What Finance as a Service Doesn’t Cover, and Who You Still Need

The Scope Line Most Engagements Never Draw

What outsourced accounting does not include is almost never written down, because engagement letters describe scope by listing inclusions and then stopping.

Finance as a service covers four operating layers. Transactional bookkeeping, GAAP accounting and monthly close, tax compliance and planning, and FP&A plus CFO-level advisory. That’s the definition behind our guide to the finance as a service model, and it’s a wide line. It isn’t an unlimited one.

Three things sit outside it every time. The independent audit, review, or compilation of the statements the engagement produces. Legal work. And the payroll, equity, and banking platforms your company owns directly.

The asymmetry in the paperwork isn’t deceptive. It’s a drafting convention. The AICPA’s nonattest services guidance asks a firm to document the objectives of the engagement, the services to be performed, the client’s responsibilities, the firm’s responsibilities, and any limitations. Services to be performed is a required element. Services not to be performed is not, and most firms cover the limitations clause in one catch-all sentence.

So two engagement letters can read almost identically and still stop in completely different places. That’s why outsourced accounting out of scope work is so hard to research before you sign.

The cost is rarely the fee for the missing work. It’s the delay.

• The audit surprise. A lender or a new investor asks for audited or reviewed statements, and the company assumes its provider produces them. It can’t, for the reasons below, and finding and onboarding an independent firm takes weeks the covenant date doesn’t grant.
• The new-state payroll gap. One remote hire creates an employer obligation in that state immediately, with no dollar threshold to cross first. Withholding account, unemployment insurance account, new-hire reporting. If registration is out of scope and nobody said so, the first check runs late.
• The document that needed a lawyer. A board consent or an amended operating agreement lands with a ten-day turnaround. No accounting provider can draft it.

The gap costs you a fee. The surprise costs you a quarter.

Naming exclusions isn’t modesty. It’s sequencing. A founder or VP Finance who knows which relationships a provider will never fill can line them up before the deadline instead of during it.

The Audit: Why the Team That Closes Your Books Cannot Attest to Them

No. The firm that keeps your books and prepares your financial statements should not also issue the independent opinion on them.

Can my accountant audit my own books is the sharpest version of the question, and for a private company the governing rule is the AICPA Code of Professional Conduct, not anything the SEC publishes.

The rule that governs a private company

The controlling authority is the nonattest services subtopic of the Independence Rule in the AICPA Code of Professional Conduct, at ET section 1.295. Three interpretations do the work.

• ET 1.295.030, management responsibilities. A member cannot make management decisions, approve financial reporting policies, authorize or execute transactions, or approve journal entries for an attest client.
• ET 1.295.040, general requirements. The client must agree to assume management responsibilities, designate an individual with suitable skills, knowledge, and experience (SKE) to oversee the service, evaluate the results, and accept responsibility for them. The firm documents that understanding in writing.
• ET 1.295.120, bookkeeping and payroll. Recording transactions the client classified, posting client-approved entries, preparing statements from the client’s trial balance, and proposing adjusting entries are permitted when those requirements are met. Determining journal entries and authorizing transactions are not.

Note what this is not. SEC Regulation S-X Rule 2-01 bars an auditor from maintaining or preparing an audit client’s accounting records outright, and Sarbanes-Oxley Section 201 made that unlawful for issuers. Those are the public-company rules. Most growth-stage companies live under the AICPA standard and assume they live under the SEC one.

Why the safeguards fail in practice

Two qualifiers turn a workable rule into a practical no.

The SKE designation is a genuine test. The Journal of Accountancy’s guidance on nonattest services quotes a practitioner on the common failure, which is that engagement teams “assume their client has the requisite SKE based on the person’s title.” At a $3M-revenue company with no controller, there may be nobody who can credibly review and take responsibility for a close package built by an outside firm.

The second qualifier is aggregation. An AICPA ethics director puts it plainly in the same piece. “Bookkeeping, making journal entries, preparing financial statements, or preparing disclosures may be permitted individually, but problems can arise if you do them all.”

