How — and when — to build out a finance team for your startup

In the earliest days of a startup, finance is almost always a founder-led function. You open a bank account, track spending in a spreadsheet, maybe work with a bookkeeper once a month, and move on. For a while, that approach is often the right call.

Founders tend to worry about hiring too early and creating unnecessary overhead, while also fearing the risk of waiting too long and losing visibility into cash, performance, or compliance. It’s a valid concern. In 2023, 82% of businesses that went under did so because they lacked the capacity to manage their finances effectively. 

Knowing when to hire a finance team for a startup often feels less like a clear milestone and more like a judgment call made under pressure. But, as a company grows, managing startup finances starts to compete for attention with product, hiring, and customer acquisition. Reporting takes longer, and numbers feel less reliable. Decisions that used to be intuitive suddenly require deeper analysis. 

To unpack what that moment looks like in practice, we spoke with Dan Kang, CFO at Mercury, who has witnessed this transition unfold across many early-stage companies. His approach is less about rigid milestones and more about understanding complexity, context, and timing.

Most founders don’t wake up one morning and decide they need a fully developed startup finance team structure. The shift usually happens gradually, triggered by events that introduce external scrutiny or internal complexity.

While every business is different, there are several consistent signs that you need to make a finance hire, even if revenue or headcount hasn’t hit a traditional milestone, including:

• Fundraising: “Raising a round is a big one,” says Kang. Investors often require audited financials and standardized reporting. “And that’s really hard to do without in-house accounting support.”
• Debt financing: This creates similar pressure. Companies that rely on lending — including ecommerce, manufacturing, or other capital-intensive businesses — often need more rigorous reporting and controls than a founder or outsourced provider can reasonably manage alone.
• Operational complexity: As startup financial operations expand to include international entities, global payroll, or multiple revenue streams, do-it-yourself finance begins to break down.
• Transaction volume: As the number of vendors, invoices, customers, and payroll entries grows, month-end close becomes harder to manage externally. An outsourced bookkeeper is likely managing several clients at once and may lack the business context to be a true thought partner.
• Revenue complexity and rising operational risk: Enterprise contracts, usage-based pricing, marketplaces, and fintech models all introduce challenges around revenue recognition and margin visibility.

For more on this topic, read our article on how to time your first finance hire and finding the right person for the job.

A thoughtful startup accounting setup matters, but heavy processes can distract founders from building products and acquiring customers. Clear cash burn and runway management are essential, but over-engineered systems can slow you down, especially in the early days.

Level set your hiring needs

Take a beat and get clear on your company’s needs. “The biggest mistake is hiring too senior or too junior without understanding what you’re trying to solve,” says Kang. If you hire someone who’s senior, you may end up with an expensive executive who can’t be effective without a larger team or who introduces big company processes too early. But, if you hire someone who’s too junior, your company may end up with  poor financial foundations or quickly scale beyond this person’s abilities. Look for someone who can be both an executive and a builder, in the right mix for your growing company.

Build and structure your team wisely

There’s no one-size-fits-all finance team structure for startups, but most follow a predictable progression as complexity increases, like this:

1. Bookkeeper or accountant: Early-stage finance roles often begin with a bookkeeper or outsourced accountant to manage reconciliations and basic reporting. 
2. CFO services: Fractional or outsourced CFO services often come next, providing strategic guidance before a full-time executive hire makes sense.
3. Controller or senior accountant: As transaction volume and compliance needs grow, you may need to add a controller or senior accountant to own close, controls, and audits. 

Hiring a bookkeeper can be a smart first step, but it won’t solve strategic gaps. Conversely, hiring a strategic finance person may help you forecast and plan more smartly, but leave you without effective financial operations. Understand where the complexities lie ahead for your business and tailor your hiring accordingly. A phased approach helps founders build a finance team that scales with the business, not than ahead of it.

Avoid over-investing too early

Over-investing in finance isn’t limited to headcount. It can also show up in systems and processes designed for companies far larger than the startup actually is. “I’ve seen founders who want to do everything the right way from day one,” says Kang. “They’ll ask if they should implement enterprise-grade systems immediately, even when it adds very little value at the seed stage.”

It’s important to understand cash burn and runway, but, in the early stages, most startups don’t need financials that are fully compliant with Generally Accepted Accounting Principles or tight purchasing controls.

Decide whether you need in-house vs. outsourced finance support

For many founders, hiring decisions aren’t initially about employee numbers. The first question is whether to bring finance in-house or continue outsourcing.

Kang points to two main factors that can guide your decision here: transaction volume and complexity. Higher transaction volume increases execution burden. Complexity in revenue models, systems, or legal entities increases the need for context. “Outsourced providers can support financial operations for startups, but once complexity rises, context becomes critical,” he says.

A helpful way to frame decisions is to separate execution from ownership. Outsourced partners can efficiently execute defined tasks. In-house hires own outcomes, context, and tradeoffs. As long as finance questions remain predictable, outsourcing often works. When decisions become more nuanced or mistakes more costly, ownership usually needs to move inside.

In the earliest phase, DIY finance can work surprisingly well, if a few fundamentals are in place, including clean transaction tracking, a reliable view of cash balances, and a basic understanding of burn and runway. 

Many founders pair a modern banking platform with lightweight tools to centralize payments, automate categorization, and reduce manual work. This kind of setup can meaningfully delay the need for headcount, while still giving founders confidence in their numbers.

Before adding headcount, many teams look to tooling as a way to reduce operational drag. Automating bill pay, expense tracking, and basic reporting can dramatically reduce the workload that often prompts premature hiring. When founders invest in effective systems early, finance hires can focus on judgment and strategy, rather than cleanup and manual work.

For founders who sense finance is becoming a bottleneck but aren’t sure what to do next, Kang emphasizes reflection over urgency. “Until you hire your first finance person, you really are the CFO,” he says. “That’s not uncommon. But you need regular check-ins with yourself to ask whether that’s still the best use of your time.”

Knowing when to hire a finance team for your startup is less about a single milestone and more about recognizing when finance work limits better decisions elsewhere in the business. “It’s hard to know what you don’t know,” says Kang. “Founders spend so much time on product and growth. But carving out even five or 10 percent of your time to learn how businesses scale can make a huge difference.”

For many founders, the goal should be to build confidence and clarity at each stage. That often starts with choosing financial infrastructure that scales (by centralizing cash, payments, and reporting) early, so that future hires can build on a solid foundation, rather than untangle fragmented workflows.

Thinking about what your finance setup needs next? Explore Mercury’s tools for streamlining early finance operations.