In the early months of building a startup, most founders focus on product development, hiring, and fundraising. Financial hygiene, especially in how business expenses are tracked and recorded, often takes a back seat. But this delay in setting up basic financial systems can quietly cost founders — both in money and administrative hassle.
Abhishek Walia, a chartered accountant who regularly advises startups, points to one of the most common and overlooked issues: founders mixing personal and business finances in the initial stage.
“Many early-stage founders use their personal accounts, cards, or UPI handles for business payments,” Walia says. “They assume they’ll sort it out later, but that rarely happens cleanly.”
This casual approach may work for a few transactions but quickly becomes problematic as expenses grow. Walia recalls a case where a founder delayed opening a current account and used personal payment methods while awaiting GST approval. Over time, this led to disorganised expense records, difficulty in reconciling GST claims, and eventually, a loss of over Rs 25,000 in unclaimed input tax credit.
The problem is not only financial. When it came time to prepare for filings and audits, the founder’s team had to go through screenshots of WhatsApp messages, scattered email trails, and Excel sheets to separate personal and business spends.
“It created unnecessary stress and delayed financial reporting,” Walia says. “This is avoidable with just a few basic systems in place from day one.”
Common mistakes and their impact
Using personal credit/debit cards for business purchases
Delaying the opening of a business current account
Paying vendors informally or without proper invoices
Not maintaining GST-compliant documentation from the beginning
These mistakes may seem minor in the early days, especially when transaction volumes are low. However, over months, they make tax filings and input credit reconciliation significantly more difficult. If ignored, they can also raise compliance issues and affect a startup’s credibility with investors or during due diligence.
What founders should do instead
Walia recommends a clear set of steps for founders, even before revenue begins to flow:
Open a dedicated current account before incurring any expenses
Use a single business-only payment method for all outflows
Insist on proper invoices, even for freelancers or small vendors
Track all expenses in real-time using simple tools or basic accounting software
“Startups often underestimate the value of structured finances,” Walia says. “But clarity in accounts helps with everything—from claiming GST credits to preparing for audits and pitching to investors.”
Startups are inherently unpredictable, but that shouldn’t extend to their financial records. Having a clean distinction between personal and business transactions from day one is a straightforward, cost-saving move. As Walia puts it, “It’s much harder to fix six months of bad accounting than to spend a few hours setting things up correctly in the first week.”
In the long run, good financial practices don’t just reduce tax losses—they enable better decision-making and a smoother path to scale.