A full-stack finance engagement is, by definition, all of them. The completeness that makes the model worth buying is the same completeness that makes the audit combination indefensible.

Preparation, compilation, review, and audit are four different things

Independence works differently at each level of service under the Statements on Standards for Accounting and Review Services, and that ladder is the real answer.

Level of service	Standard	Independence required	What the firm issues
Preparation	AR-C 70	Not evaluated at all	No report. Each page states that no assurance is provided
Compilation	AR-C 80	No, but a lack of independence must be disclosed	A compilation report, no assurance
Review	AR-C 90	Yes. Impaired independence disqualifies the firm	A review report, limited assurance
Audit	AU-C (SAS)	Yes	An audit opinion, reasonable assurance

Your provider prepares your statements monthly under a preparation or consulting framework, and that’s fine. A firm could in principle issue a compilation while disclosing that it isn’t independent. It cannot issue a review, and it cannot issue an audit. The review is the one that catches people out, because reviews feel lightweight and are commonly what a mid-market lender asks for.

SSARS No. 27 sharpens the line further. Effective for periods ending on or after December 15, 2026, it places financial statements prepared inside a consulting services engagement outside AR-C 70 and outside the peer review population. Your monthly close package is operational output, not an attest product.

What your provider should still do for the audit

None of this means your finance team steps back when the auditor arrives. Everything short of the opinion stays inside the engagement.

• Own the close calendar, so the trial balance the auditor receives is already reconciled.
• Own the prepared-by-client request list with one named owner per item. Delays cluster around late submissions and unclear ownership.
• Document the technical positions the auditor will test, including revenue recognition, capitalization, and equity accounting.
• Field auditor questions, produce supporting schedules, and book the adjustments you approve.
• Help you select and scope the audit firm.

That sequence sits in our audit prep checklist for startups. What no provider on your books can do is sign the opinion. That’s when you still need a separate CPA firm, and attest work is reserved by licensure anyway, since state boards condition it on a firm permit and peer review enrollment.

Two firms, one set of numbers. That’s the design, not a gap in it.

The Platforms You Still Own: Payroll, Equity, and Banking

Your finance provider operates inside your payroll, cap table, and banking systems. It doesn’t replace them, and it shouldn’t hold the keys.

Payroll: the provider runs it, the employer owns the liability

The IRS doesn’t hedge on this. Its page on outsourcing payroll duties states that “the employer is ultimately responsible for the deposit and payment of federal tax liabilities.” A reporting agent authorized on Form 8655 can sign and file Forms 940 and 941 and still assumes no liability for the employer’s withholding, reporting, payment, or filing duties.

Two operating rules follow. Register on EFTPS with your own PIN and verify deposits yourself rather than trusting a report. And keep your own address as the address of record, because rerouting IRS notices to a provider limits what you learn and when. A missed or late deposit is the first warning sign worth acting on.

Equity: the board decides, the ledger records

The company owns the cap table system and the board owns the decisions recorded in it. Your provider maintains the accounting consequences, which are stock compensation expense under GAAP and the related disclosures. It doesn’t approve grants.

Board approval and fair market value are different things. A board approves a grant and its exercise price. What makes that price defensible is an appraisal under the independent appraisal safe harbor at Treas. Reg. 1.409A-1(b)(5)(iv)(B)(2), which creates a rebuttable presumption of reasonableness when a qualified independent appraiser values the stock within the prior 12 months, absent a material development. Our explainer on what a cap table is covers the record, and 409A valuation covers the appraisal.

Securities compliance sits with counsel. Private-company grants generally rely on SEC Rule 701, and tracking capacity against its disclosure thresholds before a large grant round is legal work.

Banking: limited access is a control, not an inconvenience

The bank relationship, the signature card, and the beneficial ownership documentation belong to the company. A provider gets scoped access, usually read rights plus a bill pay queue where your team holds final approval.

Authorizing or executing transactions is a management responsibility under ET 1.295.030, and the plain version of that rule applies to everyone. The party that records the transaction shouldn’t be the party that releases the cash.

