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Composed: The startup operating guide
Origin: the checklist for incorporation & beyond
Origin: the checklist for incorporation & beyond
When
Order
What needs to be done
Recommended
Honorable Mention
Year 1 Cost (<5 ppl)
Notes
Week 0: Prepare Scaffolding
4
1
Purchase your domain
<$50
After Google Domains announced the sale to Squarespace, Namecheap is our go-to recommendation.
It’s quite easy to use, is a simple interface, and their domain search / exploration tools are best-in-class.
Cloudflare is a bit less user-friendly; Dynadot is well-priced but not quite “the” player. So both platforms are listed as honorable mention. Avoid most other platforms.
2
Set up email
<$50
Setting up your email ASAP will save you a lot of pain and searching. Google is the easy choice; MS Outlook isn’t horrendous, but Google is the gold standard: easy to use but powerfully configurable. Avoid everyone else.
Pricing starts at $6-7 / mo / user, scales up to 2-5x as you step up in pricing tiers.
Note: it’s also worth setting up contact@, founders@, sales@ and others as . Fuller article coming on this soon.
3
Set up password manager
$50-250
This is one of the biggest misses in the setup phase: set up 1Password, start with the individual / team subscription. For $3-20 / mo, it is one of the most no-brainer decisions you can make. Avoid Lastpass or other options.
4
Set up virtual mailbox
$238 / state for Sec of State + RA
$475 / state for all biz + payroll tax registrations and compliance
$250-500
This is the second biggest miss in the setup phase. Setting up a VMB very early ensures that your mail (from IRS, from states, from vendors) gets auto-scanned and digitized, rather than getting snail mail to a founder’s house. $30-50 / mo may seem like a lot in the early days, but this should be one of your earliest purchases.
AbstractOps is not a virtual mailbox provider, per se, but we include a subscription to in our subscription to the tier.
@Stable
Week 1: Incorporation & Governance
5
5
Incorporate 🥳
$250-500
Stripe Atlas has the best balance of functionality and reliability; it’s the right answer for startups.
Clerky gets an honorable mention — they have some legal automation, but it won’t scale beyond the first 6-12 months. Re: everyone else... they’re either tailored to small business / LLC formation, or we’ve encountered mixed things.
6
Action by Incorporator; Bylaws; Founder stock issuances & 83(b); Register EIN
Free
There are a range of corporate governance activities required at this stage, which are arcane and not really something you need to dig too deep into. As long as you follow Stripe’s lead here, you should be fine in the vast majority of cases (obviously not legal advice). They recently shipped automating 83(b) on the platform, no more snail mail!
7
Bylaws / charter amendments (optional)
$1,000+
If you’d like to customize the base Stripe docs (for things like supervoting rights or dual share classes). Note: this is really not necessary or typical. IF needed, work with a reliable firm to handle this.
8
Register with SoS where founders live
$238 / state for Sec of State + RA
$475 / state for all biz + payroll tax registrations and compliance
Free
States almost always require a company to register / qualify to operate in states where founders & executives live, but it’s easy to miss.
Yes we’re biased here 😉, but most alternatives are either 2-3x expensive, or have a terribly old school interface (registered agents).
9
Set up bank account
Free
Obviously, this will be top of mind! You’ll generally need an EIN, but some banks (e.g., Mercury) can work around that for newly incorporated startups.
Mercury is by far the best options for startups; Brex and AngelList are no-regret as well.
AngelList’s Build / Stack product is worth a look for cap table, but in our view a dedicated bank account product will scale better with you.
Week 2: Essential Tools
4
10
Set up internal chat
Free
Since this is free, might as well get started early for easier collaboration. Threads is a newcomer that looks really interesting, but Slack is the go-to due to the benefits of collaborating with other organizations via Slack Connect.
11
E-sign solution
$50-250
This is optional, but it’s not a bad idea to get an e-sign solution in place early. It might run you $5-15 / mo but it looks more tidy with employees, investors, etc. We generally recommend against DocuSign — while it has some powerful enterprise functionality, it’s an antiquated interface that’s quite hard to use. HelloSign is a really solid go-to.
