Tips for Early-Stage Start-ups: Documentation & Internal Controls

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Technology and Innovation @ Wipfli

Authored by: Kristin Kenney, CPA

Hello again. Thanks for checking in on the latest Tip for Early-Stage Start-ups. Last month, we talked about the stages of implementation and sophistication of accounting software solutions. If you missed it, click here to catch up! Today, I would like to introduce you to the concepts of internal controls and documentation and how that relates to an early-stage start-up company.

A founder of an early-stage startup company is usually a jack-of-all trades whether they like it or not. The necessity to keep costs down demands it of them. While throttling into the unknown to bring their thoughts and ideas to life, founders can lack the time and resources to dedicate to certain areas of running their start-up companies. Often, an area of weakness can be around documentation – having and retaining the documentation behind the transactions and costs that take place within the company that then serve as the core foundation for the accounting function of the business. It is easy to get behind on properly entering and filing documentation and for documents to get misplaced when you are moving forward at lightening speeds. Unfortunately (or fortunately, depending on your perspective), in the world of innovation and growth, it never slows down. As a result, it is best to build good documentation habits from the start. Catching up later can be costly in time or money or both. It can also be very detrimental if the documentation is lost and not recoverable. Today’s documentation can be requested on a look-back basis for numerous reasons, including financial reporting to investors and lenders as well by regulatory agencies like the IRS (Internal Revenue Service) or the various state departments of revenue (DOR). When undertaking a financial statement audit for the first time, historical transactions may need to be looked at to satisfy the requirements of the audit and meet the needs of the investors and/or lenders requesting the financial statement audit. In addition, the IRS and DORs have the right to audit tax information submitted by the company within the statute of limitations established for the filing by law and failure to provide the necessary supporting documentation can result in significant taxes being assessed along with interest and penalties.  

Fortunately, there are some low-cost software options that can turn a founder and his staff into pros at documentation. For example: if a company is using QuickBooks Online (QBO) for their accounting system, QBO provides its own documentation storage options whereby a receipt (in various file formats, such as PDF, JPG, and PNG) can be dragged and dropped via a smartphone into the QBO app and matched to transactions. When selecting a software system to be utilized by a company, the ease at which the software allows the founder and its staff to track, upload, and link its transactions and the related documentation is one of the many factors that should be considered. If accounting software has already been purchased and implemented, it is important for staff and founders to understand the capabilities of the system so that they can fully utilize it. You might as well if you are already paying for it – right? And why not make your life and the life of others easier if you can while maintaining the appropriate records and documentation that is needed to support your business?

Some more advanced solutions are also available at any additional cost, some of which even serve to help outsource portions of the accounting process and provide enhanced internal controls of cash disbursement functions. For vendor bill payment solutions, there are companies like, and for credit card expense tracking and employee reimbursements functions, there are companies such as Concur, Spendesk, or Expensify. These solutions allow for the matching of receipts and supporting documentation with transactional data. In addition, these options add the benefit of workflow approval processes and document storage that enhance the level of internal control within an organization. The expense tracking software requires the users to code their own purchases based on the nature of the expense and submit them to a designated approver prior to processing. The software also can synchronize the coded & approved transactions into the accounting software used by the company to avoid duplicating effort.

There is also a quickly growing list of fin-tech companies that include small business credit cards with real-time adjusted spending limits based on your current bank balance, such as Ramp, Brex, and Mesh to name a few. They provide transaction coding, document storage, and the importing of your transactional data into your accounting software.

As mentioned above, when selecting software solutions to be used by an organization and developing the accounting processes within an organization, it is also important to consider the appropriate internal control structure within an organization. Companies have many demands for its money. As a result, founders, investors, and management alike all have a vested interest in making sure that the company’s funds are used only for appropriate, approved purposes and that financial data is provided in such a manner that allows the information to be interpreted accurately so that action plans can be developed and implemented to propel the company forward. Traditionally, a start-up company lacks segregation of duties given the limited accounting staff available. As a result, start-up companies usually rely on high level internal controls to protect their organization. Important controls that start-up companies should consider include:

  • Setting the appropriate tone at the top with all employees – that honest and ethical practices are expected and anything less than that will not be tolerated by the company
  • Safeguards over IT (Information Technology) systems and access – including appropriate firewalls, up-to-date virus and malware protection, archived activity logs, restrictive access rights, and adequate back up records/systems
  • Review and approval of all cash disbursements prior to payment
  • Review and approval of all electronic disbursements prior to payment
  • Review and approval of all adjustments made to cash and accounts receivable balances
  • Review and approval of all payroll changes and registers prior to payment
  • Review and approval of monthly financial statement reporting

Implementing controls like those mentioned above can help protect companies against those that wish to do them harm and take advantage of them. Instilling internal controls when a company is young and growing provides a sound base of operations for them to build from. Each company can choose the best way for them individually to effectively set up and institute its internal control structure – whether the company chooses to utilize various software solutions like those discussed above or to use a more manual process. When properly instituted, either method can provide tools to help safeguard the company.

Wipfli LLP is here to help!

Wipfli does not specifically endorse the software platforms noted above, but they are out there for you to explore to determine which is the best software solution or solutions to meet your company’s growing and developing needs. A start-up company that signs up for Wipfli’s early-stage outsourced accounting plan, which assists start-up companies with their early-stage accounting needs, can elect to use our pre-arranged stack of accounting solutions or can customize their solutions based on the solutions the company is already using, depending on what best meets the needs of the organization. We love to help companies build a solid foundation, so they have a firm structure to grow around. If you are interested in learning more about Wipfli’s tech forward approach to accounting, please visit our website at, click “Services,” and then “Outsourcing.”

Wipfli also has a robust list of product offerings that can help companies develop their corporate structure and philosophies as well as their internal controls over financial reporting and IT. Feel free to browse our offerings via our website at under the “Services” heading.

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