How to evaluate external bookkeeping partners

Bookkeeping is often one of the first finance tasks founders try to offload — but it’s also one of the easiest to mishandle. The wrong setup can lead to messy books, unreliable reporting, and expensive clean-up work down the line.

Wondering how to choose a bookkeeper you can trust to get the job done right? You’ve got options, including certified public accountants (CPAs), freelance bookkeepers, automated platforms, and more. But choosing based on convenience or price alone rarely ends well. What matters most is fit — for your company’s stage of growth and level of financial complexity, as well as how you actually run your business.

In this article, we’ll break down a clear framework for evaluating and selecting external bookkeeping partners for startups, so you can free up your time and turn your finance operations into a strategic engine for business growth.

Choosing the best bookkeeping service for your startup begins with getting honest about what you really need. These are the core areas to focus on if you want clean books, reliable insight, and fewer headaches as your business grows.

Cash vs. accrual accounting

Cash basis accounting: If you’re running a very early-stage startup or a service-based business with simple billing, or if you’re focused on managing cash flow, you may lean toward cash accounting. Essentially, with cash basis accounting, your revenue is recorded when the money actually hits your bank account, and your expenses are recorded when you actually pay them. 

Accrual accounting: If you’re running an investor-ready startup, inventory-based business, or subscription-based business, or if your business has a lot of deferred revenue, you may need accrual accounting. This is when your revenue is recorded when it’s earned and your expenses are recorded when they’re incurred — even if the money hasn’t yet arrived in or left your bank account. 

Wondering how to choose a reliable bookkeeping provider? Select one that specializes in the type of accounting you need.

Level of involvement

Determine if you want the bookkeeper to handle categorization, reconciliation, and basic reporting without your input, or if you want to have regular communication with them about transactions and classifications that you’ll provide the necessary context for. 

Reporting frequency and complexity

Basic reporting will include monthly profit and loss statements, balance sheet, cash flow snapshots, and bank and credit card reconciliations. Advanced reporting may include burn rate and runway tracking, deferred revenue tracking, metrics tied to business models, and more. Get on the same page with whomever you’re hiring about what you need and what will be included in the bookkeeping services package.

Integrations with your existing tech stack

Bookkeeping shouldn’t happen in isolation. Ensure your external bookkeeping partner uses systems that integrate with your existing tools, such as Mercury and QuickBooks. Having a clean data flow means you’ll get faster closes and better financial visibility.

Are you evaluating how to choose a virtual bookkeeper? Or maybe you’re wondering how to choose automated bookkeeping with CPA expertise? Either way, it’s important to first zoom out and look at all of the options available. The business model of the provider will impact the cost, flexibility, level of financial insight, and style of communication you’ll receive. 

Here are the four main types of bookkeeping providers available for startups. Keep in mind that you’re not limited to just one type; you may need a combination.

Traditional CPA firm

Accounting firms offer bookkeeping and tax services. They’re ideal for startups with complex structures and those who need tight alignment between bookkeeping and taxes. Cost-wise, traditional CPA firms can be on the higher end and may be slower to communicate compared to other options.

Virtual bookkeeping services

Online options, like Bench and Pilot, are ideal for founders seeking structured, predictable support — and for those comfortable working fully online. These virtual services also may offer investor-ready bookkeeping and align well with the needs of tech and SaaS startups.

Freelance or boutique bookkeepers

Solo bookkeepers or small specialist firms are perfect for founders who want a more personal relationship and highly customized service. Keep in mind that they might have capacity limits and may not be able to grow with your business.

Automated platforms with human review

Solutions like Mercury use automations and artificial intelligence to streamline processes, with humans stepping in when something looks ambiguous, risky, or outside of the norm. This option works well for founders who want to have a hand in managing their bookkeeping.

Focus on this evaluation criteria to confidently land on a bookkeeping provider that truly meets your needs.

Accuracy and audit-readiness

How does the service provider ensure quality? Ask who reviews the work before it’s finalized and what their month-end close process looks like.

Tooling and integrations

Find out if they plug into your banking and accounting systems. Ask what parts of the process are manual to determine whether you’re going to get clean, automated data or a mish-mash of mistakes.

Communication

Find out who you’ll be working with, what their typical response times are, and whether any check-ins are included with the bookkeeping service. Automation is good, but sometimes you may want to speak with a real human. 

Transparency

It’s vital to have direct access to your books, so you can see how they’re looking in real time. If your bookkeeper or CPA only sends you reports once a month, you’ll have limited transparency into your own company’s books, which is a financial risk.

Pricing

This is a biggie for most startups. You’ll need to get clear on what’s included and not included in the bookkeeping service, and what the pricing structure looks like (flat fee, hourly, or project-based). Try to uncover hidden costs, like tax prep or investor reporting, up front.

Some red flags stand out clearly from the beginning, and others are hidden beneath the surface. When you’re assessing options for bookkeeping and accounting services, be on the lookout for these potential issues.

Automation with no human review

Without a human in the loop, you could end up with misclassified chargebacks, poorly categorized transactions, incorrectly logged purchase orders, and miscoded owner contributions.

Unclear deliverables or vague scope

Avoid surprise bookkeeping fees or missed tasks with a clear, documented scope of work that includes exactly what needs to be done, when, and how often.

Limited understanding of startup-specific needs

Startups face financial realities that go beyond basic income and expense tracking. Your bookkeeper should understand equity compensation, burn rate, runway reporting, deferred revenue, and the realities of scaling. If they don’t, you may outgrow their services faster than you expect.

High staff turnover

If you’re always dealing with someone new, you’ll stand to lose institutional knowledge and context, which can slow you down and lead to inconsistencies in your bookkeeping.

Ultra-cheap pricing

Does it seem too good to be true? It just might be. If the pricing of a bookkeeping service or software vendor is well below the standard market rate, consider what isn’t included, such as reviews, communication, and automation.

Which outsourced bookkeeping service is right for your startup? There’s no one-size-fits-all answer. The right fit depends on where your business is today, including how complex your transactions are, what kind of reporting you need, and how much time you can realistically spend on finance. A founder managing the books solo, an entrepreneur yearning for fully outsourced bookkeeping, and a high-growth startup with multiple bank accounts will each need something different.

Here’s a framework for thinking through the ideal service type based on what type of founder you are.

Your startup can turn your finance operations into a strategic function, rather than another to-do list item, when you choose the right external bookkeeping partner. Whether you opt for a CPA firm, an automated platform, or something in between, it’s crucial to align the service with your business’s needs and future goals. 

Mercury makes it easier for busy founders to run their books. With automated transaction and expense coding, easy syncs with accounting software, and so much more, you can create clarity and build confidence in your financials. Explore how Mercury supports founders.