Post-Incorporation Checklist: What Now?

Start your business off strong with these 9 tasks

Post-Incorporation Checklist: What Now?

Congratulations on incorporating your new company! You’ve taken the first big step towards launching your startup. You might be thinking– what comes next? The following post-incorporation checklist summarizes the tasks that should be top priority.

Note: This article is directed at companies forming as corporations. However, much of this advice is broadly applicable to other entity types. With the exception of stock issuance, consider this a post-entity formation checklist.

Haven’t incorporated yet? Here’s an article to help you decide which business entity to form. Here’s an article on why Delaware is such a popular place to incorporate.

1. Complete Issuance of Founder’s Stock

One of the first tasks a Founder (or founders) must do is divvy up the ownership of the company. However the founders decide to split the company, it is documented through a series of purchase agreements.

It is important to handle the issuance of stock before business activities take off. When a company is just getting started, the equity can be issued at “nominal value” (next to nothing.) This is great for two reasons: First, this reduces the amount of money a founder will have to put up. Additionally, it can prevent a taxable event from issuing shares at below fair market value.

We recommend consulting legal counsel to prepare these documents. Improper drafting and documentation can lead to a host of headaches.

The various securities issued by a startup can be difficult to understand. We put together a helpful handbook to help startup founders and employees better understand their equity.

Don’t forget to file an 83(b) election!

If any of the founders or early employee’s equity is subject to vesting (which it should be!), they should consider filing an 83(b) election. This filing can greatly reduce the shareholder’s tax burden. It is important to remember that 83(b) elections must be filed within 30 days of the issuance of company stock.

2. Apply for an Employee Identification Number

An Employer Identification Number (EIN) functions as the social security number of a company. An EIN is required for tax purposes, as well as opening a bank account and hiring employees. Founders should take care to protect the EIN, as theft can pose serious security risks for the business.

Many companies will offer to file the necessary paperwork for you. Do not pay for this! An EIN can be easily obtained for free from the IRS’ website.

3. Open a Bank Account

Once you secure an EIN, you will be able to open a bank account for your business. There will be many expenses early on, and you will want these to be paid for out of a company account. Having a dedicated company bank account also helps preserve the limited liability protections afforded by most business entities.

While most of the legacy banks have accounts geared towards small businesses, several startup-focused banks have popped up over the past decade. Startup Founder Daily has had a very positive experience using Mercury.

4. Set Up A Data Room

You will have received several documents through the course of incorporating your company. These, and all future documents, should be kept in a well-organized data room.

Not only will this help keep your business affairs organized, it will also help if you plan to raise capital. When investors conduct due diligence, they will want to see your data room. It is important to make this process as frictionless as possible.

5. File State and Local Registrations

If you incorporated in a state other than where your business is located, you will likely need to register in the state you are conducting business. These filings, licenses, and registrations vary from state-to-state. So, it is important to determine what is needed.

If that all sounds overwhelming to you, there are a number of service companies that will complete these filings on your behalf. We trust Northwest Registered Agent LLC with our filings and registrations.

6. Get Insurance

As your business grows, you will want to ensure that you are protected. Early on, companies can often get by with basic general liability insurance. However, as a business grows, so does its insurance needs. From hiring employees to forming a board of directors, insurance can ensure that your assets are protected.

While there are hundreds of insurance companies, we recommend a broker well-versed in startups. We have found Embroker to be particularly beneficial for early-stage companies.

7. Set Up Website

Whether you are a product or service company, the modern startup needs to be online. Even a bare-bones landing page can help spread the word about what you’re building.

If you choose to go the landing page route, single-webpage platforms such as Carrd are a no-brainer. If you are looking for more complexity, there are a number of great options. We have had a great experience using WordPress with Hostinger for web hosting.

The latter examples require some technical skills. Luckily, there are many resources available to help you learn the basics. However, you may want to skip the learning curve and hire a designer. Marketplaces like Fiverr make the process easy.

Pro tip: Convey professionalism

When starting out, it may be tempting to stick with your “@gmail.com” personal email addresses. However, this can convey a sense of unprofessionalism to potential clients, customers and investors. Additionally, mixing business emails with personal emails can be chaotic and distracting.

For these reasons, founders should seriously consider setting up an email through their domain. Web hosts make it easy to set up a snazzy business email address.

Similarly, founders may want to consider setting up a business phone number. Companies such as OpenPhone accomplish this with a simple mobile application.

8. Get Ready to Start Hiring

As your prepare to hire your first employees, you will want to make sure you are complying with all relevant regulations. When making a new hire, you must first determine whether they are employees or independent contractors.

From there, you must set up basic payroll structures while complying with state and federal labor laws. While there are some great free resources that can help you through this process, many founders choose to outsource to third parties. Startup Founder Daily trusts Gusto with our payroll services.

9. Create a Cap Table

A capitalization table is a document that lists the ownership of the company. The “cap” table will list every shareholder, how many shares they own, and the respective ownership percentage. There are a number of equity management companies that can host your cap table. However, it begins as a simple Excel sheet at most startups.

This important document provides a snapshot of who owns your business. Additionally, the cap table is one of the first documents investors will want to see as part of due diligence.

Knocking out these tasks early on will ensure your company starts off strong.

This article is only intended for informational purposes and does not constitute legal advice. Every venture faces a unique set of circumstances. All information should be considered critically and a lawyer should always be consulted for company-specific issues.


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