First-Year Founder Personal and Business Taxes

Open a business bank account before you deposit investor checks or revenue. Pay company expenses from that account only. Every personal transfer in or out is a bookkeeping headache and, in a C corp, can create dividend or compensation issues.

If you're paying yourself, pick a method and stick with it: W-2 salary through payroll, or a founder loan with documented terms. Random transfers labeled 'payroll' without withholding are a red flag in an audit.

Keep receipts for anything you might reimburse through an accountable plan — home internet, travel to investor meetings, software used exclusively for the business. Without documentation, those deductions disappear.

W-2 wages from your startup (Box 1) go on Line 1a. If you didn't pay yourself a salary, you may still have taxable income from consulting, a prior job, or a spouse's income — the IRS doesn't care that your company is pre-revenue.

If you filed an 83(b) election on restricted stock or early-exercised options, you generally don't owe tax again until sale (for stock) or have AMT exposure (for ISOs). No 83(b)? You may owe tax as shares vest or restrictions lapse — often a nasty surprise.

Estimated tax payments (Form 1040-ES) are due April 15, June 15, September 15, and January 15 if you'll owe more than $1,000 after withholding. Founders who skip these because the company is losing money still get penalized if household income triggers a balance due.

Form 1120 is due the 15th day of the 4th month after year-end (April 15 for calendar-year companies). Extensions give you six more months to file, not to pay.

You'll report revenue, expenses, and probably a net operating loss in year one. That NOL can carry forward — but you need accurate books to use it later. 'We'll figure it out at tax time' loses NOLs and R&D credits.

Delaware franchise tax and the annual report are separate from federal. California founders with CA nexus also file Form 100; the $800 minimum franchise tax generally starts in the second taxable year for newly qualified corporations.

☐ EIN confirmed (don't use your SSN for vendor W-9s)

☐ Business bank account; no commingling

☐ Payroll set up if taking W-2 salary — even $50K/year triggers withholding

☐ 83(b) filed within 30 days if you early-exercised options or bought restricted stock

☐ Cap table matches board approvals (Carta, Pulley, or spreadsheet — just make it accurate)

☐ Quarterly estimated taxes on personal income if needed (Form 1040-ES)

☐ Save engineering time logs if you might claim R&D credits later

☐ Issue a W-9 from the company for any contractors; collect 1099-NEC info if you paid anyone $600+

The company deducts ordinary business expenses: hosting, SaaS, contractor payments, legal fees for formation. Your personal return doesn't double-dip — if the company paid it, you don't also deduct it personally.

Home office deduction on your personal return is limited for W-2 employees (generally not allowed). If you're self-employed on a Schedule C side project, different rules apply — but a C corp founder taking W-2 pay usually can't claim it for startup work.

Startup costs up to $5,000 may be deductible in year one with the rest amortized over 180 months under Section 195. Formation legal fees often get capitalized instead. Your CPA should make that call based on your invoices.

Bank statements for every account (company and personal if you had reimbursements). Profit-and-loss and balance sheet — even if rough.

Cap table export, 83(b) confirmations, option grant summaries, and any 409A report. Payroll summary (Form W-3 / 941s). Contractor 1099s issued or received.

A plain-English note on anything weird: related-party loans, international contractors, stock splits, or 'I wasn't sure if this was personal or business.' That saves back-and-forth in March.