The Cleanest Way To Set Up Your Startup’s Legal + Tax Stack In The First 90 Days

2025-11-21

Most founders hear “legal and tax stack” and picture a giant binder of forms. In practice, the first 90 days come down to a few clean decisions and a short checklist.

This guide lays out a practical, United States focused setup for a typical venture backed startup. You will see where a Delaware C corporation fits in, what an Employer Identification Number is, how payroll and sales tax tie in, and where a platform like Afternoon can keep it sane.

What “legal and tax stack” actually means

When investors talk about your “stack” in this context, they usually mean six things:

Legal entity choice and where it is formed
Federal tax identity and basic registrations
State level registrations for tax and payroll
Banking and payments setup
Payroll and worker classification
Accounting system and basic controls

You do not need to perfect all of this on day one. You do want a plan for the first ninety days so you are not scrambling before your first real tax deadlines.

Assumptions for this playbook

This guide assumes:

You are building a software or software as a service company with plans to raise outside capital
You are a United States based founder, or you are forming a United States entity
You want a structure that venture capital funds and larger buyers are used to seeing

That usually points to a Delaware C corporation as the core entity.

A C corporation is a type of corporation that is taxed separately from its owners. “C” refers to the subchapter of the Internal Revenue Code that governs how it is taxed.

Days 0 to 30: Entity, EIN, and bank account

The first month is about getting something real on paper and opening a bank account.

Step 1: Choose your legal structure and where to form

For many venture style startups, the default is:

Entity type: C corporation
State of formation: Delaware
Home state registrations: as needed for where you have offices, employees, or operations

The United States Small Business Administration has clear primers on choosing a business structure:

The Internal Revenue Service also has a page that explains common business structures and how they affect tax returns:

Internal Revenue Service: Business structures

If you are not sure whether a Delaware C corporation is right for you, talk to a startup lawyer. The Delaware Division of Corporations does not give legal advice and expects you to arrive with a decision.

Step 2: Form a Delaware C corporation

To form a Delaware C corporation you usually:

Pick a name and check that it is available
Hire a Delaware registered agent
Draft and file a certificate of incorporation with Delaware
Pay the state filing fee

Delaware has a central site that explains how to form entities and links into its “One Stop” system:

Many founders work with a lawyer or a formation service for this step. The key for your later tax stack is that you have:

A filed certificate of incorporation
A clear ownership structure
A registered agent in Delaware

You will use these when you apply for tax IDs and open bank accounts.

Step 3: Get an Employer Identification Number

An Employer Identification Number, often shortened to EIN, is a nine digit tax identification number for businesses. It comes from the Internal Revenue Service and is used on most federal tax filings and many bank and payroll applications.

You can get an Employer Identification Number directly from the Internal Revenue Service for free:

Form SS-4 is the application form for an Employer Identification Number. Many startups use the online tool instead of mailing or faxing the form.

Be careful with search results for this step. Some sponsored sites charge fees to “help” with an Employer Identification Number. The real site ends in “.gov” and does not charge a fee.

Step 4: Open a business bank account

Once you have:

Your Delaware corporation formed
Your Employer Identification Number assigned

you are ready to open a business bank account.

Most United States banks will ask for:

Your certificate of incorporation or formation documents
Your Employer Identification Number notice
Identification for the founders and any owners who control more than a set percentage

Pick a bank that supports the tools you plan to use, such as your accounting system and payments provider. From a tax and accounting perspective, the key is simple:

Use a dedicated business account
Keep personal and business spending separate
Run all major business cash flows through this account

Afternoon connects to your bank feeds and reads these transactions into your bookkeeping and reporting. The sooner you isolate business activity in one or more business accounts, the cleaner those feeds will be.

Days 30 to 60: Payroll, accounting, and basic tax accounts

Once the entity exists and the bank is open, you can focus on how money flows through the business.

Step 5: Set up your accounting system

Your accounting system is where your profit and loss statement lives. It controls how easy or hard it will be to answer questions from investors, tax agencies, and your future self.

A practical path in this window:

Pick an accounting platform that works well for startups
Set up a clean chart of accounts that separates revenue, cost of revenue, and operating expenses
Connect your bank account so transactions flow in automatically

The Internal Revenue Service has a small business center that covers recordkeeping, basic tax topics, and common forms:

Afternoon sits on top of your accounting system and normalizes the chart of accounts, then turns raw entries into monthly and quarterly reviews. That means your “stack” here is really two layers working together.

