As a startup founder, you juggle countless responsibilities—building your product, growing your team, and keeping investors happy. Finance often takes a backseat to these priorities, and for many early-stage software companies, outsourcing accounting services like bookkeeping, payroll, and budgeting makes perfect sense.

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But as your company grows, the financial complexity increases. At some point, hiring a full-time finance person becomes necessary to manage your operations and ensure long-term success. The question is: when is the right time?

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The answer varies for each startup, but two key milestones often signal the need to bring finance in-house: raising significant capital and seeing a sharp increase in revenue. Let’s dive into these triggers and explore how to decide what’s right for your business.

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1. After Raising Capital: Managing Investor Expectations

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When your startup closes a funding round, financial accountability becomes critical. Investors expect timely and accurate reporting, including budgets, forecasts, burn rate analyses, and cash runway updates.

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At this stage, financial responsibilities often exceed what an outsourced accounting partner can provide on a day-to-day basis. A full-time finance person, such as a controller or finance manager, can:

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• Oversee financial reporting: Ensure compliance with investor requirements and audit readiness.
• Create detailed forecasts: Provide insights to help you allocate funds efficiently and plan for future growth.
• Collaborate with leadership: Serve as a strategic partner in decision-making, offering data-driven recommendations.

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If your funding round exceeds $5–10 million or includes institutional investors, the need for an internal finance hire becomes even more pressing.

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2. When Revenue Ramps Up: Scaling Financial Operations

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As your software company starts generating consistent revenue, the financial picture becomes more complex. With recurring revenue, customer contracts, and scaling expenses, managing cash flow and reporting becomes more demanding.

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Key signs it’s time to hire include:

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• More robust reporting needs: Monthly or quarterly financial statements become critical for tracking performance and making strategic decisions.
• Increased transaction volume: Processing higher volumes of invoices, payments, and payroll becomes a full-time job.
• Tax and compliance complexity: Growing revenue often brings new tax obligations, especially if you’re expanding into new states or countries.

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A dedicated finance professional ensures that these tasks are handled efficiently while helping you maintain a clear picture of your financial health.

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3. Other Factors to Consider

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While funding and revenue are the most common triggers, other factors might accelerate the need for a full-time finance hire, including:

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• Planning for an exit or acquisition: Advanced financial modeling and due diligence require dedicated expertise.
• Preparing for audits: If you’re dealing with grant funding, government contracts, or institutional investors, audit readiness becomes crucial.
• Managing complex budgets: If you’re juggling multiple product lines, cost centers, or partnerships, the financial oversight required may exceed what an outsourced partner can provide.

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The Role of Outsourced Accounting Services

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Even if you hire a full-time finance person, outsourced accounting services remain a valuable resource for many startups. They can supplement your team with specialized expertise, handle routine tasks like bookkeeping and payroll, and provide insights during the hiring process.

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At Startup Accountant, we often help founders bridge the gap between early-stage financial needs and the demands of scaling. Whether you’re looking to streamline operations before your first hire or need support alongside your growing finance team, we’ve got you covered.

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Conclusion

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There’s no one-size-fits-all answer to when a startup should hire a full-time finance person, but raising significant capital or seeing a ramp-up in revenue are clear indicators. Until then, outsourcing your accounting needs ensures that your financial foundation is solid and scalable.

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When you’re ready to hire, you’ll have the systems and processes in place to make the transition seamless. And as your business grows, having the right financial expertise—whether in-house or outsourced—will be a cornerstone of your success.

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Need help determining your next financial move? Contact Startup Accountant today to learn how we can help your software company navigate growth with confidence.