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The Smarter Startup

Tax Preparation Checklist for Startups

Use this tax preparation checklist for startups to collect the information and documents your tax professional will need to prepare your taxes.

Company Information

  1. EIN – A document issued by the IRS to confirm the unique Employer Identification Number for a new business.
  2. Articles of incorporation – Formal documents filed to legally create a corporation.
  3. List of states in which your business has nexus – Payroll by state, Sales by State, and Rent/Property by State should be maintained throughout the year. (See Tax Implications of Remote Workers)
  4. Last year’s returns – Collect copies of last year’s federal, state, and local tax returns.
  5. Estimated payments made – Document the amounts and dates of any estimated tax payments you’ve made throughout the year.
  6. Organizational chart – Showing the owners’ relationships between legal entities in the corporate family. Foreign subsidiaries have special filing requirements, and failure to file can result in hefty penalties (of $10,000 per form), as discussed below.

Shareholder Information

  1. List of shareholders – Create a list with the name, address, and SSN or EIN of each shareholder.
  2. Stock ownership – Document each shareholder’s stock ownership.
  3. >20% Foreign shareholders – Document any transactions (direct or indirect) between the entity and the foreign shareholders. Failure to disclose such transactions can result in hefty penalties (of $25,000 per form), as discussed below.

Financial Records

  1. Balance Sheet and Profit and loss statement – Burkland provides expert startup accounting services to 750+ startups across the United States. Reach out to us to learn more about how we can help your startup or portfolio company maintain accurate financial records.

International Taxation

International taxation, such as foreign subsidiaries and foreign shareholders filings, can be an overwhelming and unreasonably complex process. For example, foreign subsidiaries are required to file a Form 5471 with the corporation tax return, which requires financial information of the foreign subsidiary to be presented using US accounting principles (US GAAP), which are different from those used to create the foreign financials. Thus creating in-depth work to convert financial statements to the required format. Based on the Form 5471 instructions, it will take approximately 32 hours to complete.

The Burkland tax experts are here to help you navigate through these issues and save you time. Reach out to us as soon as possible to avoid potential penalties.