First-Year Business Compliance Checklist

What "Compliance" Means in Year One

Compliance in a business's first year means the filings and registrations that keep it legally able to operate, separate from the one-time work of forming it. The SBA groups these into licenses and permits, taxes, insurance, and labor law obligations, and says "your legal responsibilities will depend on your business and location." This checklist walks through the common ones in roughly the order they come up.

Step 1: Get an EIN

An Employer Identification Number from the IRS is free and usually issued immediately through the online application. Most banks require one to open a business account even for a single-member LLC that the IRS would otherwise let file under the owner's Social Security number. Apply only after your state has approved your formation filing, since the application asks for your exact legal name and formation date.

Step 2: Confirm Your Beneficial Ownership Status

The Corporate Transparency Act originally required many LLCs and corporations to file a Beneficial Ownership Information (BOI) report with FinCEN. Under a 2026 FinCEN final rule, domestic companies, those formed under U.S. state law, are exempt from that reporting requirement; only certain foreign companies registered to do business in the U.S. remain subject to it. This is separate from the beneficial ownership information your bank may still ask for when you open an account.

Step 3: Register for Sales Tax Before Your First Sale

If your business sells taxable goods or services, register with your state's tax or revenue agency before making your first sale, not after. The permit goes by different names, a Seller's Permit, a Sales and Use Tax Permit, or a Vendor's License, depending on the state, but most states consider collecting tax without an active permit a violation on its own. See our guide to registering for sales tax for the state-by-state steps.

Step 4: Register as an Employer, If You Hire

Before your first hire, register for state unemployment insurance and state income tax withholding, usually through your state's labor and revenue agencies. On the federal side, you will need to collect Form W-4 from each employee, withhold and deposit payroll taxes, and, for an independent contractor instead of an employee, collect a Form W-9 and issue a Form 1099-NEC once you pay them $2,000 or more in the year, per the IRS's updated reporting threshold for payments made after 2025.

Step 5: File Your State's Annual Report

Most states require an LLC or corporation to file an annual or biennial report to stay in good standing, with fees ranging from $0 in several states to $500 a year in Massachusetts. The due date is usually tied to your formation anniversary or a fixed calendar date set by your state, and missing it can eventually lead to administrative dissolution. Confirm your specific state's deadline and fee rather than assuming a flat number applies everywhere.

Step 6: Renew Licenses and Permits

Some business licenses are one-time, but many city, county, and industry licenses renew annually or biennially. Keep a list of every license or permit you obtained when you launched, along with its renewal date and fee, so a renewal does not come as a surprise partway through the year.

Step 7: Keep Records and a Separate Bank Account

Running all income and expenses through a dedicated business bank account, rather than a personal one, supports the liability protection an LLC or corporation is meant to provide and makes recordkeeping far simpler at tax time. Keep formation documents, tax filings, licenses, and payroll records organized from day one rather than reconstructing them later.

Build a Compliance Calendar

Once you know your state's annual report due date, your sales tax filing frequency, and any license renewal dates, put them on a single calendar with reminders set well before each deadline. A missed deadline is usually cheaper to avoid than to fix after the fact, since many states add penalties, interest, or require a formal reinstatement process.

BOI Exemption Does Not Remove Every Ownership Disclosure

Even though domestic LLCs and corporations are exempt from FinCEN's BOI reporting, your bank will still verify your beneficial owners under its own Customer Due Diligence rule when you open an account. These are two separate requirements, and the exemption only applies to the FinCEN filing itself.

Multi-State Businesses Multiply the Checklist

If you operate in more than one state, you generally need to register as a foreign LLC or corporation in each additional state, with its own registered agent, annual report, and sales tax rules. Treat each state as its own compliance checklist rather than assuming one state's deadlines apply everywhere you do business.

Registered Agent Requirements Continue Year to Year

Most states require an LLC or corporation to maintain a registered agent at a physical address throughout its existence, not just at formation. Confirm who is serving in that role and that the address on file with the state is current.

This Is Not Legal or Tax Advice

Which licenses, taxes, and registrations apply to a specific business depends on its industry, structure, and location, and these rules change over time. Talk to a tax professional or attorney to confirm what applies to your business specifically.

Set Reminders Earlier Than You Think You Need To

Many first-year deadlines, like an annual report or a license renewal, are easy to miss simply because they come around only once a year. Setting a reminder a month ahead, rather than the week of the deadline, gives you time to gather documents or resolve a problem before it becomes a late filing.