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https://github.com/leonar15/startup-checklist

A checklist for incorporation so you can get back to building your product, fundraising, etc.
https://github.com/leonar15/startup-checklist

bizdev california delaware founders foundersandcoders incorporation incorporation-documents irs startup startups

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A checklist for incorporation so you can get back to building your product, fundraising, etc.

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# Startup Incorporation Checklist

#### How to bootstrap a Delaware C-corp (or S-corp) with employee(s) in California



**Disclaimer:** I am not a lawyer (IANAL). This list is intended as a learning tool and you should *definitely* consult with a lawyer if you have any questions or concerns. This is a work in progress, so suggestions and pull requests are welcome! 



[![PRs Welcome](https://img.shields.io/badge/PRs-welcome-brightgreen.svg?style=flat-square)](http://makeapullrequest.com)



##### Intro

Other than building a product people want, incorporating a new business is essential to raising money, opening a bank account, and creating a legal entity for contracts and other liabilities. For technical folks like me, it's the "necessary evil" of founding a company and just needs to get done. Having gone through this recently, I made a checklist in case I'd have to do it again in the near future. Why you should incorporate in DE is outside the scope of this article, but [other folks have written good answers](https://www.quora.com/Why-do-most-technology-startups-incorporate-in-Delaware).



Some notes:

- The full process will take several weeks to complete

- Most steps are sequential and depend on an earlier step being complete

- Many steps require the use of snail mail or a [fax machine](#tools)

- For brevity, Delaware and California are shortened to *DE* and *CA*

- Again, consult your lawyer. Some will defer fees for startups



# The checklist

#### Register with Delaware

- [ ] Choose a name for your business and check that it's available. [DE Name Search](https://icis.corp.delaware.gov/Ecorp/EntitySearch/NameSearch.aspx) & [CA Name Search](https://bizfileonline.sos.ca.gov/search/business). In DE a name can be reserved without registering it, so check [DE Name Reservations](https://icis.corp.delaware.gov/Ecorp/NameReserv/NameReservation.aspx) as well.

- [ ] Generate incorporation documents and sign them [[free document service]](#free-tool1)

- [ ] Buy registered agent service in DE - **1 yr Free**

- [ ] File incorporation docs with DE - **~$150 including fees for 1 week service**

  - You can do this yourself, but it will probably take longer and not save you much money



#### First steps with the IRS

- [ ] Apply for a Federal Employer Identification Number (EIN) - **Free**

  - [IRS info & form](https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online)

  - Expect the IRS to mail you a document containing your *EFTPS Pin*. This allows you to pay federal taxes electronically

- [ ] *(for founders with stock vesting)* File 83b election within 30 days of stock grant

  - reference: https://www.irs.gov/irb/2012-28_IRB/ar12.html

  - example letter: http://accountalent.com/83b-elections-for-dummies/

  - include 2 extra signed copies and self-addressed stamped return envelope

- [ ] *(only for S-corp)* File IRS Form 2553 to convert C-corp to S-corp

  - [IRS Form 2553](https://www.irs.gov/pub/irs-pdf/f2553.pdf)



**NOTE:** Most of the following steps require a valid U.S. checking account and the steps above allow you to open an account. This is probably the best time to do so.



#### Register with California

**NOTE:** This section applies to companies that are doing business or have employees in CA - similar requirements apply for other states. Many steps require registration via the [CA Secretary of State bizfile system](https://bizfileonline.sos.ca.gov/).



- [ ] Order certified copy of *Certificate of Good Standing* from DE - **$50**

  - **June 2022 note:** According to [a contributor's experience](https://github.com/leonar15/startup-checklist/issues/17), DE is experiencing a backlog on certificate requests & they suggest an upgrade to *"Same Day"* filing speed

  - Use the [DE Document Upload Service](https://icis.corp.delaware.gov/ecorp2/) (only available on [weekdays](https://corp.delaware.gov/document-upload-service-information/)) to request a Certificate. [more info](https://corp.delaware.gov/directweb.shtml)

  - Or, find [an agent with online access](https://corp.delaware.gov/remoteagts.shtml)

- [ ] Sign up for Registered agent service in CA **1 yr free**

- [ ] Sign up for an account with the CA bizfile system. [bizfile registration form](https://idm.sos.ca.gov/signin/register) **free**

