Accounting for Startups: From Bookkeeping to Taxes for Early Stage Businesses
Accurate record keeping for a startup is a fundamental practice. It is never too soon to develop best practices for your early-stage venture’s financial records. Quality data leads to actionable information which is the backbone of business intelligence.
High-quality information is a necessity for accurate decision making in the operations of any business. Rather than being only a consumer of time, in fact, accounting helps your small business generate profit.
The types of records which should be kept include (but are not limited to):
- Bank Deposits and Withdrawals
- Bank Statements and Credit Card Statements
- Federal, State, and Local Tax Filings
- Legal Contracts of all Types including Equity Agreements, Stock Option Grants, Options Exercises
- Payroll Records and Payroll Tax Filings
- Receipts for Purchases
We often get asked about what type of software we recommend to keep these various books and records. For start-up accounting solutions, we recommend the following:
- Intuit QuickBooks (Hint: If you buy the desktop version, splurge for Accountant Edition with its extra features)
- Intuit QuickBooks Online
- Wave Accounting
- Entity selection (Usually an LLC or C-Corporation, often in Delaware)
- Year-End (December is most common)
- Based on Net Income: No income, no tax (*except for certain states like California)
- Federal Form 1120: 4 Months and 15 days after the year-end (E.g. Due 4/15 for Calendar year-end companies)
- California Form 100: Minimum tax of $800. Exemption for the first year. (Same due date as above)
- Other states if you have “nexus.”
- If you are required to pay taxes, your startup may need to make quarterly estimated tax payments
- Federal and State Income tax withholding
- Social Security, Medicare, FICA, Unemployment (quarterly, monthly, or semi-weekly deposit schedules)
- State Unemployment, State Disability Insurance
- Additional local taxes (Varies by jurisdiction)
- Secretary of State Fee
- Delaware Franchise Tax: 2 ways of calculating (assumed per value or authorized share) due March 1
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