A Founder’s Roadmap to Your First Finance Hire for UK Startups

The Three Stages of a Startup's Finance Function

For many UK startup founders, the title of 'Chief Everything Officer' is an uncomfortable reality. You are focused on building a product, finding customers, and managing a growing team. Finance often becomes a stressful, after-hours task managed with Xero and a collection of spreadsheets. This approach works for a while, but critical questions soon emerge. When do you need a proper finance team? How do you avoid wasting precious runway on the wrong hire, or worse, facing HMRC penalties for mismanaging compliance? Operating without clear financial oversight turns key decisions about burn rate and fundraising into high-stakes guesswork. This roadmap provides a clear, stage-by-stage guide for when to hire a finance team for your UK startup, ensuring you make the right hire at the right time. See the Building Your Finance Team hub for broader sequencing.

The evolution of a startup's finance team is not random; it follows a predictable path that can be broken down into three distinct stages. Understanding this progression helps you anticipate needs and match the right skills to your company’s immediate challenges. The journey moves from basic compliance to operational insight, and finally to strategic foresight. Each stage solves a different core problem. Hiring out of sequence is one of the most common and costly mistakes we see early-stage companies make. This framework provides clarity on the first finance hire and beyond.

Stage 1: When to Hire a Bookkeeper for Compliance and Control

This initial stage is characteristic of Pre-Seed and Seed startups, which typically have under £1M in revenue and a headcount of fewer than 20 people. At this point, the founder is managing the books, usually with software like Xero. The primary goal is simple: keep the company compliant and ensure bills are paid. The financial setup is reactive, designed to meet basic statutory obligations rather than provide proactive insight.

Key Triggers for Your First Finance Hire

The critical question is when a founder should stop doing the bookkeeping. There are clear business triggers that signal the administrative burden has become too great and the compliance risk is too high. Ignoring these signals can lead to errors, missed deadlines, and financial penalties.

The most significant trigger in the UK is approaching the VAT registration threshold. The UK VAT registration threshold is £85,000 turnover in a 12-month period. Once you cross this, you must register for, charge, and remit Value Added Tax to HMRC. This process adds significant complexity and risk to your financial operations. A scenario we repeatedly see is founders missing this trigger and facing penalties for late registration and filing.

Another clear signal is when you are running payroll for 5+ employees to manage PAYE, pensions, and benefits. This administrative burden is substantial and requires specialist knowledge to execute correctly. As your team grows, so does the complexity of deductions, auto-enrolment pension contributions, and benefits administration. At this point, the founder’s time is unequivocally better spent on growth activities, not financial administration.

The Right Hire: Outsourced Bookkeeper or Accounting Firm

The right move here is not a full-time hire. The most capital-efficient solution is to outsource to a modern accounting firm or a freelance bookkeeper. Their role is to record the past accurately and ensure you meet all your compliance obligations. See our Bookkeeper Job Description for SaaS Startups for the typical scope and skills we expect at this stage.

A good outsourced bookkeeper will typically handle:

• Bank and credit card reconciliations in Xero.
• Managing and filing quarterly VAT returns.
• Processing monthly payroll, including pensions and PAYE submissions.
• Ensuring you meet statutory deadlines for Companies House.
• Maintaining clean and organised financial records.

This step is about building a clean, reliable foundation of financial data. It frees you from time-consuming administrative work and, most importantly, mitigates the growing risks of non-compliance.

Stage 2: Hiring a Financial Controller to Build Insight

As a startup grows from the Seed to Series A stage, typically corresponding to £1M to £10M in revenue and a 20-75 person headcount, its needs evolve. Basic compliance is no longer enough. Investors, department heads, and the leadership team need to understand *why* financial results look the way they do. The pain point shifts from compliance to a lack of insight. Your collection of spreadsheets becomes brittle, and the finance function must transform from a reactive record-keeper to a proactive source of business intelligence.

Key Triggers for Hiring a Financial Controller

The trigger for your first in-house finance hire is the need for reliable management accounts and predictable financial processes. You need to move beyond simple bookkeeping to generating real financial insight for decision-making. Department heads start asking for budgets, investors demand detailed SaaS metrics, and you need to forecast cash flow with confidence. When spreadsheets feel like they are holding the business together, it is time to professionalise your operations.

This is the time to hire your first in-house finance professional: a Financial Controller. The distinction is critical: a bookkeeper records the past, while a controller analyses the present and builds robust systems for the future.

Financial Controller Responsibilities

A Financial Controller’s core responsibility is to own the financial engine of the business. The reality for most Series A startups is they need someone to professionalise their financial operations. Their duties include:

• Managing the outsourced bookkeeper or bringing the function in-house.
• Implementing a structured and timely month-end close process.
• Producing monthly management reports, including a P&L, balance sheet, and cash flow statement.
• Performing variance analysis to explain performance against budget or forecast.
• Optimising the finance tech stack, which often includes tools like Xero, Pleo/Spendesk, and Stripe, to ensure data flows efficiently and accurately.

