Startups are at the heart of innovation and economic growth in Pakistan, rapidly transforming industries from fintech and e-commerce to edtech and healthtech. However, while founders focus on building products, acquiring users, and raising funding, many overlook the importance of financial management and tax compliance. Ignoring these essentials can lead to penalties, loss of investor trust, and even business failure.

This article outlines the bookkeeping and tax-related services that every startup in Pakistan needs throughout the year—whether bootstrapped or funded—to ensure financial stability, compliance, and scalability.

Why Bookkeeping and Tax Services Matter for Startups

• Keeps financials clean for investor due diligence

• Helps track burn rate and extend runway

• Ensures legal compliance with FBR, SECP, and provincial tax authorities

• Supports better budgeting, fundraising, and decision-making

• Avoids heavy fines, audits, and unnecessary legal trouble

Monthly Services Required by Startups

1. Bookkeeping and Recordkeeping

• Record daily expenses, income, and cash transactions

• Categorize revenue streams (subscriptions, product sales, service income)

• Maintain expense classifications (R&D, marketing, payroll, overhead)

• Reconcile bank, credit card, and digital wallet statements

2. Payroll Processing and Salary Tax Deductions

• Process employee and contractor payments

• Deduct income tax under Section 149

• Prepare salary slips

• Manage contributions to EOBI, Social Security (if applicable)

3. Withholding Tax Management

• Deduct applicable withholding tax (e.g., on rent, services) under Section 153

• Maintain WHT statements and certificates

• Deposit withheld tax into FBR accounts via CPR

4. Sales Tax Compliance

• Register for sales tax if providing taxable goods or services

• File monthly sales tax returns (STRN)

• Maintain input and output tax ledgers

• Reconcile invoices and tax payments

Quarterly Services Required

1. Management Reporting

• Generate income statements, balance sheets, and cash flow reports

• Review KPIs like CAC, LTV, burn rate, and runway

• Help in strategy review and investor updates

2. Advance Tax Payments

• Estimate and pay quarterly advance income tax (if applicable)

• Avoid default surcharge by complying with Section 147

3. Budgeting and Forecasting

• Prepare cash flow forecasts

• Review budgets vs. actuals

• Plan for fundraising or debt financing

• Optimize costs and set financial goals

Annual Services Required

1. Income Tax Return Filing

• File annual tax return under Section 114

• Submit wealth statement and reconciliation (Form 116) for directors

• File separate returns for the company and individual founders (if salaried)

2. Financial Statement Preparation

• Prepare audited or unaudited financial statements based on startup size and funding

• Comply with IFRS for SMEs or full IFRS depending on investor or regulatory requirement

3. SECP Compliance for Startups as Companies

• File Form A (Annual Return)

• File Form 29 in case of change in directors, shareholding, or business structure

• Hold Annual General Meeting (AGM) and prepare board resolutions

4. Audit Coordination and Investor Reporting

• Support external audit, if required by investors, SECP, or grants

• Provide reconciled ledgers, bank statements, and payroll records

• Assist in due diligence documentation for funding rounds

As-Needed or One-Time Services

1. Company and Tax Registration

• Register startup as a Private Limited Company with SECP

• Obtain NTN and STRN from FBR

• Enlist with PSEB (for IT startups) to avail tax benefits and export recognition

• Register with provincial revenue authorities (SRB, PRA, KPRA, BRA) if required

2. Startup Tax Exemptions and Certifications

• Apply for IT export exemption under Clause 133, Second Schedule

• Get PSEB registration certificate

• Avail reduced tax rates or exemption certificates from FBR

3. Responding to FBR Notices and Audits

• Draft replies for Section 176 (record explanation) or Section 122 (reassessment)

• Represent startup before the tax department

• File appeals or rectifications

4. Fundraising and Financial Modelling Support

• Create investor-ready financial models

• Build pro forma income statements, cash flows, and cap tables

• Structure equity and SAFE investments for accounting and tax impact

Cloud-Based Tools Ideal for Startups

• QuickBooks Online / Xero – real-time bookkeeping and financial reporting

• Zoho Books / FreshBooks – affordable accounting for small teams

• Google Sheets or Excel – for budget modeling and KPI tracking

• Trello / Notion – to manage financial tasks and documents

• Tax Asaan / IRIS portal – for tax registration and return filing

Benefits of Outsourcing Bookkeeping & Tax for Startups

• Access to expert accountants and tax advisors without full-time cost

• Timely compliance and filings

• Improved investor confidence through proper financial documentation

• Reduced risk of tax notices or audits

• Better cash flow tracking and tax planning

How to Choose the Right Accountant for Your Startup

• Look for professionals experienced with startups, SECP, and FBR laws

• Understand their familiarity with fundraising, SAFE notes, and cap tables

• Check if they offer cloud-based or virtual services

• Ensure they can handle both compliance and advisory work

• Evaluate responsiveness and reporting capabilities

Frequently Asked Questions (FAQs)

Q: Should a startup register for sales tax immediately?
Only if it offers taxable services or goods exceeding the threshold (currently Rs. 7.5 million in some provinces). IT/Software startups may be exempt if registered with PSEB.

Q: Can I manage startup bookkeeping myself?
Yes, but it’s advisable to engage professionals early for accuracy and compliance, especially when scaling or fundraising.

Q: Are tech startups eligible for tax exemption in Pakistan?
Yes. Registered IT/ITeS startups certified by PSEB and recognized by FBR may claim income tax exemption up to June 2025.

Q: What financial records do I need to raise funding?
You’ll need clean income statements, balance sheets, tax returns, cap tables, and cash flow projections.

Q: Do startup founders need to file personal tax returns?
Yes. If they draw salaries or own shares, they must declare income and file returns individually.

Conclusion

Startups move fast—but ignoring bookkeeping and tax can bring your momentum to a halt. Clean financial records, timely tax filings, and structured compliance are essential for investor trust, sustainable growth, and legal safety. Whether you’re bootstrapped or funded, product-focused or scaling, professional bookkeeping and tax services can help your startup stay financially sound and future-ready.