The same logic governs subscriptions. The AICPA’s hosting services interpretation at ET 1.295.143 treats independence as impaired when a client’s data is accessible only through the firm, and the practical test is memorable. If you can’t change providers without contacting your current one, the arrangement is wrong.

Your name on the subscription. Your admin seat. Your export.

Legal Work, Entity Formation, and the Registered Agent

Legal work is the cleanest boundary in the engagement, because statute draws it rather than preference.

Under ABA Model Rule 5.5, a lawyer may not assist someone who isn’t admitted to the bar in activity constituting the unauthorized practice of law, and each jurisdiction sets its own definition of that practice. State bars publish concrete examples. North Carolina lists preparing legal documents for others, organizing corporations, and advising individuals on their legal rights among the activities reserved to licensed counsel. The ABA’s own comment recognizes that a lawyer may advise nonlawyers whose work requires knowledge of the law, and it names accountants.

One carve-out matters. Federal law authorizes CPAs and enrolled agents to represent taxpayers before the IRS, and tax advice and planning are generally not treated as the practice of law. That carve-out is why tax belongs inside a finance engagement and entity formation does not.

The registered agent is a statutory appointment, not a service line. The Delaware Division of Corporations states it directly. An entity not physically located in Delaware must appoint a registered agent maintaining a street address and an office in the state, open during business hours to accept service of process. A P.O. box doesn’t satisfy it. This one fails quietly, because a notice that can’t reach the agent can cost a company its good standing.

The legal items that recur between $1M and $20M in revenue are predictable. Formation and conversion documents. Foreign qualification filings in new states. The registered agent appointment. Commercial contracts, including MSAs, order forms, DPAs, and NDAs. Equity plan documents and grant agreements. Board consents and minutes. Financing documents and side letters. Employment agreements and IP assignment. All of it goes to counsel.

The two professions meet constantly, though, and a provider should manage the seams rather than wait at them. The cap table and the current 409A feed the grant paperwork counsel drafts. Revenue contract terms drive the ASC 606 conclusions the finance team documents. The state footprint tracked for payroll and sales tax is the same one counsel needs for foreign qualification. Handing counsel a clean set of facts is part of the business advisory work inside an outsourced finance engagement.

Your accountant can tell you what a contract does to your revenue. Only your lawyer can tell you what it does to your rights.

Where Providers Draw the Line Differently

Audit independence and the practice of law are fixed boundaries. Everything in this section moves from provider to provider.

Most lists of outsourced accounting out of scope work treat the boundary as fixed. It isn’t. Six line items account for nearly all the variation.

• Tax preparation and filing. Bookkeeping-only providers hand the return to an outside CPA firm. A full-stack engagement treats tax compliance and planning as one of the four layers, so the return is built from the ledger that produced the close. That’s the position behind indinero’s business tax services.
• Sales tax registration and filing. Since Wayfair, states impose collection obligations on remote sellers based on economic activity, commonly at $100,000 in in-state sales, with transaction-count tests being abandoned. The scope question has three parts. Nexus monitoring, registration, and return filing. Many providers do the first and stop.
• R&D credit studies. A study is a specialist engagement producing a substantiated qualified research expense calculation, not a line item in a close. The IRS instructions for Form 6765 set the current reporting architecture, including Section G. Ask who signs the study and who defends it on exam.
• 409A valuation. Some providers perform it, some subcontract, some refer out. The safe harbor holds for 12 months absent a material development, which makes 409A valuation a recurring annual need tied to grant activity rather than a one-time purchase.
• Payroll tax registration in new states. Distinct from running payroll. Opening the withholding account and the unemployment insurance account and completing new-hire reporting is administrative work that payroll platforms often bill separately and accounting providers often exclude.
• Equity administration. Issuing grant documents, tracking vesting and exercises, processing post-termination exercise windows. Most providers touch only the accounting side.

Here’s the whole boundary in one place.

