What Founders Need to Do After Forming a New Company

Forming your C-Corp or LLC is the legal starting line, not the finish. The steps below are what separate a company that operates cleanly from one that spends its first financing round cleaning up paperwork.

This guide walks through the operational steps every newly-formed startup should complete in the first 30 to 60 days after incorporation. None of it is optional if you plan to open a bank account, hire anyone, take outside money, or sign customer contracts. Work through the list in order, get the foundations right, and you'll save yourself expensive cleanup later.

TL;DR — Your first 60 days after formation

1. Get your EIN from the IRS (15 minutes, free, required for almost everything else)
2. Open a dedicated business bank account
3. Register for applicable state and local taxes and licenses
4. Put the right insurance in place
5. Foreign qualify in states where you do business
6. Set up payroll and cap table management systems

Each of these has consequences if skipped. An unregistered employer triggers state penalties. A commingled bank account puts your limited liability status at risk. A missed foreign qualification can block you from enforcing a contract in court. None of it is hard — it's just a sequence that has to happen.

1. Get an Employer Identification Number (EIN) from the IRS

An EIN — Employer Identification Number — is your company's federal tax identification number. Think of it as a Social Security number for your business. You'll need it to open a bank account, hire employees, file taxes, apply for licenses, and enter most commercial contracts.

How to apply for an EIN

The fastest route is the IRS online EIN application. It's free, takes about 10 minutes, and issues the EIN immediately on completion. The portal is available Monday through Friday, 7 a.m. to 10 p.m. Eastern.

If you can't use the online portal, you can also apply by fax or mail using IRS Form SS-4 — but those channels can take days or weeks.

International founders without a U.S. Social Security number must apply by phone or mail. Plan for extra time.

What to have ready before you start

• Entity's exact legal name as shown on your formation documents
• State of formation and date of formation
• Principal business address (this can be a home or registered agent address)
• Name and SSN or ITIN of a Responsible Party — typically a founder who ultimately controls the entity

Common EIN mistakes to avoid

• Save your EIN confirmation letter (CP 575). Banks and government agencies will ask for it. The IRS does not easily reissue it.
• Apply in the correct entity name. C-Corps should apply as the corporation, not in a founder's personal name. This is a surprisingly common error that triggers cleanup later.
• Single-member LLCs should still get a separate EIN. You can legally use a personal SSN for some purposes, but a dedicated EIN keeps business and personal records cleanly separated — which matters for the corporate veil discussion below.

2. Open a Dedicated Business Bank Account

A separate business bank account is essential to maintaining the corporate veil — the legal separation between you and your company that protects your personal assets from business liabilities. Commingling personal and business funds is one of the most common reasons courts pierce the corporate veil and let creditors come after founders personally.

What you'll need to open a business account

Most banks will ask for:

• Your EIN (see above)
• Formation documents — Articles of Incorporation for a C-Corp, Certificate of Formation for an LLC
• Operating Agreement (LLC) or Bylaws (C-Corp)
• Board resolution or written consent authorizing the account opening (for C-Corps)
• Government-issued ID for anyone who will be a signatory

Choosing the right bank for your startup

Prioritize these features:

• No monthly maintenance fees and low minimum balance requirements
• Good online banking and bill pay
• Wire and ACH capability included (startups send wires more often than founders expect)
• Integration with accounting software like QuickBooks or Xero
• Reputation for serving venture-backed companies if you plan to raise

A note on multiple entities

Every legal entity needs its own account. If you operate through both an LLC and a related C-Corp, or if you form a separate subsidiary later, each one gets its own account. Never share a bank account across entities — it undermines the entire reason for forming them separately.

3. Register for State and Local Taxes, Licenses, and Permits

Forming a Delaware corporation (or any state entity) does not automatically register you for tax or licensing obligations in the states where you actually operate. Depending on your business, you may need to register for several of the following:

• Sales tax permit — if you sell taxable goods or services in any state where you have nexus (physical presence, employees, or substantial economic activity)
• State employer tax accounts — required before you pay your first W-2 employee in a state
• Local business license or occupational permit — most cities and counties require these before you legally operate within their borders
• Franchise tax registration — many states, including Delaware, California, and Texas, impose annual franchise or privilege taxes on entities formed or doing business in the state

Delaware Franchise Tax — don't miss this one

If you formed in Delaware, your first Delaware Franchise Tax report and payment is due March 1 of the year following formation. Miss it and Delaware imposes penalties and interest, and can eventually revoke your good standing. Most founders are surprised by the franchise tax calculation — Delaware's default "Authorized Shares" method can generate a five-figure bill for a startup with a typical 10 million share authorization. The alternative "Assumed Par Value Capital" method almost always produces a much lower number. Know which method you're using.

