# Back office core

> The map: the entity, the bank, the books, payroll, bills, invoices, taxes and benefits, and the calendar that ties them together.

Source: https://lopifi.com/learn/core
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**What is a startup back office, and what does a founder actually have to do?** The map: the entity, the bank, the books, payroll, bills, invoices, taxes and benefits, and the calendar that ties them together.

1. [What a back office is, and who does what](https://lopifi.com/md/learn/what-is-a-startup-back-office) — 8 min. What does a startup back office do, and who does each part of it? The back office keeps the record, pays and collects, runs payroll and files. Founders can hand off the work, but the company stays responsible.
2. [The entity and its numbers](https://lopifi.com/md/learn/ein-and-state-registrations) — 8 min. How do I get an EIN, and what registrations does a new startup need? The EIN is free and issued online in one sitting. The state brings a registered agent, an annual report and registrations wherever the company does business.
3. [Company money, kept apart](https://lopifi.com/md/learn/separate-business-and-personal-money) — 8 min. Why does a startup need a separate business bank account? Company money lives in company accounts. Mixing it breaks the books, weakens the tax return and puts the liability shield at risk.
4. [The books, in one lesson](https://lopifi.com/md/learn/how-startup-books-work) — 8 min. What kind of accounting does a startup need: cash or accrual? Startup books are accrual books, closed every month. Profit, operating cash and the bank balance are three different numbers, and the books show all three.
5. [People: employees and contractors](https://lopifi.com/md/learn/hiring-employees-and-contractors) — 10 min. Should my first hire be an employee or a contractor, and what forms do I need? Who controls the work decides employee or contractor. An employee gives a W-4 and an I-9 and goes through payroll; a contractor gives a W-9 and invoices.
6. [Money in and money out](https://lopifi.com/md/learn/money-in-and-money-out) — 8 min. What are accounts payable and accounts receivable, and how does a startup run them? Invoices become receivables and bills become payables. Each is a list that ties to the books, and the cash settles them later.
7. [The founder's annual calendar](https://lopifi.com/md/learn/startup-back-office-calendar) — 9 min. What are a startup's tax and filing deadlines in its first year? The founder's year, worked out on Northwind: payroll deposits and 941s, the January forms, Delaware's March 1, and the corporate return.
8. [Keeping the records](https://lopifi.com/md/learn/how-long-to-keep-business-records) — 7 min. How long should a business keep its records and receipts? Records are kept until the period they support can no longer be examined: three years in general, at least four for employment tax, longer for assets.
9. [Set up your back office in a week](https://lopifi.com/md/learn/set-up-a-startup-back-office) — 7 min. How do I set up a startup's back office from scratch? A week, in order: the EIN, the bank, the books, payroll, bills and invoices, the calendar and the records. Then a monthly close from the first month.