Work type	Typically in scope	Typically out of scope	Who to call
Transaction coding and reconciliation	Yes	No	Your finance provider
Monthly GAAP close and financial statements	Yes	No	Your finance provider
Budgeting, forecasting, and board reporting	Yes	No	Your finance provider, FP&A layer
Federal and state income tax returns	Varies. In scope at indinero	A common exclusion elsewhere	Your finance provider or a separate CPA firm
Audit, review, or compilation report	No. Independence bars it	Always	A separate licensed CPA firm
Audit preparation and PBC list management	Yes	No	Your finance provider
Payroll processing inside your system	Yes	No	Your finance provider, in your payroll platform
Payroll tax registration in a new state	Varies	Frequently excluded	Your finance provider, payroll platform, or state agency
Sales tax nexus monitoring	Varies	Sometimes	Your finance provider or a sales tax specialist
Sales tax registration and return filing	Varies	Frequently excluded	A sales tax specialist or a filing service
R&D tax credit study	Varies	Frequently excluded	An R&D credit specialist or your tax provider
409A valuation	Varies. An indinero service line	Frequently referred out	A qualified independent appraiser
Equity plan administration	Rarely. Accounting for equity is in scope	Usually	Your cap table platform plus counsel
Entity formation and conversion	No	Always	Corporate counsel
Registered agent	No	Always	A commercial registered agent
Commercial contracts and board consents	No	Always	Corporate counsel
Bank account ownership and signatory authority	No	Always	The company and its bank
Insurance and benefits brokerage	No	Always	A broker
Investment advice and treasury management	No	Always	A registered investment advisor or your bank

Nine questions will establish where any provider’s line sits, and each one has a verifiable answer.

1. Do you prepare and sign our federal and state income tax returns, or hand off to an outside firm?
2. Do you monitor sales tax nexus, register us in new states, and file the returns? Which of the three?
3. Do you perform R&D credit studies in-house, and who represents us if the credit is examined?
4. Do you perform 409A valuations, subcontract them, or refer them out? If subcontracted, to whom?
5. When we hire in a new state, who opens the withholding and unemployment accounts, and how fast?
6. Do you administer our equity plan, or only account for it?
7. Can you perform our review or audit? The right answer is no, and hesitation tells you something.
8. Who owns the subscriptions to our accounting, payroll, bill pay, and cap table systems?
9. If we leave, what do we get, in what format, and how long does it take?

Ask where the line is. If the answer is a brochure, you found it.

How Indinero Manages the Work It Hands Off

Indinero draws the line wider than most, because bookkeeping, GAAP accounting and close, tax, FP&A, and fractional CFO advisory sit inside one CPA-led engagement.

That changes two things. Tax is prepared from the same ledger that produced the close, so there’s no reconciliation between two firms’ versions of the year. And 409A valuation is an indinero service line rather than a referral, so a company issuing options isn’t running a separate procurement every twelve months. Fewer services isn’t the point. Fewer seams is. Our accounting services page covers the close and audit-prep layer, and the model itself is set out in our guide to finance as a service.

The line still exists. Here’s where it sits.

• Attest. The audit, the review, and the compilation go to a separate licensed firm. That’s a standards requirement, not a preference. What we do instead is run the close so the trial balance handed over is reconciled, own the audit prep request list, document the positions the auditor will test, and book the adjustments you approve.
• Legal. Formation, the registered agent, contracts, board consents, and securities compliance go to counsel. We supply the numbers those documents depend on.
• The platforms. Payroll, cap table, and bank and card programs stay in your name, with your admin rights and your export.
• Specialists outside the four layers. Where an engagement needs expertise we don’t staff, the answer is a named introduction and a scoped brief.

A handoff is a deliverable, not an exit. The receiving specialist should get a reconciled trial balance, the close documentation, the accounting policy memos, the state registration footprint, the cap table and the current 409A, and one named contact who stays on the thread. You shouldn’t be the router between your own advisors.

You’re not just buying a finance function. You’re assembling a bench, and the order matters more than the revenue number. Sequence it by trigger event.

