Well, maybe not today, but certainly within the next month.
- Get an Employer Identification Number (EIN) from the IRS. You have an SSN – this is the corporate equivalent. Get it here https://sa1.www4.irs.gov/modiein/individual/index.jsp
- Register your business with your State’s DOR. Most states require you to file and pay taxes and unemployment insurance online.
- Understand your Secretary of State filing requirements. And you may have more than one Secretary of State filing if you incorporated in one state, such as Delaware, and are physically located in another state.
- If you are selling stuff, understand that you may need to charge sales tax. Forty-five states, DC and Guam have sales tax and each have very different, unique rules. Also, some states may have the “Amazon” tax, whereby online retailers need to charge sales tax even though they have no physical presence in the state.
- Know which workers are independent contractors and which workers are employees. The IRS slap you really hard when you get caught “pushing the envelope” with independent contractors. If you have employees, you need Workers’ Comp insurance. NEVER PAY ANY WORKER UNDER THE TABLE.
- If you have employees, engage a payroll service, such as MassPay (ADP and Paychex are good but overkills for startups) and use their tax service to file and pay your payroll taxes.
- Open a business bank account and pay all of your bills from this account and make all of your deposits into this account. If you are running a payroll, open an additional checking account and ensure “Payroll Account” is somewhere in the name of the account (it is an IRS thing).
- Buy QuickBooks Pro and figure out how to use it. It is not difficult. Do not buy any of the QuickBooks’ industry specific products and definitely do not sign up for QuickBooks Online. As good and inexpensive QuickBooks Pro is, these other QuickBooks’ products are the opposite.
- If you want a business credit card, read the fine print – you are signing personally, even though the business’ name is on the card. It is a real horror story when you leave the business, do not cancel the cards and the business does not pay the bill. The credit card company, especially AMEX, will aggressively come after you.
- Set up a Stock Plan to legally and tax-efficiently compensate workers, consultants and directors with stock options or restricted stock grants. The plan should hold about 15%-20% of the outstanding equity of the business on a fully-diluted basis. Engage a lawyer who is familiar with these plans, as there can be several legal and tax pitfalls and these plans have many moving parts.
Now smile. It does not get better than this. Even if grow this business into a mega-corporation, there is no more fun than starting a business and setting it up properly. Good luck.
IRS Circular 230 Disclosure
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this document is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter that is contained in this document.