What Are Internal Controls? And Should Early-Stage Startups Care?

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If you’re an early-stage founder, odds are you didn’t start your company to worry about accounting processes or internal controls — you’ve got product, customers, and fundraising to focus on. But at some point, you’ll hear the term internal controls tossed around by investors, accountants, or your future CFO. So what are they, and do you really need them right now?

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What Are Internal Controls?

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Internal controls are the systems and processes you put in place to make sure your company’s money is handled properly. Think of them as guardrails that help prevent mistakes, fraud, or just plain sloppiness when it comes to your finances.

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For example:

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• Having someone review expenses before they’re reimbursed.
• Requiring two people to approve large payments or wires.
• Separating duties so the same person isn’t sending money and reconciling the books.

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Why They Matter

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Good internal controls protect your cash — which, at an early stage, is your runway. They help ensure your financials are accurate, your team stays honest, and your investors feel confident you’re running a tight ship.

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But Let’s Be Real — You’re Small

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If your entire finance team is… well, you (or you and a bookkeeper), it’s not realistic to have robust internal controls like a big company would. And that’s okay. Investors know your team is lean. What matters is you do what you can to build good habits early.

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A Quick Win: Banking Controls

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One easy internal control every startup can set up: require multiple admins to approve outgoing wires or large payments. Most startup-friendly banks let you do this in your online banking settings. That simple extra step makes it a lot harder for someone to send money out without a second set of eyes.

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Bottom Line

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You don’t need an entire internal audit department. But you do want to think about a few basic safeguards to protect your cash. Good controls now mean fewer headaches later — and make you look more mature when it’s time to raise your next round.

Need help getting the basics right? That’s what we’re here for. Let’s keep your books clean and your runway protected — so you can focus on building the company you actually want to run.