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How a financial statement audit could benefit your startup

March 6, 2024

by Matt Ringwelski, CPA

Small business startup

Starting a business comes with a lengthy to-do list. These tasks typically include choosing an entity type, establishing a brand, and finding office space—to name a few. One thing to consider adding to your small business startup list: securing a financial statement audit.

Even if your startup is in the pre-revenue stage, hiring an accounting firm to conduct a financial statement audit can be a wise move. Here’s how your business could benefit.

Why worry about a financial statement audit right now?

An audited financial statement shows that an accounting firm has tested and verified your startup’s numbers, which can come in handy if a buyer comes knocking.

When a buyer does due diligence on your business, they’ll ask you to provide all kinds of information as part of their risk assessment. An audited financial statement is a great start toward fulfilling this request, helping to reduce your burden at a busy time.

Conducting a financial statement audit early in the life of your startup can also help to streamline the sale and will very likely increase the purchase price.

Streamline the sale of your startup:

Selling your business can be stressful. As I mentioned, a buyer will ask for a significant amount of information. You don’t want to have to scramble to deliver it.

If you have an audited financial statement ready to go, you won’t have to spend a month pulling together quality financial statements. Instead, you’ll be able to get to the decision-making point of the sale more quickly.

Increase the purchase price:

Less risk = more money. The more confident you can help a buyer feel about your startup’s foundation, the more money they’ll be willing to pay for it.

What’s more, having a financial statement audit will help to attract multiple buyers at once, which also can help to increase the purchase price.

When’s the best time to do a financial statement audit?

Financial statement audits should be done annually and as early as the pre-revenue stage. Keep in mind that some buyers require the previous three years’ audits.

Even if you’re not certain you want to sell your startup, it’s still a good idea to conduct an annual audit. You never know what could happen—and it could pay to be prepared.

Set your small business startup on the right path. 

Starting a business can be overwhelming, but it’s important to do it right. Taking time to secure a financial statement audit early on can position your startup for success in more ways than one. Along with helping to optimize the sale of your startup, a financial statement audit—including the act of preparing for it—can improve your accounting, giving you more accurate information with which to manage your business.

From conducting your audit to guiding you through the M&A process, the experts at Abdo can help you make the most of your startup’s future, regardless of what it holds.

If you’d like to learn more about how a financial statement audit could benefit your startup, contact us today.


Meet the Expert

Matt Ringwelski, CPA

Matt helps his clients incorporate best practices like cash flow management, budgeting, and tax planning into their daily operations.

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