Set up the business
Choose a legal structure and confirm its federal tax treatment. Determine whether you need an EIN, state tax registrations, and local licenses. An EIN identifies the business for federal taxes; it does not replace state formation or licensing.
Give every transaction a home
Open dedicated business accounts and choose a bookkeeping system. Save invoices and receipts as transactions happen. Track money you contribute or withdraw separately from customer revenue and operating expenses.
Plan before paying people
Review worker classification and payroll requirements before hiring. Record startup costs separately so their tax treatment can be evaluated. Build a calendar for income tax, payroll, and applicable state obligations.
A practical example
A new designer pays for a laptop, advertising, and a personal grocery trip on one card. Separating the grocery charge and documenting the business purchases now prevents confusion at filing time.
What to gather
- Formation documents and ownership details
- EIN confirmation and registration notices
- Startup receipts, bank statements, and equipment invoices
- Projected revenue, expenses, and hiring plans
Official references
General educational information, not individualized tax, legal, or investment advice. Federal rules are summarized; state rules and your circumstances may differ. Check the rules for your tax year before acting.