Starting your own business is one of the most exciting things you’ll ever do. You’ve got your big idea, maybe even your first customer, and you’re ready to change the world! But before you can grow your dream, there’s something every founder needs to do, get the boring (but super important) stuff right: your business setup and taxes.
Don’t worry, this checklist will help you go step by step, from registering your company to staying on the right side of the IRS.
1. Choose the Right Business Structure
Your first task is to decide what type of company you want. This choice affects your taxes, legal protection, and how investors see your business.
Here are the main options:
- LLC (Limited Liability Company) – simple, flexible, and great for small startups.
- S-Corporation – helps you avoid double taxation if you meet the requirements.
- C-Corporation – perfect if you plan to raise money from investors.
Many founders register in Delaware because it’s business-friendly, but your choice depends on where you are and what you plan to do. Once you pick, it’s hard (and costly) to change later — so choose carefully!
2. Register Your Company and Get an EIN
Once you’ve decided on your structure, it’s time to make it official. You’ll need to register your business with your state and get an Employer Identification Number (EIN) from the IRS. Think of it as your company’s ID number for taxes.
You can find helpful tools and guides at EIN Search to make the process quick and easy.
With your EIN, you can open a business bank account, hire employees, and file your taxes properly. It’s one of the first real steps toward becoming a real business owner.
3. Keep Your Finances in Order
Good bookkeeping is the secret to staying sane as your startup grows. From the very beginning, track every cent coming in and going out.
Here’s what to do:
- Use accounting software like QuickBooks or Xero.
- Keep business and personal money separate.
- Save receipts and invoices.
- Set up a payroll system if you hire people.
When your books are clean, tax season won’t be a nightmare. Plus, you’ll always know how your business is really doing.
4. Know Your Taxes (Before They Surprise You)
Taxes are part of every founder’s life — and it’s better to understand them early. Depending on your business, you might have to pay:
- Income tax (federal and state)
- Payroll taxes if you have employees
- Sales tax if you sell goods or services
- Annual or franchise fees depending on your state
Each state has different rules, so double-check yours. Missing deadlines or payments can lead to big fines — and nobody wants that!
5. File the Right Forms on Time
The IRS loves its forms, and you’ll get to know them well.
Here are some key ones to remember:
- Form 1120 – for corporations.
- Form 1120-S – for S-corps.
- Schedule C or Form 1065 – for LLCs.
- Forms 941, 940, W-2, and 1099-NEC – for payroll and contractors.
Mark your calendar for deadlines or work with an accountant who knows startups. Submitting the right forms on time keeps you safe from penalties and stress.
6. Plan Ahead and Save on Taxes
When you have the fundamentals at your fingertips, it is time to be smart.R&D tax credits (assuming you are developing new products) can also save startups money or provide a tax deduction that can be carried forward in the future.
When you recruit remote workers, or add new states, examine new tax regulations, you may pay taxes in two or more locations.You should also have your financial records at hand so that people who come knocking in the door are investors or auditors.
Conclusion
Starting a business requires courage, innovation and some paperwork! From picking your business structure to staying compliant with the IRS, each step makes your company stronger and more professional.
Compliance is your safety net, it saves you, establishes trust with the investors and enables your business to expand easily.Therefore, take that list, mark all the steps, and make your dream of a startup come true, in the proper manner.