Crucially, a good Financial Controller gets the company 'due diligence ready'. They create the clean, auditable, and well-documented financial records that investors expect to see. This builds credibility and significantly de-risks future fundraising rounds. With a typical salary for a Financial Controller at £70k, this is a significant investment. For companies not yet ready for a full-time commitment, a fractional controller can provide this expertise for a few days a month.

Stage 3: When Your UK Startup Needs a Strategic CFO

For companies scaling to Series B and beyond, with revenues exceeding £10M and a team of over 75, the nature of financial leadership changes again. The focus shifts from internal process to external strategy. The business is now complex enough to require a senior leader who can act as a strategic partner to the CEO and the board. Key decisions might involve M&A, international expansion, or navigating complex debt and equity financing structures.

Key Triggers for Hiring a CFO

The clear trigger for hiring a CFO is reaching a scale of £10M+ ARR or 75+ employees. At this scale, the business needs a forward-looking finance leader to guide its long-term growth. The Financial Controller ensures the engine is running smoothly; the Chief Financial Officer (CFO) decides where the vehicle is going. A Controller is internally focused, while a CFO is externally focused, managing investor relations, strategic capital allocation, and long-range planning.

Controller vs CFO Responsibilities

While the Controller focuses on historical accuracy and process efficiency, the CFO focuses on future growth and strategy. Their responsibilities are fundamentally different.

A strategic CFO typically owns:

• The long-term financial model and strategic planning process.
• Leading fundraising negotiations and managing investor relations.
• Managing banking relationships and optimising the company's capital structure.
• Providing strategic input on all major business initiatives, such as pricing, M&A, and international growth.
• Building out the entire finance team structure for the scaling startup.

The right CFO adds immense value by shaping the company's growth trajectory and building investor confidence. This level of strategic expertise comes at a cost, as a typical salary for a strategic CFO is £150k+. For startups approaching this stage but not yet ready for the full-time salary, a Fractional CFO is an excellent bridge. A Fractional CFO typically provides support for 2-4 days a month, offering board-level strategic guidance on fundraising, unit economics, and planning without the full-time overhead.

Your Startup Finance Hiring Guide: A Summary

Building your startup finance team is a journey, not a single event. The key is to match the hire to your company's current stage and most pressing problem. Hiring a £150k CFO when you simply need clean bookkeeping is a catastrophic waste of runway. Conversely, relying on a bookkeeper to create a Series B financial model is a recipe for failure. The correct sequence and timing are paramount.

Pre-Seed and Seed Stage (< £1M ARR)

At this stage, your key problem is being overwhelmed by compliance and administration. Your primary need is to avoid HMRC penalties and free up your time. The right hire is an outsourced bookkeeper or a modern accounting firm who will ensure your VAT, payroll, and statutory filings are handled correctly.

Seed to Series A Stage (£1M-£10M ARR)

Your challenge now is a lack of reliable insight for decision-making. You need accurate management accounts and robust processes. The right hire is a Financial Controller, either fractional or full-time, who will professionalise your financial operations and get the company ready for due diligence.

Series B and Beyond (> £10M ARR)

As you scale, you require strategic and fundraising leadership. Your business complexity demands a forward-looking partner for the CEO. The right hire is a Chief Financial Officer (CFO), either fractional or full-time, who will own the long-term financial strategy and manage investor relations.

This progression illustrates the core principle: the role of finance evolves from historical recording (Bookkeeper), to present-day analysis (Controller), to future strategy (CFO). By understanding these distinctions, you can build a robust finance function that supports, rather than hinders, your company’s growth.

Next Steps

Assess where your startup sits today. Are you struggling with VAT returns and payroll, or are you trying to build a five-year financial model for your board? Identify your most significant financial pain point and use the framework above to determine the appropriate next step. For many, the most pragmatic and capital-efficient path is to engage outsourced or fractional support first. This allows you to access the right level of expertise precisely when you need it, building a world-class finance function one deliberate step at a time. Continue your research at the Building Your Finance Team hub.

Frequently Asked Questions

Q: What is the difference between an accountant and a bookkeeper for a startup?
A: A bookkeeper is responsible for recording daily financial transactions, such as sales, purchases, and payments. An accountant typically takes this data to prepare financial statements, file tax returns, and provide higher-level analysis. For early-stage UK startups, an outsourced firm often provides both services.

Q: Can my office manager handle early-stage bookkeeping?
A: While tempting, this is generally not advisable. Proper bookkeeping requires specific knowledge of UK accounting standards, VAT rules, and payroll regulations. Errors can lead to significant HMRC penalties. It is safer and more efficient to use a professional with dedicated expertise, even on a part-time basis.

Q: How does a Fractional CFO differ from an interim CFO?
A: A Fractional CFO provides ongoing, part-time strategic support (e.g., 2-4 days a month) over a long period. They are a long-term strategic partner. An interim CFO is typically a full-time, temporary replacement who steps in to cover a gap, such as when a full-time CFO leaves suddenly.

Q: At what point should our UK startup switch from Xero?
A: Xero is highly effective for most startups up to the Series B stage. Triggers for considering a more advanced ERP system like NetSuite include complex multi-entity consolidation (e.g., international subsidiaries), advanced revenue recognition needs under FRS 102, or highly specific inventory management requirements.