Adobe is also an excellent go-to because — while the online interface is a bit less intuitive — the ability to send PDFs from the Acrobat desktop app is really easy, and the subscription comes with a lot of powerful PDF manipulation functionality.
PandaDoc is more expensive but better-built for sales use cases.
12
Reimburse personal expenses
Free
Doesn’t matter where this is — could be in Apple Notes. Just keep track (and receipts) somewhere to avoid commingling funds! Make sure to keep record of receipts, especially over $75.
When you Start Operating
5
13
Register with DoL/DoR
$238 / state for Sec of State + RA
$475 / state for all biz + payroll tax registrations and compliance
$250-500
Yes, we’re biased here 😉. But comparable offerings are 2-3x as expensive.
You need to do this before you run payroll in a state — payroll companies cannot remit income or unemployment taxes without these accounts opened. It can take from 30 mins to 10 hours depending on the state. for more.
14
Set up payroll
$250-500
Gusto is our clear recommendation here for very early stage companies. Rippling has built some powerful product, but it can be very overwhelming for founders to work with, and many of those features are moot at the early stage.
Generally, please avoid more “enterprise-y” solutions like ADP.
15
Get benefits if needed
Free
The best call is to use whatever “small group” benefits come with your payroll (whether you use Gusto or Rippling). However, there are sometimes minimums (e.g., minimum 2-5 members on the plan) which might limit your ability to sign up via your payroll’s broker.
There’s a recent alternative, via regulation enabling “ICHRA” — where you can create a tax-advantaged reimbursement, and employees can shop and buy their own plan. This can work well in many cases, but there are a few states (NY is a commonly notorious example) where the plans you can buy yourself on a state’s marketplace are really bad. So, especially if your employees are in favorable states, and/or if you’re too small to get it via Gusto / Rippling, this is a good alternative.
16
Set up a corporate card
Free
The reason this is not earlier in the journey is because most providers (especially Ramp / Brex) require $50K or more in your account to issue you a card, because they do not get a personal guarantee from founders.
However, Mercury’s IO card is a solid option and should not require much of a balance to get started, so this is a good way to make sure you’re earning some rewards along the way even in the early days. If you’re already far enough along when you’re considering this (e.g., pre-seed raised or $250K+ in the bank), it’s worth considering Ramp out the gate — that’s our recommendation for Seed+ companies.
17
Set up bookkeeping software
Free
Quickbooks has long had an iron-grip on this category, especially because of the deep adoption by accountants. But Puzzle is a very exciting product to launch recently in this space — they use a combination of deep integrations and AI to enable “autonomous bookkeeping.” In the early days, you may not need a bookkeeper at all, to enable accurate books. In addition, Puzzle is free for early stage teams, while QBO is $20 - 50/mo, so they’re our clear recommendation in the early days.
Note: if the need were to arise, you can usually migrate bookkeeping platforms with a modest amount of effort — we’re about to migrate from QBO to Puzzle soon — so this not a firm one-way door.
When you Need it
10
18
Design
$250-500
Figma is obviously the market standard. Just dropping it into this list as a reminder :).
19
Issue Tracking
Free
Yes, Jira and Asana rule the roost. But... have you tried Linear?
It’s genuinely one of the most delightful products ever built
20
CRM
$250-500
Hubspot is widely considered to be the best plan for SMBs (including early startups). Personally, we find the interface a challenge at times, but the integrations and the year 1 discount makes it compelling to get started with.
gets a lot of good votes online, as do Copper and others. It’s worth strongly considering as well. We do not recommend Salesforce, especially at this stage.
21
Payment Processing
Free
Stripe is the de facto default for payment processing, for good reason. They are compatible with a wide range of platforms, currencies, and businesses. While their admin interface is clunky at times, it’s still straightforward and gets the job done. They’re not always the cheapest, but they make up for it with functionality and reliability.
