Congratulations on launching your new startup! Now that you’re busy building your empire, tax deadlines might be the furthest thing from your mind. But fear not, with a little planning you can stay on track from day one.
Question: Aside from income, payroll and sales taxes, what are some lesser known tax forms and deadlines that might apply to my startup?
Answer: While every startup’s tax journey is unique, here are three filings you’ll likely encounter:
- 1099s: Think of these as receipts for independent contractors you’ve hired. If you’ve brought in freelancers, consultants, or gig workers, you’ll need to send them a 1099 form by January 31st of the following year, reporting the total amounts you paid them. Don’t forget to send a copy to the IRS by the same deadline!
- Delaware Franchise Tax: If your startup is incorporated in Delaware (most venture-backed startups are), you’ll owe an annual franchise tax. The exact amount depends on your authorized capital stock, but the deadline is (almost) always March 1st of each year. Remember, timely filing avoids late fees and potential penalties.
- Form 3921: This one’s is probably the least known and pretty specific to startups that have employee stock options. If an employee (or former employee) exercises their ISO options and purchases stock, this is the form that lets the IRS know critical information around that exercise such as how many shares and at what price they were exercised. Form 3921 typically has two deadlines: January 31 to get a copy to your employee, and February 28 to get a copy to the IRS.