

The “Few Months In” Checkup for Startups - ananddass
http://blog.filepicker.io/post/35848874458/the-few-months-in-checkup

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ericabiz
> "It's illegal to not have Workman’s Comp."

Not true. You need to check local laws. For instance, here is the law in
Texas:

"Texas law does not require workers' compensation. However, your customers may
require you to carry it."

Reference: <http://www.tdi.texas.gov/wc/index.html>

And in California, if you don't have any employees, you may not be required to
have workers' comp (but you should probably carry it anyway if your co-founder
is not your spouse):

"My spouse and I are the sole owners of our business. We have no employees.
Are we required to obtain workers' compensation coverage?

Generally, coverage for sole owners is optional. You would, however, need to
have workers' compensation coverage for any employee you may hire, even if
it's just one employee, and even if it’s just temporary employment."

Reference: <http://www.dir.ca.gov/dwc/faqs.html>

Please update your post to explain that this is based on jurisdiction, and to
check local laws.

Also: This is one of many reasons why running a business in Texas is better
than running one in California. (Yes, I've run tech companies in both places.)

~~~
brettcvz
Got it! Good call, thanks

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jaredstenquist
\- Great list. Having gone through all of this I can tell you it's very
expensive and time consuming to do all of this, but it is prudent.

\- 83B 83B 83B! This one cost me over $100,000 in a deal, and at one point
came close to killing a venture financing in the 11th hour - all because an
attorney told us we were all set (when we weren't). Make sure your attorney
and accountant have startup experience, and don't be afraid to ask the opinion
of others. It's incredible how one sheet of paper can totally kill your
business.

\- I disagree with the PayPal suggestion. A check is more valuable to me as a
vendor since i don't have PayPal taking out their fees. This is substantial
money if you are talking about thousands or tens of thousands of dollars.

~~~
brettcvz
Makes sense, will add an note on the paypal comment in github

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tlogan
Excellent list.

One thing - to fix your HR (and medical insurance, 401k, and other things) you
might want to consider to outsource everything to something like TriNet
(<http://www.trinet.com/>). Depends on company size but it really helps having
401k and other things already as a part of your package.

In general, I would suggest the following approach:

\- outsource legal to a lawyer (she will tell you to check code, about 83B,
etc.)

\- outsource finance to your accountant (the good one (like mine), will
actually explain you the best practices and how to organize things not
directly under his control - like spreadsheet templates, which SW to use, etc)

\- outsource HR to HR company or HR consultant

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mikemac
Good read, a few things to add:

\- Even when you think you are getting a great deal by buying something on
Amazon and not paying taxes, you still owe the state those taxes. Your
accountant will know more, but you should be filing a Use tax at least every
quarter. Easy to get burned if you are buying tons of equipment for new hires
and the state anything on it.

-Vacation policy: The 'take it when you need it' method works great. If you don't think it will work, be ready to keep track of all employees used days (it's a huge hassle) because it is a liability and you will owe them some cash on unused days if they split ways with the company.

-If you are going to fire someone, talk to your lawyer or HR connection first. The law can be strict on making sure that the employee is paid on the day you fire them through that time period. It's good to have a check ready for this before you sit them down.

~~~
brettcvz
Great! Happy to take a look at a pull request if you have one

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dangrossman
#6 appears incorrect. 1099-K is a form prepared by credit card processing
services informing the IRS about their merchants' annual transaction volume.
It's not something FilePicker or any other company outside the payment
services industry would send to vendors.

The author might be confusing it with 1099-MISC, which PayPal does not take
care of for you. If you pay individuals (or LLCs that have not elected to be
treated as a corporation) over $600 during the year, you have to send them and
the IRS a 1099-MISC to report that non-employee compensation.

~~~
ananddass
Should have articulated this better in the original post [I am not a lawyer so
I'd suggest talking to yours to nail it down.]

1\. 1099-k: over $20,000 in goods and services sales and completed 200
transactions.

There is an Etsy link quoted in the comments that explains Paypal's role in
these transactions clearly.

2\. 1099-MISC forms: Paypal used to issue 1099-MISC. They stopped issuing
these since they discontinued the option to direct debit your money market
account for payments.

Hope this clarifies.

[Edit]-just got off the phone with Paypal support and they confirmed that they
don't issue 1099-Misc

[Edit-2]-proof why things like this are a time sink! outsource and get back to
building product and talking to users.

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jamiequint
With the exception of a few of these things (2, 8, 10, 14) I find many of
these things to be a huge time suck and I would suggest avoiding them until
absolutely necessary.

Its easy to focus way too much effort on operations at the expense of actually
building your business.

~~~
brettcvz
While I agree it can be a huge time suck, the way to deal with many of these
things is to find the right people to outsource to (particularly for HR,
corporate contracts, etc) rather than ignore entirely

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davmar
I bootstrapped my multi-million dollar revenue producing company and did very
few of those initially. 4,5, and 10 I did. But a co-founders wife was our
accountant until things got more complicated.

Some of these we probably should do.

Either way, I'd spend most of your energy building something that'll produce
revenue or users. Who cares about your vacation policy/employees handbook if
you've got no money?

I'll look into the 83b. Thanks for the list!

~~~
spartango
While I strongly agree that _most_ of your energy should go towards building
things, it's important make sure you check all the necessary boxes, so to
speak, to make sure your work doesn't go to waste/get compromised for lame
reasons.

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ipince
"Be aware that pictures and other things you write down (including emails) can
be used against you for legal/tax purposes. If you’re living out of your
office or visa-versa, you didn’t tell me, and you don’t have any pictures. It
can be dealt with, but you’d rather not."

Uhh.. What? Clarify?

In general, please fix grammar. Lots of issues that actually make the list
harder to understand.

Thanks for putting it together. It's pretty useful!

~~~
brettcvz
In general, it's referring to the fact that you should be very careful with
what you write down.

For example, if you send an email to a potential employee that the 10,000
shares you are offering them are worth $10,000, you've effectively valued your
stock at $1/share. Now if you try to go and give options at $0.02/share and
claim that is "fair market value", if the IRS ever saw the original email you
would be in a bad situation.

Re. the grammar, happy to fix it up as necessary, it was done in a very
conversational style as I didn't think it would be this popular, and likely
has ways that it can be improved for clarity. Let me know what/where can be
improved and I'll fix it up

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ry0ohki
I'm not so sure about the advice with PayPal, according to this article PayPal
only sends out the 1099-K to vendors making over $20k or 200 transactions
[http://www.etsy.com/blog/en/2012/the-paypal-1099-k-dont-
fear...](http://www.etsy.com/blog/en/2012/the-paypal-1099-k-dont-fear-it/)

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josh2600
Solid advice.

One thing, this might be just me, but I find the light grey on white text very
hard to read. I'm on a Macbook Air, so it's not a retina screen, but still.

~~~
ananddass
Thanks for the feedback Josh. If you are having this issue a lot of others
will to. We will modify this to improve readability.

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tptacek
Great checklist. The only thing I can think to add:

* If you're going to do business with larger companies, make sure your licensing is up-to-date in every city and state that you have employees. There are fines for getting this wrong, but they're not (as I recall) that big a deal; the bigger problem is, big client purchasing departments will sometimes verify compliance it very inopportune times; this can cost you deals.

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snambi
> "That any open-source components you’re using are fine for commercial use.
> These days, a lot of great software is being written under the MIT or Apache
> Licenses, but check. Twice."

You can also use GPL, LGPL software. It is okay to use these licenses for
commercial use, in web applications. but, you cannot distribute your app as a
proprietary software. Basically you can also consider using GPL licenses.

