Congratulations, you’ve crossed a significant milestone: incorporation of your startup.

Armed with your certificate of incorporation, you're now poised at the beginning of your entrepreneurial journey.

Below is a comprehensive guide of nine crucial steps to assist you in navigating through the post-incorporation landscape. Let’s get started!

Issue founder shares

If you’re incorporating an incorporation, this is the time to issue shares to founders (and any other relevant stakeholders). This crucial step requires approval from the board of directors to ensure compliance and promote transparency.

Acquiring shares can involve simple methods of payment, like writing a cheque, especially when a corporate bank account hasn't been established yet. 

It's essential to complete this step as soon as possible due to IRS regulations. According to valuation guidelines, a startup's stock value should reflect its fair market value at the time of the equity award. Issuing equity shortly after incorporation enables founders to receive shares at a lower price.

Founders must secure common stock purchase agreements endorsed by the board of directors to validate their investment. 

File an 83(b) election

83(b) elections provide an opportunity to designate how profits from potential future sales of these shares are viewed by the Internal Revenue Service (IRS).

If you elect to file an 83(b) election, you’ll pay taxes on your equity when you receive it instead of paying when it vests. This could lead to substantial tax savings if your valuation increases in the intervening period. Click here to learn more about 83(b) elections.

This document must be filed with the IRS within a relatively stringent time frame — no more than 30 days after the share purchase.

In the past, founders were required to submit these forms through the post. This could have been time-consuming and left room for potential errors and lost mail.

However, these hassles have been mitigated due to progressive changes initiated by the IRS. The 83(b) election can now be submitted electronically, reducing the possibility of error, speeding up the procedure, and making it easier to track. 

Establish a document repository

Every startup needs a document repository. All essential records that help maintain transparency and traceability in business dealings should be stored in your repository.

Online storage platforms provide a flexible and easily accessible space to store, track, and manage legal documents. They offer valuable options for startups needing an immediate and temporary solution before moving towards more specialized software.

However, it's imperative to remember the importance of maintaining organization within this repository. 

A systematic arrangement of documents aids in easily locating specific legal agreements when needed. The necessity for this becomes evident during investor due diligence. It is typical for potential investors to request access to inspect the repository. A well-maintained document repository can streamline this information-sharing process. A poorly maintained or organized repository can spell disaster.

Acquire an Employer Identification Number (EIN)

An Employer Identification Number (EIN) is a critical requirement for all businesses.

Failure to obtain an EIN from the IRS can lead to significant complexities and challenges during the management of necessary business functions. A valid EIN is required for completing several crucial processes, such as:

• Setting up a bank account: A business bank account is mandatory to manage finances professionally and maintain clear records. Banks typically require an EIN to establish an account under the company's name. However, we can set you up with a business bank account while you wait for your EIN if you incorporate with Firstbase.
• Procuring a corporate card: To allocate expenses and control expenditures, a corporate card is essential. EIN is a prerequisite for obtaining such credit facilities.
• Hiring employees: As a startup prepares to expand and hire team members, having an EIN is necessary to facilitate and streamline payroll and tax compliance.
• Submitting annual corporate income tax returns: Lastly, an EIN is indispensable for filing yearly income tax returns for the company, ensuring compliance with tax regulations.

Procuring an EIN is of paramount importance for a startup, providing a unique identifier and supporting the execution of numerous indispensable tasks.

Establish a business bank account

Opening a dedicated business bank account helps maintain a clear distinction between personal finances and business transactions.

The primary benefit of a separate business account lies in the protection against personal liability for any business-related debts. In the event of financial difficulties or legal disputes, your personal assets are safeguarded from claims or potential issues that may arise due to the business's performance.

Setting up a business bank account is a relatively straightforward process, usually involving the following steps:

• Select a suitable banking institution based on your startup's financial requirements and the services provided.
• Prepare the required documents, including your EIN and incorporation paperwork:
• Arrange a meeting with a bank representative and submit the necessary documentation.

Setting up a dedicated business bank account is a major step forward for your startup. While incorporation helps to limit liability, things will be more complicated if you use the same account for both business and personal expenses.

File to operate in your home state

If you choose to incorporate in a business-friendly state like Delaware or Wyoming, you will need to register in your home state in order to compliantly operate there.

This registration signifies that your corporation is authorized to conduct business in that state.

A crucial part of this process is to have a registered agent in each state where your business is registered.

This individual or company acts as the primary point of contact between your corporation and the state government. They receive legal and official documents on behalf of your startup.

If you need a registered agent in a particular state, just use Firstbase Agent to set up a new registered agent in minutes.

Registering your business in your home state and appointing a registered agent ensures that you stay compliant with local laws, maintaining your good standing and supporting your business's growth in the long run.

Create a cap table

A capitalization table, casually referred to as a "cap table," documents every stakeholder's slice of ownership, including investors, founders, and employees.

Updating this table regularly ensures transparency, providing an up-to-the-minute image of the company's equity structure. It is an essential resource, especially during critical business processes such as fundraising and selling equity. 

An accurate, meticulously managed cap table can play a pivotal role in these situations.

A transparent cap table gives prospective investors a clear understanding of the company's capital structure, demonstrating your startup’s integrity and reliability. 

Our users get automatic onboarding + white-glove support when they set up a cap table with Carta.

Build an accounting workflow

Initially, a startup's accounting responsibilities could be as basic as recording expenses and consulting a tax accountant for tax-related matters.

As your startup grows, however, you’ll find yourself needing more sophisticated accounting processes. While accounting may not seem like a vital expense, it can save you countless hours in the long run.

An external accounting service can assume these increasing responsibilities, ensuring accurate financial reporting that aligns with the latest regulations and standards. They relieve the growing pressure on the startup, allowing it to focus on core business functions without fretting about accounting complexities.

Proactively managing accounting duties is critical in maintaining financial transparency and integrity as businesses scale.

Firstbase Accounting is the best way for founders to manage their books, offering full-service accounting within our all-in-one Founder’s App.

Get business insurance

If your startup is selling products or incurring any kind of risk, it’s time to consider business insurance.

This provides an essential layer of financial security as you start expanding your operations. Coverage could include various events such as property damage, legal liabilities, and employee-related incidents.

Having insurance can ensure a startup navigates these turbulent situations without folding under financial strain.

Business insurance providers offer a wide range of options depending on the client’s needs. If you incorporate with Firstbase, we’ll connect you with an insurance policy that makes sense for your business and budget.

Conclusion

Incorporation is a big step forward, but your next moves may be even more important. Make sure not to neglect any of the key tasks mentioned above.

Not yet incorporated? Click here to start your application in minutes.