What happens if you skip state registration

Penalties, back taxes with interest, and — in many states — the legal inability to bring a lawsuit to enforce your own contracts in that state's courts until you register and pay all back amounts. That last one matters when a customer stops paying and you need to sue.

4. Get the Right Business Insurance

Even early-stage companies should carry appropriate insurance. Some coverage is legally required. Some is required by your customers, lease, or investors. Some just protects the company you're trying to build.

General Liability

Covers third-party bodily injury and property damage claims — someone slips in your office, a piece of your product damages a customer's equipment. Often required by commercial leases and enterprise customer contracts. This is usually the first policy a startup buys.

Workers' Compensation

Required in virtually every state the moment you have employees, and in some states for certain contractors. Penalties for operating without required workers' comp coverage can be severe and are among the easiest things for a state labor department to catch.

Directors & Officers (D&O) Insurance

Protects founders and board members from personal liability for management decisions — wrongful termination claims, breach of fiduciary duty allegations, regulatory investigations. Sophisticated institutional investors typically require a D&O policy as a condition of closing a priced round.

Professional Liability / Product Liability / Errors & Omissions (E&O)

Covers claims that your product or service caused financial loss or harm to a customer. Software companies, fintechs, healthtech, and any B2B service provider should strongly consider this. Enterprise customers increasingly require it in the contract.

Cyber Liability

If you handle any customer data — which almost every modern company does — cyber liability covers breach notification costs, regulatory response, and some forms of business interruption. The cost has come down significantly and it's table stakes for anything SaaS.

5. Foreign Qualify in States Where You Do Business

"Foreign qualification" means registering your out-of-state entity to do business in another state. Most Delaware startups need to foreign qualify somewhere — because most startups are not actually operating in Delaware.

When foreign qualification is required

Every state has its own rules, but the common triggers are:

• Having a physical office, warehouse, or other location in the state
• Having employees in the state (remote workers typically trigger this)
• Holding a state-issued license or permit
• Substantial, ongoing revenue from customers in the state

Occasional sales or one-off transactions usually do not require foreign qualification, but the line is fact-specific and varies by state.

Consequences of failing to foreign qualify

• Monetary penalties and back fees, often with interest
• Loss of standing to sue in that state's courts — meaning you cannot enforce your own contracts there until you register and pay up
• In some states, personal liability exposure for founders and officers

How foreign qualification works

You file a Certificate of Authority (or equivalent) with the Secretary of State, pay a filing fee, and appoint a registered agent in that state. Many states also require a Certificate of Good Standing from your home state. Annual reports and franchise tax obligations typically follow in each state where you've qualified.

6. Set Up Payroll and Equity Management Systems

As soon as your company pays people or issues equity, the right systems need to be in place. Getting this wrong early creates expensive cleanup during diligence.

Payroll

Use a payroll provider — Gusto, Rippling, or ADP are the most common — from the moment you pay your first W-2 employee. Running payroll manually exposes the company to significant tax withholding, reporting, and unemployment insurance compliance risk. Payroll providers also handle state registrations in new states as you hire remote employees, which is a meaningful operational benefit.

Cap Table Management

Use a cap table management tool from day one. Carta and Pulley are the common choices for venture-track companies; a carefully-maintained spreadsheet can work for pre-seed companies with only founders, but the longer you wait to migrate, the harder it is.

Your cap table should track:

• Every equity issuance, with date, consideration, and number of shares
• Vesting schedules for founder and employee grants
• All outstanding options, warrants, SAFEs, and convertible notes
• 83(b) election filings and confirmations

Stock Option Plans

If you plan to issue stock options — and almost every C-Corp does — adopt a formal stock option plan before you issue a single grant. For C-Corps, this is typically an Incentive Stock Option (ISO) plan. Board approval of the plan, and board approval of each individual grant, is required. A 409A valuation is required to set the exercise price on the first grant.

Issuing options without a plan, or without board approval, or at an exercise price below fair market value, are three of the most common early-stage cleanup items. All three create real tax and enforceability problems later.