1. First hire outside your home state, or the first state where you cross an economic nexus threshold. Add state registration capability.
2. First option grant to a non-founder. Add a qualified independent appraiser, and counsel for the plan documents.
3. First priced round, or the Delaware conversion. Add counsel as a standing relationship, not a project.
4. First credit facility or venture debt term sheet. Read the covenant language first. Lenders frequently require reviewed or audited statements on a fixed annual date.
5. First institutional investor that requires an audit. Add a separate licensed CPA firm, and start the search a full quarter before fieldwork.
6. First foreign entity or first employee abroad. Add international tax counsel and a local statutory accounting provider.

Continuous operations since 2009, SOC 2 compliant (2026), and a 5-star Clutch rating are why 500+ regular customers stay with us through those transitions. A wider line, and honest edges on the rest. If you want a straight answer on where a provider stops, ask the nine questions above. We’d rather you ask now than find out in month four.

Frequently asked questions

Scope questions tend to surface late, usually when a lender, a board member, or a lawyer asks something the engagement letter never addressed. These are the ones founders and finance leads ask most.

If we hire an auditor separately, will our finance provider work with them?

Yes, and it’s a well-worn working relationship, though your provider can’t issue the independent opinion on statements it prepared. Everything short of the opinion stays inside the engagement. At indinero that means owning the close calendar so the trial balance arrives reconciled, managing the prepared-by-client request list with one named owner per item, documenting the technical positions the auditor will test, and booking the adjustments you approve. Two firms, one set of numbers.

Who actually runs payroll, the provider or the payroll platform?

Your finance provider operates payroll inside the platform your company owns, and the platform stays the system of record. The provider isn’t a substitute for the subscription, and admin rights stay with you. The IRS is blunt about why. The employer remains responsible for depositing and paying federal tax liabilities, even when a reporting agent signs and files the returns, so keep your own EFTPS PIN and your own address of record.

Do finance as a service providers manage your cap table?

Most finance as a service providers account for equity rather than administer it, so the cap table system stays in your company’s name. At indinero the accounting for equity sits inside the engagement, which means stock compensation expense under GAAP and the related disclosures. Issuing grant documents, tracking vesting, and running post-termination exercise windows stay with your cap table platform and your counsel. The board approves grants. Your provider records what the board decided.

Is a 409A valuation part of a monthly finance engagement?

A 409A valuation is typically a separate engagement rather than part of the monthly fee, even when the same firm performs it. Providers vary here. Some perform the valuation, some subcontract it, and some refer it out entirely, so ask which before you need the appraisal. 409A valuation is an indinero service line, so the line sits wider than most, and a company issuing options isn’t running a separate procurement every twelve months.

What happens when you need work your provider does not do?

You add a specialist, and the practical cost is usually the delay in finding one, not the fee for the missing work. A lender asking for reviewed statements on a covenant date doesn’t grant the weeks it takes to find and onboard an independent CPA firm. The protection is asking where a provider’s line sits before you need the missing thing. A good handoff is a deliverable, so expect a reconciled trial balance, the close documentation, and one named contact who stays on the thread.

How do you avoid paying two firms for overlapping work?

Scope each engagement in writing and name the owner of every deliverable, because overlap comes from unspecified scope rather than from having two firms. Engagement letters list inclusions and stop, so the exclusions are the part you have to draw out. Ask directly who prepares the return, who registers you in a new state, who performs the 409A, and who administers the equity plan. Fewer seams is the goal, which is why indinero keeps bookkeeping, close, tax, FP&A, and CFO advisory in one engagement.

Which specialist should a growing company add first?

Sequence specialists by trigger event, not revenue, because a lender requirement, a first audit, or a first option grant forces the hire. For most growing companies the first outside specialist is state registration capability, triggered by a hire outside the home state or a first economic nexus threshold. A first non-founder option grant brings in a qualified independent appraiser and counsel for the plan documents. A first credit facility or institutional investor brings in a separate licensed CPA firm for the review or audit.