SMB Accounting and Consulting

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Checklist for Small Business Startups

Are you a small business owner seeking expert guidance on accounting practices? Navigating the complexities of financial management is crucial to the success of any business. Establishing a core understanding of key accounting principles not only instills confidence but also ensures compliance with accounting and government regulations.

Our checklist will guide you through some key items to consider when setting up your business and best practices for those already in operation.

The Checklist


 Legal Structure and Registration (Get a lawyer)

First, you must decide on your legal structure (e.g., sole proprietorship, LLC, corporation). Different legal structures offer varying degrees of liability protection for business owners. For instance, in a sole proprietorship, owners have unlimited personal liability. Whereas forming a corporation or a LLC provides limited liability protection, separating personal assets from business liabilities.  It will also have tax implications and different regulatory compliances the business will have to follow. Please be sure to consult your lawyer for information regarding your company’s legal structure (Yes, having a lawyer should be on your checklist).

In a lot of cases, you will need to complete tax registration to obtain an Employer Identification Number (EIN) from the IRS. If you have employees or operate as a corporation or partnership you must have an EIN.  Other categories requiring an EIN can be found on the IRS website. Even if your company isn’t required to have an EIN, it may be worthwhile for liability purposes.  Speak to your lawyer about their recommendations for your specific circumstance.  With your EIN in hand, you’ll then be able to complete your business entity registration with the state and complete any additional licensing or permit applications.

There is also a new requirement for businesses called the Beneficial Ownership Information Report (BOIR).  Per the Small Entity Compliance Guide published by the Financial Crimes Enforcement Network, companies created or registered to do business before January 1, 2024, will have until January 1, 2025 to file their initial BOI reports. Companies created or registered on or after January 1, 2024, and before January 1, 2025, have 90 calendar days after receiving actual or public notice that their company’s creation or registration is effective to file their initial BOI reports. Reporting companies created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice that the company’s creation or registration is effective to file their initial BOI reports.

Business Plan

Creating a business plan is essential for small businesses as it serves as a roadmap, outlining clear objectives and strategies for achieving success. It provides a structured framework for decision-making, helping entrepreneurs anticipate challenges, identify opportunities, and mitigate risks effectively. Additionally, a well-crafted business plan enhances credibility with stakeholders, including investors, lenders, and partners, demonstrating the business's viability and growth potential.

Bank Accounts (Find a bank)

Before any spending gets underway, open a bank account with your EIN. There are numerous benefits to having a bank account under your company’s registration, including separation of personal and business finances, providing legal protection, and helps facilitate business growth by easily tracking cash flow. Business accounts often come with specialized banking services tailored to the needs of businesses, such as merchant services, business loans, lines of credit, and business credit cards. These services can facilitate growth and financial management.  It also keeps people out of your personal accounts that you probably don’t want to be there.

Accounting Software (Hire an accountant and/or bookkeeper)

Small businesses should consider using accounting software instead of Excel or other record keeping options due to its automation, efficiency, and reliability in managing financial tasks. Accounting software provides real-time insights, scalability and enhanced security measures compared to a manual process. Investing in software streamlines financial management processes, improves decision making, and supports sustainable growth for small businesses. If accounting software is set up appropriately, it provides more than just financial reports needed to do your taxes.  You can collect all sorts of financial data which will allow you to make sound decisions regarding your business.  Skimping here can lead to exponentially higher costs in the future trying to fix things or get ready for proper audits. 

Financial Statements

Once accounting software has been implemented, it is important to understand the different financial reports. Understanding how to read financial statements is crucial for gaining insight into a company’s financial health and performance. Proficiency in interpreting the balance sheet, cash flow, and profit and loss statement, and how they interact with each other will aid in making informed decisions, identifying areas for improvement, and evaluating the overall financial position of a business.

Budgeting and Financial Planning

Budgeting tends to be an area that a lot of small businesses overlook.  They take time, and they require the proper data collection and analysis to make them worthwhile.  Budgeting helps with financial planning, expense management, cashflow management, goal setting, and identifying plausible opportunities and associated risks.  Additionally, they provide accountability to everyone involved.  A budget is a primary form of internal controls.  It assists in ensure funds are spent as they should be, and any anomalies are identified before they get too bad. 

Tax Compliance

Filing your tax returns following local, federal, and state levels is paramount for your startup's success, so you must determine your company’s tax obligations.  Establish a system for collecting and remitting sales tax if required. Each state and locality have different laws on sales tax, when it’s charged, and how much it is.  Reviewing these requirements or ensuring you have a service that can assist will be imperative to your success.  Compliance with payroll tax requirements can also depend on both your location and your company’s. Having remote workers can cause liabilities in other states of which to be aware.

Invoicing and Accounts Receivable

Create an effective invoicing system to bill consumers quickly. To sustain cash flow, follow up on delinquent invoices.  Accounting software packages typically come with options to bill customers.  Several allow for payments to be made by customers online or invoices to be emailed rather than mailed.

Bill payment and Accounts Payable

Another solid part of your financial system should be the process to verify bills, pay them, and record the expenses properly in your books.  There are many services that help pay business bills to alleviate manual checks and postage.  Acquiring a business credit card is also a great way to make recurring payments.  Many options exist for automating bill pay that can often integrate the information directly into your books.  Tracking these costs also support your budgeting endeavors. 

Insurance (Get an agent)

Assess your business's liability, property, and other insurance needs. Insurance reduces risk and protects assets.  Common insurance policies to consider are general liability, property, professional liability, workers’ compensation, auto, cybersecurity, product liability, employment practices, and directors’ and officers’ insurance.

Record Retention

Establish a legal record retention mechanism for financial documents. Audit preparation and compliance require organized documents.  Whether digitally or hard copy, records need to be kept safe, organized, and accessible.  This should include financial statements, tax returns, employment documents, receipts and proof of payment, and bank statements, just to name a few.


There’s no all-inclusive checklist for every small business.  They’ll all be a little different based on industry, location, type, and goods or services provided.  This list should give you a good starting point to get your company off the ground and set up for success.