A great idea, a fantastic initial team, and a round coming together — what next? How do you find office space? How do you run payroll? In this post, I’ll go over the “stack” for getting your company up and running.
I pieced this together through trial and error from getting my own company going. This post is geared toward early-stage startups in the Bay Area, particularly San Francisco, but much is broadly applicable. Luckily, today they’re enough “recursive” startups (startups for startups) where you can automate most of this stuff.
Legal
The two most important functions are your lawyer and your accountant. You’ll need ample help from both, so you want someone you trust who gives actionable advice and will not waste your time.
Gunderson Dettmer has been invaluable during incorporation, fundraising, and the like. Not only do they understand startups and venture capital, they have in-house expertise on intellectual property, mergers and acquisitions, and more.
Accounting
As for accountants, I’ve been happy with Kranz & Associates, who specialize in startups and early-stage companies.Kranz introduced us to Michael R. Ivancich, who handles our corporate taxes. We’re using Quickbooks Online as our accounting software due to its ubiquity, but I’ve heard there are other good choices such as Xero.
Government
Most startups will end up as a Delaware C-Corp; your attorneys will guide you. As part of this process, you’ll receive an Employer Identification Number (EIN), which is your company’s federal tax identifier.
If you’re in California, you also need to register to receive a California Employment Development Department (EDD) number. This is necessary to pay unemployment insurance, which is an employer contribution, and state disability insurance and personal income taxes, which are withheld from employees’ wages. The good news is that once you have this EDD number, a payroll provider like ZenPayroll will handle almost everything for you (see below).
If you’re in San Francisco, you also need to register your business with the San Francisco Treasurer and receive a business registration certificate, which needs yearly renewal.
Banking
The first thing you’ll need after incorporation is a bank account. We use Silicon Valley Bank, as they’re accustomed to a startup’s needs. Their banking website is painful to use, but they understand and can help with typical startup needs like subscription-based business models and mobile payments.
Insurance
By California law, an employer must have worker’s compensation insurance. You’ll also want general liability insurance (usually a requirement for any real estate lease). We used the small business division of The Hartford Insurance Group as they had the best rates, great service, and the setup was quick and painless.
Compliance
You need to hang certain set of posters, as mandated by the Department of Labor. You can find the necessary federal and state posters from their poster advisor. You also need additional posters in San Francisco to comply with citywide labor laws. The easiest way to ensure compliance is to get “all-in-one posters” from an online provider and subscribe to automatic poster updates (e.g., when the minimum wage changes). I don’t have a great resource for a poster provider, but there are plenty a Google search away.
As well, the Compliance Assistance Resources of the Department of Labor has a wealth of information on complying with federal employment laws.
HR & Benefits
We use Zenefits, an all-in-one HR portal that serves as a comprehensive view on all HR-related items like compensation & payroll, benefits, and vacation. Zenefits works by acting as a middle-man (taking a hidden commission) between benefits providers and your company. We use Zenefits to manage health, dental, and vision insurance, commuter benefits, and 401K.
With Zenefits, Anthem Blue Cross has good plans for startups, and they don’t require any payroll history to get started, a nicety when you’re first starting out. Our commuter benefits are through Ameriflex and our 401K is through MyUbiquity, both which come with Zenefits. It pays to shop around here and compare prices, especially with local brokers and other HR solutions like Tri-Net.
Zenefits becomes your source-of-truth HR system, and automatically connects with other services. You hire employees & contractors through the system, people enter their benefit selections, and Zenefits populates all downstream systems like your payroll and benefits providers.
There have been some minor problems with Zenefits, but generally speaking I’m pleased with their onboarding and responsive customer support. There is no need to manage any of this yourself.
Payroll
Like HR, you don’t need to manage this yourself any longer. We use ZenPayroll, which has been fantastic. They handle the entire payroll process, from tax calculations & filing all the way to direct deposits for your employees. Employees get an email with their paystubs, and they can also login and get any historical paystub, W-2, or 1099. ZenPayroll also syncs with common accounting software like Quickbooks Online, making life easier for your accountant.
For San Francisco startups, there’s also a local SF payroll tax that’s paid yearly. No payroll provider currently administers this tax for you, so work with your accountant or tax professional on this.
Real Estate
There are plenty of co-working spaces, but eventually you’ll want your own space. In the Bay Area, you’ll definitely want a broker to find and coordinate viewing spaces, and to help you get a lay of the land. T3 Advisors, particularly David Bergeron and team, specialize in locating office space for entrepreneurs and are excellent. They were able to understand our requirements and had great spaces for us to visit. We used Jonathan Rattner as our real estate attorney to help negotiate the lease.
A helpful service is Breather, which provides on-demand by the hour office spaces. They’re nice setups with whiteboards and a lounging area; useful when you’re in between places.
Furniture
Be mindful that office furniture gets expensive and time-consuming fairly quickly. For a small startup, it’s best to keep your ear to the ground — ask your investors, your bank, your lawyers, and the rest of your network — and find startups that are relocating, which we found to be a great way to get discounted furniture. I tried calling a few office furniture brokers, but unless you’re large, you’re not worth their time.
We also relied heavily on MoveLoot, an online furniture consignment shop that has decent quality pieces. MoveLoot delivers (free delivery on orders of $100 or more), removing a major hassle when shopping for used items. They deliver next day, and I found their delivery team to be prompt.
Cap Table & 409A
We started off having our cap table in Excel, which was a pain as we had different versions flying around in email, and often had to resort to email searches to find what we needed. We’ve since moved to eShares, a service that centralizes your cap table and keeps an entire, rewindable history of updates.
eShares offers “409a’s as a service”, which may be preferable and something to look into, but we went with Arcstone Partners, who were efficient and well-qualified.
Food
Unfortunately, I don’t have a great automated out-of-the-box solution here. Zerocater has a 15 person minimum head count, and the other players servicing smaller companies were either often late with deliveries or had quality control issues. We use Sprig, an on-demand food startup with healthy food and high standards, supplementing with delivery from local restaurants using OrderAhead or Caviar. This seems to be working well so far.
Office Supplies and Everything Else
Two words: Amazon Prime.
That’s about all there is. With automation, you shouldn’t have to spend more than a couple hours a month on logistics.
For more resources, check out Steve Blank’s incredibly comprehensive Startup Tools list as well as Yevgeniy Brikman’s Hello, Startup repository.
