The paperwork you can't skip in your first year

Open a business bank account before you take a single dollar from a customer.

That one act prevents more trouble than anything else on this list. It gives you a clean record of what came in and what went out, it makes your accountant's job cheap instead of expensive, and it's the difference between having a business and having a hobby with invoices. You don't need a fancy one. You need one that isn't the account your mortgage comes out of.

Everything else below is downstream of that.

Pick an entity, then stop thinking about it

New owners spend weeks on this and it's rarely the highest-value week of their year. The practical version:

A sole proprietorship is what you're by default. No filing, no fee. Your business and you're the same legal person, which means a claim against the business is a claim against your house.

An LLC puts a wall between the two. It's a state filing, it costs money, and it only works if you actually keep the business separate — separate account, no paying for groceries out of it, contracts signed in the company's name. Owners who treat the LLC account like a second wallet find out the wall was decorative.

An S-corp election is a tax treatment, not an entity, and it usually only starts making sense once profit is consistent and meaningful. It brings payroll, which brings a payroll provider, which brings a monthly cost.

Ask a CPA which one fits your numbers. It's a one-hour conversation and it's the cheapest hour you'll buy all year. Don't take the answer from a forum, because the right answer depends on your profit, your state, and whether you'll have employees.

Get your EIN straight from the IRS

It's free. It's an online form. It takes about fifteen minutes and you get the number immediately.

You'll see services charging to do this for you. They're filling out the same form. Go to the IRS site directly.

You need the EIN to open the business account, to hire anybody, and to give to clients who ask for a W-9 so they don't have to put your Social Security number on a tax form. That last reason alone is worth it.

Find out what your city actually requires

Registration happens at more than one level and the levels don't talk to each other. You may have a state filing, a county business license, a city business tax certificate, and a home occupation permit if you're working out of the house. Trades usually have a licensing board on top of that.

Call the city clerk's office and ask plainly: "I'm starting a [whatever] business at this address. What do I need from you?" They deal with this every day and they'll tell you. That call is faster than an afternoon of searching.

Sales tax is the one people miss. Whether services are taxable depends entirely on your state, and the rules aren't intuitive — landscaping might be taxable while consulting isn't. If you're selling anything physical, assume you need to register and collect. Ask your accountant before your first invoice, not after your first year of them.

One contract, written properly, used every time

You don't need a library of documents. You need one service agreement you actually send.

What it has to cover:

• Scope. What's included, in detail, and a line that says anything else is a change order at a stated rate.
• Payment terms. When you invoice, when payment is due, what happens when it isn't. A late fee you'll actually enforce.
• Deposit. Take one. It filters out the people who were never going to pay.
• Who owns the work when it's finished, and what happens to it if the project dies halfway.
• Termination. How either side gets out, with notice, and what's owed at that point.

Have an attorney draft or review it once. After that it's a template you reuse for years. The version you download for free and never read is the version that has no clause covering the exact thing that goes wrong.

The failure mode is almost never a dramatic lawsuit. It's a customer who genuinely believes the fence included the gate, and you have nothing in writing that says it didn't.

Collect the W-9 before you write the check

Any contractor you pay — the subcontractor, the designer, the guy with the truck — gets a W-9 form from you before their first payment clears. Not in January. Before.

Because in January you'll need to issue 1099s, and the people who ghosted you in October won't answer the phone about tax paperwork. Chasing a W-9 from someone you no longer work with is a miserable, avoidable week.

The related trap is classification. Calling someone a contractor doesn't make them one. If you control when they work, how they do it, and they use your tools on your schedule exclusively, a state labor board may decide they were an employee — and hand you back payroll taxes, penalties and unpaid overtime. The tests vary by state and some of them are strict. If you're unsure where someone falls, that's a question for an employment attorney before you hire, not after a complaint.

Close the books monthly, not annually

Set a recurring appointment. Same day each month. Forty-five minutes.

Reconcile the bank account. Categorize what came in and what went out. Snap photos of receipts as they happen, because a shoebox in March is a lie you tell yourself in January. Log mileage as you drive it — a contemporaneous log holds up, a reconstructed one doesn't.

Use accounting software from month one, even the cheapest tier. Migrating a year of spreadsheet history into real software costs more than the subscription would have.

Taxes on business income aren't withheld for you, which means estimated payments through the year rather than one bill in April. Ask your accountant what percentage of every deposit you should be setting aside, then move it into a separate savings account the day the money lands. Don't calculate it in your head. Move it.

The owners who blow up in year two are usually the ones who spent the tax money in year one and didn't know they had.

Insurance, and the part clients will ask you for

General liability is the baseline. Professional liability covers advice and work product. Commercial auto matters the moment you're driving for the business, because a personal policy can deny a claim on a work trip. Workers' comp is generally required the moment you have employees, and the rules differ by state.

Commercial clients will ask for a certificate of insurance before you set foot on site. Not having one costs you the job on the spot.

Keep the entity alive

Most states want an annual report and a fee. Miss it enough times and the state administratively dissolves your company — which quietly removes the liability protection you paid for, usually without you noticing.

Your registered agent has to be reachable at a real address during business hours. If that's your home and you move, update it.

Build a one-page calendar: annual report month, quarterly estimated payment dates, January 31 for 1099s and W-2s, license renewals, insurance renewal. Put every one in your phone with a two-week warning.

Most service businesses that fold don't fold over paperwork. They fold because the work dried up or the pricing was wrong from the start. But the paperwork decides what a bad quarter does to you. Clean books mean you can walk into a bank and get a line of credit. Messy ones mean you find out how bad it was in April, from a stranger, too late to do anything about it.

Spend the weekend. Then go sell something.