Business Compliance: A Practical Checklist for Small Business Owners

Formation and registration

Register your business entity, get a federal tax ID if needed, and keep your state filings current.

Choose an entity type, register with your state, and apply for an Employer Identification Number if your business needs one. Many states require annual or biennial reports and fees to keep an LLC or corporation in good standing. Missing them can lead to penalties or administrative dissolution.

See how to register a business and business tax ID numbers.

Licenses, permits and zoning

Many businesses need local, state or industry licenses. Zoning rules can limit what you do at a location.

Requirements depend on your trade, city and county. Examples include general business licenses, professional licenses, health permits, signage permits and contractor licenses. Renewals have deadlines. Learn more in how to get a business license and zoning laws.

Home-based owners should read licensing a home business.

Taxes and filings

Businesses may owe income tax, self-employment tax, payroll tax, sales tax and excise taxes, each with its own schedule.

Build a tax calendar with due dates for estimated payments, payroll deposits, sales tax returns and annual returns. Keep payroll taxes separate from operating cash, since they are trust funds you hold for the government. Read how to manage business taxes and payroll vs. income taxes.

Your accountant can confirm what applies in your state.

Employment compliance

If you hire, you must handle wage laws, worker classification, I-9 forms, payroll taxes, workers' compensation and posting requirements.

• Classify workers correctly as employees or contractors
• Complete Form I-9 for each new employee
• Pay at least the minimum wage and overtime where required
• Carry workers' compensation where your state requires it
• Post required notices

See how to fill out Form I-9 and types of employment.

Insurance, contracts and records

Carry the insurance your trade needs, use written contracts and keep records for the periods the law requires.

General liability, property, professional liability and commercial auto policies cover different risks. Clients and landlords may require specific coverage. Read types of business insurance.

Keep tax and payroll records for the time the IRS and your state recommend. See how long to keep business records.

Build a compliance calendar

A single calendar with every renewal, filing and payment date prevents most compliance problems.

List each obligation, who handles it, the due date and the cost. Include state annual reports, license renewals, insurance renewals, sales tax returns, payroll deposits, estimated tax payments and any industry certifications. Add reminders 30 and 7 days before each date.

Review the calendar quarterly and update it when you hire, open a new location, start selling in another state or add a new service. Each of those can create new obligations.

Assign one person to own it, even if that person is you. Compliance fails when everyone assumes someone else is watching. An hour of setup now prevents penalties that can run into the thousands.

Compliance costs cash, so plan for it

Fees, insurance premiums and tax payments arrive on fixed dates. Put them in your cash forecast so they never surprise you.

List every recurring compliance cost with its month. Set aside funds in a separate account. Late fees and penalties are among the least productive costs a business pays.

If a large renewal or tax bill lands before sales do, a short-term tool like a business line of credit can smooth the timing. ROI Funder considers 500+ FICO, 6+ months in business and $20,000+ monthly revenue, and shows true cost before you sign.