New Startup Checklist: What to Do after Formation
So you just sent in the paperwork to make your new business official. Now what?
Below are some of the common topics covered in an initial conversation with startup founders, although the list is certainly not exhaustive.
Founder Legal Documentation
Make sure that you appropriately document the issuance of equity to the founders. If you’ve formed a Delaware C-corp, that means issuing stock (most like restricted on a 4-year vesting schedule). If you’ve formed an LLC, the form will be restricted units.
If founder equity is subject to vesting, file 83(b)s with the IRS.
Opening a Bank Account
State legal filing: For most states, this is the Articles or Certificate of Incorporation for a corporate formation or Articles of Organization if you’re forming a limited liability company. If you’ve decided to form a Delaware C-corporation because you are a high-growth startup, don’t forget to also register with the state where you have your headquarters. For example, in North Carolina, you need to file an Application for Certificate of Authority, which gives a company the ability to conduct business (and have the benefit of limited liability protection) as a “foreign” corporation.
EIN# from IRS: This is your tax ID number, which you’ll need to open your bank account and use for tax filings.
Initial deposit: this is just the initial check you write to open the account. Typically, founder contributions are sufficient to meet whatever minimum opening balance requirements your bank might have.
3 Standard KEY SERVICE PROVIDERS
Legal
A business lawyer should help you understand the pros/cons of various business value choices. Ultimately, your startup lawyer should also give you peace of mind so you can sleep at night without worrying about whether you are in compliance with any of the variety of ways in which your startup interacts with the law as you grow. A few common topics early-stage startups have questions about are as follows:
o Help you hire properly
o Commercial space/leasing
o Trademark/IP issues
CPA/tax advisor
No big mistakes: taxes are boring. And complex. And BORING. Make sure you’ve got a solid CPA on your team so you don’t have to worry about whether your taxes are done correctly.
Taking advantage of the tax benefits of owning a business: owning a business can be difficult and stressful, but it does have tax advantages. Having a good business CPA will ensure you’re taking full advantage of savings within the boundaries of IRS guidelines.
Payroll/bookkeeping: manually calculating payroll is awful if you’re not trained as an accountant (and maybe even then…), but it’s important that you properly pay your employees and various tax agencies. Basic bookkeeping is also an exercise in guaranteed frustration so this may be one of the first business/operational tasks you decide to outsource.
Insurance
General liability: this is basic business insurance and is worth getting as baseline protection for your startup. Some customers or landlords may require specific coverage limits, so make sure you know how much coverage you need to be in compliance.
Workers’ comp: once your business hires employees, it’s time to get workers’ compensation insurance.
Cyber: if you store sensitive customer information or utilize the cloud for business information storage, cyber insurance may be an option that makes sense for your business.
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