Step 6: Decide when to start payroll

Payroll is where your legal and tax stack touches actual people.

Key terms:

Payroll taxes are the federal and state taxes you must withhold and pay when you have employees
Employment taxes include income tax withholding, Social Security, Medicare, and federal unemployment taxes

The Internal Revenue Service has several pages that explain employment taxes for small businesses:

In this 30 to 60 day window, you should:

Decide when founders will start taking a salary instead of only distributions
Choose a payroll provider that can handle your home state plus any other states where you hire
Register for federal and state payroll accounts as needed

Federal registration is covered by your Employer Identification Number. States often require separate registrations with their departments of revenue and labor. Your payroll provider and your tax advisor can help you sequence these.

Afternoon helps by tracking which states you are active in, which payroll accounts exist, and how those feeds tie back to your books.

Step 7: Understand your basic sales tax exposure

Sales tax in the United States is a state level concept. Software as a service and digital products are taxed differently in each state.

Two important ideas:

Some states tax software as a service, some do not
You can create tax obligations in states where you have no office, through “economic nexus” rules that look at your revenue and transaction counts

Each state has its own department of revenue or taxation site with rules. The Internal Revenue Service does not control state sales tax but it does maintain broad business tax resources that are a good general starting point:

Internal Revenue Service: Tax information for businesses

In this 30 to 60 day window, your goals are:

Identify your state of incorporation, your home state, and any states where you already have customers
Get a first pass view on whether your product is taxable in those states
Decide whether you need to register for a sales tax permit in your home state now or can wait

Afternoon’s product is focused on this exact problem. We map your revenue by state, apply sales tax rules, and tell you where you are close to or past state thresholds so you can register in time.

Days 60 to 90: Close your first books and lock in a routine

By now you have an entity, a bank account, an Employer Identification Number, an accounting system, and a plan for payroll and sales tax. The last step in this ninety day window is to turn that into a repeatable routine.

Step 8: Close your first month of books

A “month end close” sounds formal. At this stage it can be simple:

Categorize every bank transaction in your accounting system
Reconcile bank balances to what the accounting system shows
Confirm revenue lines match what your billing or payment system reports
Check that any sales tax collected is going into the right liability accounts

Once your books are closed for the month, you can:

Produce a basic profit and loss statement and balance sheet
Share a simple update with cofounders or investors
Spot early if your burn is outpacing your plan

Afternoon automates most of this by pulling your bank, payroll, and billing data into one place and running a consistent close process each month.

Step 9: Create a simple compliance calendar

You do not need a complex calendar tool. A shared document or calendar with reminders is enough.

Include:

Federal filing dates that apply to your type of corporation
Estimated tax deadlines, if you expect to owe income tax
Employment tax deposit schedules from your payroll provider and the Internal Revenue Service
Any state sales tax filing dates if you have already registered

Useful references from the Internal Revenue Service:

Afternoon bakes this into your monthly reviews. We surface upcoming deadlines alongside your financials so you do not rely on memory.

Step 10: Decide what you will own vs what you will outsource

In the first ninety days you need to answer a simple question:

What will you do yourself
What will software and specialists do for you

A common split for early stage teams:

Founder or operations lead owns bank approvals and big picture decisions
A bookkeeping and tax partner owns everyday coding of transactions, closings, and filings
Tools like Afternoon connect the systems, keep the data aligned, and surface issues before they become problems

The exact mix does not matter as much as picking one and sticking with it.

A simple 90 day checklist

Here is the full list in one place.

Days 0 to 30:

Choose your legal structure and formation state
Form a Delaware C corporation
Get an Employer Identification Number from the Internal Revenue Service
Open a dedicated business bank account

Days 30 to 60:

Set up an accounting system and chart of accounts
Decide when to start payroll and pick a provider
Register for federal and state payroll accounts as needed
Map your early sales tax exposure by state

Days 60 to 90:

Close your first full month of books
Create a compliance calendar for federal and state deadlines
Decide what to keep in house and what to run through partners and tools
Connect your systems into Afternoon so you have one clear view of cash, taxes, and runway

Official U.S. resources worth bookmarking

Legal structure and formation:

Federal tax identification and small business resources:

Payroll and employment taxes:

General filing and payment guidance:

If you work through this list in your first ninety days, you will have a legal and tax stack that investors recognize and that tools like Afternoon can plug into cleanly. After that, your main job is to keep it consistent while you focus on building the actual product.