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Checklist| Guide to Self-employment Compliance
STEP 1
Small Business Structure
Determine if you should form a Limited Liability Company (LLC) or remain a Sole Proprietor.

Contact your Attorney, Accountant, or a LLC Formation Service to appropriately structure your small business.
STEP 2
Federal Tax ID Number
Step 1 must be done first if you are setting up an LLC.
An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity.

Generally, businesses need an EIN. Even if you're a sole proprietor, and EIN may be a good idea so you don't have to share your SSN.
STEP 3
Bank Accounts
Step 1 and 2 should be done first.
Set up a bank account for your business, separate from your personal finances.

The number one way to maximize deductions, and remain compliant as you grow, is to separate your business and personal money.
STEP 4
Sales & Local Tax
Determine if any of your products and/or services are subject to local or State tax; including but not limited to Sales Tax and Lincoln Occupation Tax. Learn more
STEP 5
Receipts
The IRS requires that supporting documentation be kept for all financial transactions for your business. Learn more

Among other things, lack of documentation may result in disallowed deductions and/or disqualification of tax credit or grant programs.
STEP 6
Licensing
Check State and local regulations to determine if your business, or employees, are required to hold any licenses or certifications.
STEP 7
Insurance
Check with your Insurance provider to ensure you are properly insured to do business. General business liability coverage is typically required.

In addition, employers are required to have Workers Compensation Insurance for W2 employees.
STEP 8
Contracts/ Agreements
Although is not required, establishing legal contracts or agreements to define the specifics related to the services your business is providing, and how compensation should be handled, is key in limiting risk and cash management.