Your Business's First Year: The Tax Checklist
The registrations, elections, and deadlines that belong to year one — including the ones with no second chance.
Reviewed by the Fairlight Accounting cross-border tax team — U.S. & Canadian Tax Desks
A new business's first year sets elections that are hard to undo: the accounting method, the treatment of startup costs, the vehicle deduction method, and the timing of an S corporation election. It also brings registrations and deadlines — federal, state, and local — that many owners discover only when a notice arrives. This checklist covers them in order.
On this page
What is the first-year checklist?
| When | Action |
|---|---|
| At formation | Choose the entity; file with the state; obtain an employer identification number; open a business bank account (companies formed in the U.S. no longer file beneficial ownership reports with FinCEN) |
| First two months and 15 days (if electing S status for year one) | File Form 2553 within two months and 15 days of the start of the tax year |
| Before the first sale | Register for sales tax if selling taxable goods or services; obtain the county and city business tax receipts |
| Before the first hire | Payroll registration, workers' compensation, new-hire reporting |
| Ongoing | Bookkeeping system with a chart of accounts mapped to the return; separate every business transaction |
| Quarterly | Estimated taxes, if you expect to owe $1,000 or more when you file (C corporations: $500 or more) |
| January 31 | Forms 1099-NEC to contractors paid $2,000 or more (payments made after 2025); W-2s if you had employees |
| April 1 (Florida) | Tangible personal property tax return (Form DR-405), filed with the county property appraiser, for business equipment and furnishings owned on January 1 |
| By the return due date | Adopt the accounting method, the startup cost election, and the vehicle method on the first return; SEP contribution if desired |
| May 1 (Florida, following year) | First annual report with the Division of Corporations |
Which first-year choices are locked in?
- Accounting method. Adopted on the first return; changing later requires Form 3115.
- Startup costs. The deemed election lets you deduct up to $5,000 of startup costs and, for a corporation or partnership, $5,000 of organizational costs in the year business begins — each $5,000 reduced dollar for dollar once that category's costs exceed $50,000 — with the rest amortized over 180 months. Costs must be tracked from the start.
- Vehicle method. To use the standard mileage rate for a car you own, you must choose it in the first year the car is used in the business; starting with actual expenses bars the standard rate for that car later.
- Depreciation elections. Section 179 is elected, and bonus depreciation is declined by class of property, on the return for the year the asset is placed in service.
What about estimated taxes in year one?
If you had no tax liability last year, were a U.S. citizen or resident all year, and your prior tax year covered 12 months, there is no federal underpayment penalty for the first year — but tax is still due in April, and it is usually large. Set aside a percentage of profit from the first month.
What do new Florida businesses often miss?
Tangible personal property tax on furniture and equipment (an initial return is required even when the property is under the $25,000 exemption), the county local business tax receipt, reemployment tax registration once quarterly payroll reaches $1,500 or there is an employee in 20 weeks of a year, and the annual report, which carries a $400 late fee for corporations and LLCs filed after May 1 and administrative dissolution if not filed by the third Friday of September.
Frequently asked questions
Do I need an EIN if I have no employees?
A sole proprietor without employees can use a Social Security number, but an EIN keeps your number off vendor forms and is needed for most business bank accounts.
Can I deduct expenses from before I officially started?
Yes, as startup costs under the election, if they were incurred investigating or setting up the business and the business actually begins; the deduction starts in the year it opens.
Should I elect S status in year one?
Usually only if profit is already expected to exceed a reasonable salary; otherwise wait and elect effective January 1 of a later year.
What if I missed the sales tax registration?
Register now and consider voluntary disclosure for the back period; the tax is owed whether or not it was collected.
Official sources
The IRS explains: “Listed below are links to basic federal tax information for people who are starting a business, as well as information to assist in making basic business decisions.” — Internal Revenue Service, Starting a business, https://www.irs.gov/businesses/small-businesses-self-employed/starting-a-business
The IRS explains: “You can elect to deduct up to $5,000 of business start-up costs and up to $5,000 of organizational costs. The $5,000 deduction for start-up costs and the $5,000 deduction for organizational costs is reduced by the amount your start-up or organizational costs exceed $50,000.” — Internal Revenue Service, Publication 583 (12/2024), Starting a Business and Keeping Records, https://www.irs.gov/publications/p583
Next step
Fairlight Accounting handles U.S. domestic, cross-border (U.S.–Canada), and international tax returns, plus bookkeeping, payroll, and CFO advisory. Our U.S. Tax Desk sets up new businesses with the elections, registrations, and bookkeeping decided in the first month. See pricing or book a free fit call.
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