22
Subscription Management
Free
You can probably manage this in spreadsheets to start, but if you’re lucky enough to have a number of subscribers early, we also recommend Stripe for billing.
We do not recommend Chargebee, Recurly, and other platforms.
23
Cap Table Management
Free
While you can manage the founders and maybe the first few advisors / employees in a spreadsheet, this is free to start so it’s worth considering very early on.
Pulley has built a very robust product + founder tools. However, it can be tricky to navigate sometimes without legal help. We still believe it’s the best product, on balance, for early stage companies. AngelList is a rising star in this area and it’s possible they’ll be tied very soon.
Carta is quite hard to use without legal help, so while they’re also free, we only suggest considering Carta when you have legal counsel and can afford the billing (founders issuing stock on their own, looking to be thrifty with legal fees, should not).
24
Business Insurance
$500-1,000
Vouch is the best answer for early stage startups. It’s super simple, easy, and competitive pricing.
There are some industries that Vouch coverage might exclude; for those, Embroker and Newfront are worth considering.
25
International Hiring
$250-500
There have been a lot of players in the last 4-5 years given the pandemic and the rise of remote work. Deel and Remote were the early players, and are still the leading players.
Deel used to be our primary recommendation, but there are two reasons we’ve put Remote ahead in this list: a) pricing, where Remote is much more competitive, and b) the recent Remote <> Gusto partnership. Given Gusto is our go-to for US payroll, Remote will play much more nicely to help founding teams set up and scale.
26
Company-sponsored SPV (aka Roll-up Vehicle)
Free
This is a relatively new category, but something we think is important for founders to consider while fundraising. If you raise from 10-20+ investors in early rounds, legal logistics (e.g., stockholder consents) from those investors later on is non-trivial.
AngelList pioneered this structure and format, so it should be your go-to. Sydecar is a new, interesting provider, but we’d generally sticking to a known quantity.
27
Run Background Checks
<$50
Especially if you’re handling sensitive customer data, it’s a good idea to consider background checks for early hires and/or contractors who have access to critical systems. Certn is our go-to because they have much wider coverage across the globe, and they’re competitively priced.
Use Existing Tool
7
28
Books & Accounting
[DIY]
Free
This is obviously very important to get right by the time you do your taxes, but this can generally wait until the end of the tax year. Until then, the more important thing is visibility into spend and cash, which a founder can generally DIY in Puzzle.
And if there’s little or no operating activity in year 1, it’s honestly even possible for a founder to consider using a self-serve tool such as TurboTax for business filings.
The time to engage a CPA for books & accounting is once you have notable revenue (>$100K) and/or once you’ve raised $500K - 1M.
29
Knowledge Management
Free
Google Workspace is perfectly functional for startups. OTOH Notion, Coda, etc. have strong products — worth a look to see if you want to get started with them early.
30
Financial Planning
Free
This is worth a brief, high level plan at the beginning, but your bandwidth should be focused on building & selling product. This starts to be relevant when you have to consider a fundraise, and will be covered in a future post in the Composed series.
31
Applicant Tracking System
Free
This should definitely be done in spreadsheets or Airtable for a while. Unless you’re hiring 10+ people / year, it’s not worth considering a professional ATS — not just for cost, but the overhead of maintaining and getting value out of them is usually not a good use of a startup’s bandwidth at the early stages.
32
Vendor Management
Free
Honestly, you should be frugal with decisions, but then give no time to this at all in the early stages. When it’s a handful of folks setting out to build something, revenue & product matter a lot more than costs.
33
Treasury
Free
Theoretically you don’t have tons in the bank already, but interest rates are meaningful these days! Your best option is to either do nothing, or to use Mercury’s built in treasury solution — it’s quite good.
34
Expense Mangement
Free
Generally, most things should be running through your corporate credit / debit card anyway. There shouldn’t be much to reimburse. In these rare exceptions, you can simply pay directly from Mercury (and upload the receipt to the payment for recordkeeping). If you happen to be using Ramp / Brex, they also have good solutions for this built in.
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