Starting your own business can be daunting, especially if you don’t know where to start, or what to do first. Setting up a bank account, getting registered with the government, paying employees, and making sure you stay compliant along the way. This can be overwhelming (and it’s definitely not what you started your business to do!), so we’ve come up with a list of six basic things every company needs to do to get off the ground, to help you on your way.
EIN (Employer Identification Number)
An EIN, also known as a Federal Tax Identification Number, is used to identify a business entity. EINs are issued for the purpose of tax administration. Anyone who has started a new business or hired or will hire employees is required to have an EIN. Don’t worry, you can obtain an EIN for free from the IRS!
- How: You can obtain an EIN for free via the IRS website.
- What you’ll need: your SSN
SUI (State Unemployment Insurance)
Ensure that quarterly combined returns and unemployment insurance payments are credited promptly and accurately. You can’t set up payroll without this, unless you use a PEO (like Justworks). Need more information? You’re in luck, we walk you through Unemployment Insurance on our blog.
- How: Each state has its own requirements. For example, the New York State Employer Registration Unemployment Insurance, Withholding, and Wage Reporting (NYS100) is for businesses and household employers to register for an Employer Registration Number.
- What you’ll need: an e-mail address and your EIN.
Business Bank Accounts
If you co-mingle your personal and business finances, a court can potentially assess fines, as it looks like you and the corporation are one and the same. Using a separate business account makes it much easier come tax time, as you will need to file your business income and expenses separately from your personal transactions. Some banks will let you open a free small business account so make sure you look around before you sign up for anything.
- How: We like Nerd Wallet’s research on how to find the best free checking accounts by state.
- What you’ll need: Required to have a business name and an EIN number.
Workers’ Comp
Workers’ compensation insurance protects employers and employees against financial losses in the case of injury. Not carrying this insurance for employees is a crime and the business owner can be prosecuted for a misdemeanor or felony.
- How: Workers’ Compensation Board / Work Comp One
- What you’ll need: Name of Company and census data (salary, job type, location).
W-4 / I-9 / New Hire Reporting
Form I-9 is used for verifying the identity and employment authorization of individuals hired for employment in the United States. Both employees and employers (or authorized representatives of the employer) must complete the form. You may use the information on W-4 forms to submit your new hire reporting. All hired or rehired employees must be reported within the first 20 days of employment (date of hire is the first day). Failure to report new hires can result in a fine of $20x the number of employees that you failed to report.
- How: All 50 states can get this set up here.
- What you’ll need:employee name (first, middle initial, last)
- employee address (street, city, state, and ZIP code)
- employee social security number
- employee hire date
- employer name
- employer address (street, city, state, and ZIP code)
- employer identification number (assigned by the Internal Revenue Service)
- if dependent health insurance benefits are available to the employee and if so, the date the employee qualifies for the benefits
Hiring Contractors
As a business, you are required to file a 1099 at the end of each year for any entity that you pay over $600 in a calendar year. For more details, we have a great resource called Stop Wasting Time with 1099 to help!
- How: You’ll need to print and mail 1099-MISC forms to your vendors. Accounting software like Quickbooks can help with this. In addition, you’ll need to print a scan-able copy of each 1099 and submit to the IRS. You need to order these forms from the IRS, or purchase them from an office supply store.
- What you’ll need: Contractor name, address, birthdate, and Social Security number.
Once you have these things in place, you’re ready to start putting your employees (and contractors!) on the books and focus on the real reason you started your company. Don't want to deal with any of this? Sign up for Justworks, which automates everything we’ve just listed above for you (including the paying people part!).
Photo Credit: Startup Stock Photos