What it means
Notion doesn't hold money and never shows up as an account. For accounting, it's a common place for policies to live: the written rules that decide how the books treat the same situation every month.
A capitalization threshold is a good example. Say you set it at $5,000. A $6,000 server becomes a fixed asset and is depreciated over its life, while a $1,200 laptop is expensed right away. Without the written rule, the same purchase gets treated differently depending on who books it that month.
Most startups need four to start: revenue recognition, a capitalization threshold, a prepaid threshold and a close checklist. A Notion page can be edited by anyone with access, so date each version, note who approved it, and have your CPA sign off on changes.
Work through the close checklist and mark each step done for the month. When the business changes, like a first lease, a new pricing model or a first hire abroad, update the policy before the books start handling it.
Once a year, check that the books actually follow what's written. A policy the ledger doesn't follow is worse than none, because it tells a reviewer something that isn't true.
Monthly close is what the checklist runs. Fixed assets and prepaid expenses depend on the thresholds, and CPA review is where the policies get approved.
Why it matters. An accounting policy only helps if it's written once and followed every month. Approved by your CPA, it settles the same question before it comes up again.
Notion isn't a ledger, and we don't connect to it. We work only in QuickBooks Online and Xero. This page covers how Notion shows up in the books kept there.
Common questions
What accounting policies does a startup need?
At minimum, a revenue recognition policy, a capitalization threshold, a prepaid threshold and a month-end close checklist.
What is a capitalization threshold?
The amount above which a purchase is recorded as an asset and depreciated, instead of expensed right away. You pick it, write it down and apply it every time.
What is a prepaid threshold?
The amount above which an advance payment, like an annual software plan or insurance policy, is booked as an asset and expensed over the months it covers. Below it, the charge is expensed when it's made, which saves a schedule for every small renewal.
Read further
- Accounts payable process for startups: intake to paymentFounder guide · 7 min
- Audit-ready books before your Series AFounder guide · 4 min
- SaaS revenue recognition under ASC 606, step by stepFounder guide · 6 min
- Monthly closeRelated · Convention
- Fixed assetsRelated · US GAAP · ASC 360
- CPA reviewRelated · Control · Quarterly
General information for US companies, not tax, legal or accounting advice. Check the specifics with a CPA before you act on them.