Good morning! Starting a business generates more tax obligations in the first 90 days than most people accumulate in years as an employee. The entity choice, the EIN, the state registrations, the sales tax permits, and the estimated tax schedule. None of it shows up on the formation paperwork your state handed you.

This week’s lineup:

🚀 Starting a biz in 2026? This nine-digit number needs to happen first.
🪪 Got your EIN? Cool. Here’s what you still don’t have.
🗺️ You sold to someone in Texas. Texas may already expect a check.
📋 Free this week: the tax setup checklist every new business needs in 2026.

The Basics

🚀 Starting a business? The first thing you need isn’t what you think

Image from Envato

The Quick & Bristly: Before you open a business bank account, sign a contract, or hire anyone, you need an EIN. It takes 10 minutes, it’s free, and skipping it creates problems that follow you for years.

Everyone starting a business thinks about the logo, the website, the first sale. Almost nobody thinks about the nine-digit number that makes the whole operation legitimate in the eyes of the federal government. Until they need to open a bank account and the banker asks for it.

An Employer Identification Number (EIN) is your business’s federal tax ID. Think of it as a Social Security number for your business. You need one before almost anything else happens, and the good news is it takes about 10 minutes to set up and costs exactly nothing.

You need an EIN to:

Open a business bank account
File business tax returns
Set up payroll if you ever hire
Work with vendors who require a W-9
Apply for licenses and permits

The application is Form SS-4, available at IRS.gov. Apply online and your EIN is issued immediately. No waiting, no fee, no follow-up required.

One thing to get right before you apply: know your entity type. Your EIN is assigned to your business as structured, and changing your structure later can require a new one. Settle the LLC vs. sole proprietor vs. corporation question first, then get your EIN.

And if you’ve been using your Social Security number on vendor forms and contracts … stop. An EIN keeps your SSN out of business documents and costs you nothing to get.

👉 Apply for an EIN on IRS.gov

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True or False: If you form your LLC in January and want S-Corp tax treatment for that same year, you have until April 15 to file Form 2553.

(Find the answer at the end of this newsletter)

The Strategy

🪪 You have an EIN. Your business still isn’t fully registered.

Photo from Unsplash

The Quick & Bristly: Most new business owners get their EIN and assume the ID situation is handled. It isn’t. There’s a whole stack of state, local, and sales tax registrations that nobody tells you about, and the penalties show up long after the registration was supposed to be completed.

The EIN is not the finish line. It’s the starting gun.

Your Employer Identification Number covers the federal side of your business identity. It does not register you with your state tax authority, create a sales tax account, enroll you in state unemployment insurance, or substitute for a single local business license. The federal government and your state are entirely separate systems that do not communicate with each other about your existence.

Here’s what most new businesses actually need beyond the EIN:

State income tax registration. Most states require businesses to register separately with their department of revenue, separate from the LLC formation you already filed. This creates your state tax account and establishes your filing obligations. Some states assess penalties for late registration that have nothing to do with your actual tax liability.
A sales tax permit. If you sell taxable goods or services, you cannot legally collect sales tax without one. And here’s the part that catches people: economic nexus rules mean you may owe sales tax in states where you’ve never set foot. Sell enough into a state and you have an obligation there, starting from when you cross the threshold, not from when you get around to registering.
Payroll registrations. If you have employees, including yourself as an S-Corp owner, you need Electronic Federal Tax Payment System (EFTPS) enrollment at the federal level and a separate state workforce agency account. EFTPS takes five to seven business days to process. Set it up before your first payroll, not after.
Local licenses. Your city or county may require a general business license, a home occupation permit, or a zoning permit. They’re usually cheap. Operating without one isn’t.

The businesses that end up in compliance trouble almost never did something intentionally wrong. They just didn’t know the stack existed.

👉 IRS EFTPS enrollment and federal deposit guidance

The Deep Dive

🗺️ Your new business probably owes sales tax in states you’ve never visited

Image from Evanto

The Quick & Bristly: Since 2018, selling enough into a state — no office, no employees, no physical presence required — can trigger a sales tax collection obligation. Most new businesses don’t know this. The states absolutely do.

Before 2018, sales tax was simple. You had a store or warehouse in a state, that state could tax you. You had nothing there, it couldn’t. Then the U.S. Supreme Court decided South Dakota v. Wayfair and rewrote the rules entirely.

Under economic nexus, the post-Wayfair standard now adopted by nearly every state, the volume of sales you make into a state can create a tax collection obligation regardless of where you or your business are physically located. No office required. No employees required. Just sales.

Many states set the threshold at $100,000 in sales or 200 transactions in a calendar year. Cross it and the obligation begins. Miss the registration and the liability (plus interest, plus penalties) accumulates silently until a state audit finds it.

For a new business selling nationally, this is not a future problem. It’s a “now” one.

A few things worth knowing:

Physical nexus never went away. Employees, contractors performing work in a state, inventory stored in a fulfillment center (including Amazon FBA warehouses you didn’t choose and can’t control) all create nexus. Amazon decided where your inventory lives. The sales tax obligation exists regardless.
Services aren’t automatically exempt. A growing number of states tax specific services — data processing, information services, some professional services. Don’t assume you’re clear because you sell services rather than goods.
Voluntary disclosure exists for a reason. If your business has been operating for a year or more without addressing nexus, most states have programs that let you come forward before they find you, typically with a limited lookback period and reduced penalties. If the state contacts you first, those favorable terms disappear.

The window for clean compliance is the beginning. For a business in its first year, that window is still open.

👉 Multistate Tax Commission Voluntary Disclosure Program

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The Freebie

🗂️ The tax setup checklist every new business needs in 2026

Image from Evanto

Everything in today’s issue, turned into a step-by-step action list. Every registration, deadline and filing obligation, in order, from day one through your first full year.

Download the free new business tax setup checklist →

🎙️ Listen: Main Street Business “What Every New LLC Owner Must Do to Avoid Costly Mistakes.” No fluff, no upsell, just the mechanics, explained by two people who have done this with thousands of clients.
🛠️ Use: The IRS “Starting a Business” Resource Hub. It’s not flashy, but it’s authoritative and current. The IRS has organized every federal requirement for new businesses (EIN application, entity type guidance, tax calendar, employment tax setup, estimated tax instructions) in one place.
📖 Read: “Sales Tax by State: Economic Nexus Laws.” A clean, current, state-by-state breakdown of every economic nexus threshold in the country. The dollar amounts, the transaction thresholds where they still exist, and how each state measures the lookback period. Updated regularly as state laws change.
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Answer: ❌ False!

The S-Corp election deadline for a new entity is within 75 days of formation, not the April 15 tax deadline. For an LLC formed January 1, that window closes around March 17. Miss it, and your S-Corp election applies to the following tax year at the earliest, unless you qualify for late election relief under Revenue Procedure 2013-30, which requires a reasonable cause statement and is not guaranteed. The deadline is strict and arrives faster than most new business owners expect.

You're reading an archived edition of TaxStache.

🚀 Your LLC is formed. Now the tax part starts.