- [ ] Register your *foreign entity* with CA Secretary of State - **$100**

  - Fill out and eFile [Registration - Out-of-State Corporation - Stock](https://bizfileonline.sos.ca.gov/forms/business) **OR** mail [CA form S&DC - S/N](http://bpd.cdn.sos.ca.gov/corp/pdf/foreign/s&dc-sn.pdf)

  - Make sure **NOT** to include mailing address for registered agent

  - Include *DE Certificate of Good Standing* with mailed form

- [ ] *(optional for solo founders)* Exclude yourself from paying SDI taxes 

  - [CA form DE459](http://www.edd.ca.gov/pdf_pub_ctr/de459.pdf)

- [ ] Within 90 days of CA registration, file Statement of Information (SI-550) - **$25**

    - eFile [CA Form SI-550](https://bpd.cdn.sos.ca.gov/corp/pdf/so/corp_so550_112021.pdf) via [CA Secretary of State website](https://bizfileonline.sos.ca.gov/search/business)

    - *if multiple directors*, also attach [CA Form SI-550A](http://bpd.cdn.sos.ca.gov/corp/pdf/so/si-550a.pdf) if sending by mail



  

#### Set up payroll tax payments with IRS and CA

- [ ] Sign up to make IRS payroll tax payments electronically - **Free**

  - Enroll via phone call to IRS 1-800-555-3453 

    - have your EFTPS Pin and checking account info handy

    - be prepared to write down *enrollment number*

  - Set password via [EFTPS password form](https://www.eftps.gov/eftps/login/forgotPassword)

  - Confirm enrollment via [EFTPS login form](https://www.eftps.gov/eftps/login/loginInitial)

- [ ] Register with CA Employment Development Department (CA EDD) as an Employer - **Free**

  - [CA EDD Enrollment](http://www.edd.ca.gov/Payroll_Taxes/e-Services_for_Business.htm)

- [ ] Sign up with Social Security Business Services - **Free**

  - guide: https://support.waveapps.com/hc/en-us/articles/208623366-Social-security-business-services-online-SS-BSO-registration-guide

  - form: https://www.ssa.gov/bso/bsowelcome.htm



## Recurring items



- [ ] *varies* File and pay CA payroll taxes

  - *quarterly* eFile [CA Form DE9](https://www.dir.ca.gov/dlse/regulation_detail/DE9rev1.pdf) & [CA Form DE9C](https://www.dir.ca.gov/dlse/regulation_detail/DE9C.pdf)

  - File forms via [CA EDD website](https://eddservices.edd.ca.gov/tap/secure/eservices)

- [ ] *varies* File and pay Federal payroll taxes

  - Mail or eFile federal tax form (Medicare, Social Security, Federal Income Tax) [(reference)](https://www.irs.gov/taxtopics/tc757.html) [(eFile tool)](#tool3)

    - *quarterly* use [IRS Form 941](https://www.irs.gov/pub/irs-pdf/f941.pdf) [(instructions)](https://www.irs.gov/pub/irs-pdf/i941.pdf)

    - *yearly* use [IRS Form 944](https://www.irs.gov/pub/irs-pdf/f944.pdf) [(instructions)](https://www.irs.gov/pub/irs-pdf/i944.pdf)

  - Pay via [EFTPS website](https://www.eftps.gov/eftps/index.jsp)

- [ ] *yearly* File federal tax return

  - *(S-corp only)* File [IRS Form 1120S](https://www.irs.gov/pub/irs-pdf/f1120s.pdf) ([instructions](https://www.irs.gov/pub/irs-pdf/i1120s.pdf))

  - *(C-corp only)* File [IRS Form 1120](https://www.irs.gov/pub/irs-pdf/f1120.pdf) ([instructions](https://www.irs.gov/pub/irs-pdf/i1120.pdf))

  - *(LLC-only)* depends on ownership structure, but partnerships must distribute [IRS Schedule K-1](https://www.irs.gov/pub/irs-pdf/f1065sk1.pdf) to each owner

- [ ] *yearly* File federal unemployment tax (FUTA) return 

  - File [IRS Form 940](https://www.irs.gov/pub/irs-pdf/f940.pdf) ([instructions](https://www.irs.gov/instructions/i940))

