A checklist of all items outlined in this playbook. While there is so much more, this can be used as a starting point!
The Basics
- Choose a business structure - Recommended Delaware C-Corp if you are going to raise funding
- Choose a jurisdiction
- Incorporate online - Choose your name, registered, agent, get an EIN
- Create a virtual business phone number and mailbox
Issue shares
- It is best practices for venture backed startups to issue shares. The most common amount of shares is 10M at $0.0001 each. There is no right answer, this is just the most common. Most venture backed startups reserve 10-20% for employee option pools. Most venture backed startups require all founders and employees to create a 4 year vesting with a 1 year cliff. Read more here.
Exercise your options
- Why? - Long term capital gains.
File an 83b *VERY IMPORTANT*
- You have 30 days to file your 83b stock purchase notice with the IRS. No exceptions, no excuses. Don’t forget to send it certified mail, take a picture of the little green form and save it in your startup data room.
- Document here.
- You should have a dedicated business bank account and credit card, to separate personal from business expenses. If you do not you will run the risk of overpaying taxes, adding thousands of dollars of additional bookkeeping expenses, and waste your valuable time as a founder.
Register with your state
- A certificate of good standing is a legal document that confirms that your business is compliant with state regulations. In California for example, a certificate of good standing is known as a certificate of status.
- Recommended solutions
- Payroll is one of the few places where there are 100% guaranteed fines by the IRS. Under no circumstances should you, as a C-corp, just pay yourself by withdrawing funds from your bank account. Other legal structures can do owner withdrawals, but should be documented as such.
File with unemployment offices for each state where you have employees
- Every company in the US has to file taxes every year, regardless of whether or not they generated any revenue. The longer you wait, the most time consuming and expensive it is to clean up later - every dollar movement, from day one.