Business Startup Checklist: IRS Tax Steps

The IRS keeps its own business startup checklist, and it is short: EIN, business structure, tax year, employee forms, and business taxes. The IRS says the list is not exhaustive, that other steps may apply to your type of business, and that every state has its own requirements on top of the federal ones.

This page takes those steps in order, adds the federal tax facts behind each one (who files what, when the money is due, how long to keep the paperwork), and points to the deeper Taxstra guide for each step. It ends with a first-year tax calendar for a new single-member LLC so you can see the deadlines in sequence.

What it does not cover: which deductions to claim, how to deduct startup costs, or which entity to pick. Those have their own guides, linked below.

The IRS lists the EIN first, with a qualifier: "if applicable." You need one to run a partnership, multi-member LLC or corporation, and any business needs one once it has employees. A single-member LLC with no employees and no excise tax filings can use the owner’s number for income tax, although most banks ask for an EIN to open a business account.

The EIN is free from the IRS and comes from a short online application. Form the LLC or corporation with your state before you apply, so the number belongs to the entity and not to you personally.

Hours, eligibility, the responsible party rule and how to find a lost number are all in how to get an EIN, step by step.

The IRS puts it plainly: your form of business determines which income tax return you file. The federal structures are sole proprietorship, partnership, corporation and S corporation. An LLC is a state-law structure, so for federal tax it lands in one of those buckets.

By default, a single-member LLC is disregarded and reported on the owner’s return, and an LLC with two or more members is taxed as a partnership. An LLC can choose corporate treatment with Form 8832, and S-corp status takes its own election on Form 2553.

Deciding between the default LLC treatment and an S-corp election is its own analysis; start with LLC vs. S-corp: which tax setup fits.

A calendar tax year runs January 1 to December 31. A fiscal year is 12 consecutive months ending on the last day of any month except December. You adopt a tax year by filing your first income tax return on it. Applying for an EIN, filing an extension or paying estimated tax does not lock it in.

Most small businesses end up on the calendar year, and many have to. You must use it if you keep no books or have no annual accounting period, and if you already file on a calendar year and become a sole proprietor, partner or S-corp shareholder, you generally keep it. Changing a tax year later usually takes IRS approval on Form 1128.

The IRS checklist says to have each employee complete Form I-9 and Form W-4. Form I-9 is a USCIS form that verifies identity and authorization to work in the United States. You do not file it; you keep it for 3 years after the date of hire or 1 year after employment ends, whichever is later. Form W-4 tells you how much federal income tax to withhold from the employee’s pay.

Once payroll starts, you withhold federal income tax and the employee’s share of Social Security and Medicare, pay the employer’s share, and pay federal unemployment (FUTA) tax. Deposits are generally due monthly (by the 15th of the next month) or semiweekly, depending on your deposit schedule.

State withholding and unemployment accounts come first too; see how small business payroll gets set up.

The IRS sorts business taxes into five types: income tax, estimated tax, self-employment tax, employment taxes and excise tax. Every business except a partnership files an annual income tax return; a partnership files an information return and its partners pay the tax. Federal income tax is pay-as-you-go, so when nothing is withheld, the owner pays during the year.

Sole proprietors, partners and S-corp shareholders generally must pay estimated tax if they expect to owe $1,000 or more when they file. Corporations generally must pay if they expect to owe $500 or more. Individuals use Form 1040-ES, and the payments cover both income tax and self-employment tax.

You generally avoid the underpayment penalty by paying the smaller of 90% of this year’s tax or 100% of last year’s tax, through withholding and estimated payments combined. If last year’s adjusted gross income was over $150,000 ($75,000 married filing separately), use 110% instead of 100%. The prior-year return has to cover 12 months. If you were a U.S. citizen or resident all of last year and had no tax liability, you do not owe estimated tax this year.

How to size each payment and pay it online is covered in the quarterly estimated taxes guide.

If your net earnings from self-employment are $400 or more, you owe self-employment tax and file Schedule SE with your Form 1040. The rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. For 2026, the Social Security part applies to the first $184,500 of combined wages, tips and net self-employment earnings. An additional 0.9% Medicare tax can apply above your filing-status threshold.

You deduct the employer-equivalent half of the tax when figuring adjusted gross income. That lowers income tax, not the self-employment tax itself. For most new sole proprietors, this tax is the surprise on the first return, because it applies even when income tax is small.

How the tax is calculated, and when an S-corp changes the math, is in the self-employment tax guide.

If your business pays someone who is not your employee $2,000 or more for services during 2026, you generally file Form 1099-NEC for that person. The threshold was $600 for payments in 2025 and earlier; the IRS raised it to $2,000 for tax years beginning after 2025 and says it may be adjusted for inflation beginning in 2027.

Form 1099-NEC is due to the IRS and to the recipient by January 31. Only payments made in the course of your business count; personal payments are not reported. Payments to a corporation, including an LLC taxed as a C or S corporation, are generally exempt, with exceptions such as payments to attorneys.

Collect a Form W-9 before the first payment so you have the name and taxpayer ID in January; see Form W-9 explained.

Most service businesses never file an excise return. Excise tax applies if you make or sell certain products, run certain kinds of businesses, use certain equipment or facilities, or are paid for certain services. If that might be you, check these forms early.

• Form 720, quarterly federal excise tax return: environmental, communications and air transportation, fuel, first retail sale of heavy trucks, trailers and tractors, and certain manufacturer taxes.
• Form 2290: heavy highway vehicle use tax for trucks, truck tractors and buses with a taxable gross weight of 55,000 pounds or more.
• Form 730: monthly tax return for businesses that accept wagers or run a wagering pool or lottery.
• Form 11-C: registration and the federal occupational tax on wagering.

The IRS does not require a particular bookkeeping system, only one that clearly shows income and expenses. Publication 583 recommends opening a business checking account and keeping it separate from your personal account. Keep the documents behind each entry: invoices, deposit slips and 1099s for income; receipts, canceled checks, account statements and invoices for expenses; purchase and sale records for assets.

Setting up the books themselves is covered in bookkeeping for small business.

The IRS checklist is federal only and tells you to check your state’s government website for the rest. Depending on the state, that usually means registering the entity, a state income or franchise tax account, a sales tax permit if you sell taxable goods or services, and withholding and unemployment accounts before the first paycheck. Cities and counties often add a business license.

Write down every state account number, filing frequency and portal login in one place. Many of the first-year notices new owners receive come from a state account nobody remembered opening.

Here is how the checklist turns into dates for a one-owner consulting LLC with no employees, formed in early 2026 on a calendar year. It pays one subcontractor $3,000 during the year and expects to owe more than $1,000 of tax.

What to deduct on that first Schedule C is covered in the first-year business tax guide.