Accounting may not seem as urgent as finding your first customers or refining your product, but it’s just as critical to your success. Without a solid accounting foundation, you risk losing sight of your financial health, which can derail your growth. Here's why accounting matters for startups and how to get started.

The simplest form of accounting, cash basis accounting tracks income when it is actually received and expenses when they are actually paid.

Accrual basis accounting counts money when it’s “earned” rather than received (and the same with expenses). So, for example, if your customer signs a big contract, you’d consider the money earned, even if they haven’t paid you yet. This method is more complex, but it allows you to track a long-term picture of the business more accurately—something particularly useful when reporting to investors or making fast-paced scaling decisions.

Both are numbers-related, but bookkeeping and accounting are not quite the same things. Bookkeeping is the process of tracking all financial records—mainly income and expenses. The term dates back to the olden days when business owners tracked finances in paper books.