New Business Structuring Checklist

Use Practice Ignition or your firm's template to lock fee structure (fixed-fee vs. hourly), deliverables (entity formation only vs. ongoing bookkeeping), and start date. Scope creep on formation engagements — "while you're at it, can you do my 401(k)?" — kills realization, so flag change-orders explicitly.

Walk the client through the trade-offs: sole prop (no liability shield, Schedule C), single-member LLC (disregarded by default, optional S-corp election), multi-member LLC (1065 partnership), S-corp (1120-S, reasonable comp required), C-corp (1120, double tax but QSBS opportunity). Document the recommendation in a memo for the file in case a future audit questions the choice.

Default is forming in the state of operations. Delaware or Wyoming makes sense for VC-backed C-corps; otherwise the foreign-qualification cost in the operating state usually outweighs the benefit. Confirm franchise tax exposure (CA $800 minimum, DE annual report) before recommending.

File articles of organization (LLC) or articles of incorporation (corp) through the state portal. Designate a registered agent — the client's home address is fine but creates a public record; many firms use Northwest or Harbor Compliance to keep the address private.

For multi-member LLCs and corps, route to outside counsel — drafting governing documents is the practice of law in most states. For single-member LLCs, the state's template plus the firm's standard rider is usually sufficient. Capture capital contributions, profit/loss allocations, and buyout provisions.

Required when the client operates under a name different from the legal entity name. Filing is at the county or state level depending on jurisdiction. Banks will not open an account under a trade name without the recorded DBA certificate.

City business license, county license, and any industry-specific permits (food service, contractor, professional). Most cities require renewal annually with gross-receipts reporting; calendar the renewal date now.

Apply via SS-4 online at IRS.gov for instant assignment (US-based responsible party with SSN/ITIN). Save the CP 575 confirmation letter to the client folder — banks and payroll providers require it. Foreign responsible parties must fax SS-4 and wait 4–6 weeks.

Must be filed within 2 months and 15 days of the start of the tax year for which the election is to take effect. All shareholders must sign. Late elections can be cured under Rev. Proc. 2013-30 — file with reasonable cause statement attached. Confirm state-level S-corp election separately (some states require their own form).

Register in the home state if the client sells taxable goods or services. Pull the post-Wayfair economic-nexus thresholds for any state where the client expects to cross $100K or 200 transactions in year one. Avalara or TaxJar handles multi-state filers cleanly.

Required for federal payroll tax deposits (941/940) and quarterly estimates. Enrollment PIN arrives by mail in 5–7 business days. Do this early — late deposits trigger 2%/5%/10% penalty tiers depending on lateness.

Bank requires articles, EIN letter, operating agreement, and beneficial-ownership disclosure (FinCEN BOI rule). Recommend separate accounts for operating, payroll, and tax reserves. Commingling personal and business funds is the fastest way to pierce the LLC liability shield.

Set the fiscal-year start, accounting method (cash vs. accrual — most SMBs cash, switch to accrual at $27M gross receipts threshold), and base currency. Connect the firm as Accountant User so review and adjusting entries flow through the firm's portal.

Start lean — 40–60 accounts for an SMB is plenty. Use class tracking, locations, or customer dimensions for slicing rather than spawning new GL accounts. A bloated 800-account COA is the #1 reason close cycles balloon. Map to the tax return lines so year-end mapping is clean.

Connect the operating account, credit cards, and payment processors via Plaid. Set up Hubdoc or Dext for receipt capture, and write categorization rules for the top 10 recurring vendors. Without rules, every transaction becomes a partner question and dumps into Ask My Accountant.

If the client is an S-corp owner-operator, reasonable comp rules require running themselves on payroll even with no other employees. 1099 contractor relationships should be vetted against the IRS 20-factor test before assuming non-employee status — misclassification triggers back FICA, FUTA, and penalties.

Gusto, Rippling, or ADP Run for SMB. Provider needs EIN, state tax IDs, bank account for ACH debits, pay schedule, and W-4/I-9 for each employee. Confirm workers' compensation coverage is bound before the first payroll run — most states require it from day one of employment.

Each state where employees work requires its own withholding and unemployment insurance account. Remote employees in different states multiply this fast — a 5-employee company in 5 states means 10 registrations. Most payroll providers can register on the client's behalf for an additional fee.

The firm's WISP (required by IRS Pub 4557 for paid preparers) extends to client engagements that handle SSNs and financial data. Confirm encrypted file exchange (SmartVault, ShareFile, TaxDome), secure email, and document the client's MFA on QBO and bank logins. State data-breach laws (MA 201 CMR 17, NY SHIELD, CA CCPA) layer on top.