- [ ] *yearly* File DE annual report and pay franchise tax **>= $450**

  -  https://corp.delaware.gov/paytaxes/

- [ ] *yearly* File CA statement of information **$25**

  - File [CA Form SI-550](https://bpd.cdn.sos.ca.gov/corp/pdf/so/corp_so550_112021.pdf) via [CA Secretary of State website](https://bizfileonline.sos.ca.gov/search/business)

- [ ] *yearly* File CA tax return **>= $800**

  - *Note:* First year loss might waive $800 minimum [[ref]](http://www.taxes.ca.gov/corps.shtml)

  - *Note 2:* COVID-19 Relief Bill waives $800 minimum for companies formed between Jan 1, 2021 and Dec 31, 2023 for first taxable year [[ref]](https://www.nolo.com/legal-updates/california-extends-first-year-800-minimum-franchise-tax-exemption-to-llcs-lps-and-llps.html)

  - File and pay via [CA Franchise Tax Board (FTB)](https://www.ftb.ca.gov/pay/payment-options.html)

- [ ] *yearly* Send W2 to employees [(eFile tool)](#tool3)

- [ ] *yearly* File W3 with IRS

- [ ] *yearly* Send 1099 to contractors, lawyers, et. al. [(eFile tool)](#tool3)



## Customer-facing documents

- [ ] Generate a *Terms of Service* [(free document generator)](#free-tool6)

- [ ] Generate a *Privacy Policy* [(free document generator)](#free-tool6)



## Tools & References

### Free or mostly-free tools

1. [Founder's Workbench](https://www.foundersworkbench.com/toolbox/document-driver) - generate incorporation documents

2. [FreeRegisteredAgent](http://www.freeregisteredagent.com/delaware/registered-agent-service/) - one year of free registered agent service in DE and/or CA

3. [HelloFax](https://www.hellofax.com?ref=43d04ff4&s=F) - send faxes without a fax machine

4. [Wave](https://www.waveapps.com/) - free accounting software, with extra services for a $fee

5. [Cooley GO Document Generators](https://www.cooleygo.com/documents/index-document-generators/) - free incorporation package, early-stage financing documents and other common documents needed by startups.

6.  [Termly](https://termly.7zqw8y.net/termly) - free [privacy policy](https://termly.7zqw8y.net/termly-privacy-policy-generator) and [terms of service](https://termly.7zqw8y.net/termly-terms-generator) generators



### Non-free tools

1. [Clerky](https://www.clerky.com/offerings#company-formation) - software to handle the complete set of company formation paperwork online (incorporation, appointing directors and officers, issuing stock, protecting IP, etc.)

2. [Stripe Atlas](https://stripe.com/atlas) - like Clerky, handles most of the company formation paperwork, it will also automatically setup a bank account with SVB as well as a Stripe account

3. [InCorp](http://www.freeregisteredagent.com/delaware/registered-agent-service/) - will file DE incorporation papers quickly on your behalf for ~$150, including state fees

4. [Tax1099](https://www.tax1099.com) - e-file federal tax forms (e.g. tax return, 1099, W2, etc), small fee per form

5. [Intuit 1099 service](https://iop.intuit.com/welcome/1099.jsp) - generate and e-file 1099 forms, small fee per form 

6. [VirtualPostMail](https://www.virtualpostmail.com/) - virtual mailbox for real mail. Good for nomadic workers and short-term offices. Also offers free registered agent in CA with paid plan



### References

* **Q:** Choosing between C-corp, S-corp, and LLC? [Answer](http://www.obliviousinvestor.com/llc-vs-s-corp-vs-c-corp/)

* **Q:** Why incorporate in DE? [Answer](https://www.quora.com/Why-do-most-technology-startups-incorporate-in-Delaware)

* **Q:** What should I look for in a startup lawyer? [Answer](https://www.cooleygo.com/choosing-a-lawyer-for-your-startup/)

* **Q:** What is a public benefit corporation and is it right for my company? [Answer](https://www.cooleygo.com/delaware-public-benefit-corporation-is-it-right-for-you-a-five-part-test/)



## Known unknowns

- Sales taxes

- Liability insurance

- Start using bookkeeping software right away to track expenses, income, etc. Lots of free/affordable options