## Terms this track teaches

- [General ledger](https://lopifi.com/md/glossary/general-ledger): The complete set of accounts, holding every posted entry
- [Close](https://lopifi.com/md/glossary/close): The process of finalizing a period
- [Accounts payable](https://lopifi.com/md/glossary/accounts-payable): What we owe vendors for bills already received
- [Accounts receivable](https://lopifi.com/md/glossary/accounts-receivable): What customers owe us for invoices already issued
- [Compilation](https://lopifi.com/md/glossary/compilation): An engagement in which an accountant presents financial statements from management's information without obtaining or giving any assurance — no audit, no review — and says so in the report; an accountant who is not independent must disclose it
- [Payroll service provider](https://lopifi.com/md/glossary/payroll-service-provider): A firm that runs payroll under the employer's own EIN — paychecks, deposits, Forms 941, 940 and W-2. It isn't liable for the employer's employment taxes; the employer stays liable for every deposit it makes
- [Professional employer organization](https://lopifi.com/md/glossary/professional-employer-organization): A firm that co-employs a client's staff and runs payroll, benefits and HR under its own EIN for a fee. Only a PEO the IRS has certified (a CPEO) is generally treated as the employer for employment tax on the wages it pays
- [Segregation of duties](https://lopifi.com/md/glossary/segregation-of-duties): Splitting authorization, recording, custody of assets and reconciliation across different people, so no one person can both commit and conceal an error or fraud — at minimum, preparer ≠ approver
- [Fiscal year](https://lopifi.com/md/glossary/fiscal-year): The twelve-month (or 52–53 week) reporting year an entity has chosen, which need not start in January
- [C corporation](https://lopifi.com/md/glossary/c-corporation): A corporation taxed as a taxpayer in its own right: it files Form 1120 and pays 21% of its taxable income, and its shareholders are taxed again on what it pays them as dividends. Every corporation is a C corporation unless it elects S status
- [Registered agent](https://lopifi.com/md/glossary/registered-agent): The person or company, with an address in the state, that a corporation must keep to receive legal process and the state's notices. Delaware sends its annual report and franchise tax notices to the registered agent each December
- [State annual report](https://lopifi.com/md/glossary/state-annual-report): The yearly filing a corporation makes with its state of formation and each state where it is qualified — officers, directors, address, and in Delaware the figures the franchise tax is computed from. Names, fees and due dates vary by state
- [Foreign qualification](https://lopifi.com/md/glossary/foreign-qualification): Registering a corporation formed in one state to do business in another — a Delaware corporation with its office or staff in California files there, appoints an agent there and files that state's annual report. "Foreign" means another state, not another country
- [New-hire reporting](https://lopifi.com/md/glossary/new-hire-reporting): The employer's report of each new employee — name, address, SSN, start date and the employer's EIN — to the State Directory of New Hires where the employee works, within 20 days of hire or sooner if the state says so. It feeds child support enforcement
- [SUTA](https://lopifi.com/md/glossary/suta): The state unemployment insurance tax an employer pays on each employee's wages up to a state wage base, at an experience-rated rate assigned by the state
- [Sales tax nexus](https://lopifi.com/md/glossary/sales-tax-nexus): The connection with a state that obliges a seller to collect its sales tax — physical presence, or economic nexus from sales into the state above a threshold (commonly $100,000) since South Dakota v. Wayfair (2018)
- [Beneficial ownership information report](https://lopifi.com/md/glossary/beneficial-ownership-information-report): The report of a company's beneficial owners to FinCEN under the Corporate Transparency Act. Since the March 2025 interim final rule and the final rule effective August 14, 2026, companies created in the United States and US persons are exempt; only entities formed under foreign law and registered to do business in a US state still report
- [Commingling](https://lopifi.com/md/glossary/commingling): Running company and personal money through the same account or card, so the books can no longer show whose a transaction was. The fix is a separate business account and a recorded entry — a reimbursement, a loan from the founder or a contribution — for every crossing
- [Reconciliation](https://lopifi.com/md/glossary/reconciliation): Comparing our record to an external party's
- [Audit trail](https://lopifi.com/md/glossary/audit-trail): The immutable record of every state change
- [Evidence](https://lopifi.com/md/glossary/evidence): Documentation supporting a recorded amount
- [Equity](https://lopifi.com/md/glossary/equity): The residual interest in the assets that remains after deducting liabilities (FASB CON 8 ¶E61)
- [Dividend](https://lopifi.com/md/glossary/dividend): A distribution of earnings to shareholders, declared by the board — a liability from the declaration date and a reduction of retained earnings, never an expense
- [Accrual basis](https://lopifi.com/md/glossary/accrual-basis): Recognizing revenue when earned and expense when incurred, regardless of when cash moves
- [Cash basis](https://lopifi.com/md/glossary/cash-basis): Recognizing revenue and expense only when cash moves. Not GAAP for any entity — it is a special purpose framework (AICPA AU-C 800), and for tax a method IRS Pub. 538 and IRC §448 limit by entity type and gross receipts
- [Transaction](https://lopifi.com/md/glossary/transaction): A business event — a payment, a sale, a purchase
- [Journal entry](https://lopifi.com/md/glossary/journal-entry): A balanced set of debit and credit lines posted to the GL
- [Double-entry](https://lopifi.com/md/glossary/double-entry): Recording every transaction as equal debits and credits, so the ledger proves itself
- [Chart of accounts](https://lopifi.com/md/glossary/chart-of-accounts): The account structure
- [Deferred revenue](https://lopifi.com/md/glossary/deferred-revenue): Consideration received, or unconditionally due, before the goods or services are transferred — a liability until the performance obligation is satisfied. ASC 606 calls it a contract liability
- [Worker classification](https://lopifi.com/md/glossary/worker-classification): Deciding whether a worker is an employee or an independent contractor — federally by the common-law control test (behavioral, financial and relationship facts), in some states by the stricter ABC test. It decides who withholds and pays employment taxes
- [ABC test](https://lopifi.com/md/glossary/abc-test): A state test presuming a worker is an employee unless the hiring entity proves all three: (A) free from its control, (B) work outside the usual course of its business, and (C) customarily engaged in an independent trade — California (AB 5), Massachusetts, and New Jersey for unemployment
- [Form W-4](https://lopifi.com/md/glossary/form-w-4): The form a new employee gives the employer to set federal income tax withholding — filing status, the two-jobs checkbox, credits, other income, deductions and extra withholding. Kept by the employer, not sent to the IRS unless it asks. A state with an income tax may use its own certificate, such as California's DE 4
- [Form I-9](https://lopifi.com/md/glossary/form-i-9): The Department of Homeland Security form proving a new hire may work in the US. The employee completes Section 1 by the first day of work; the employer examines documents and completes Section 2 within three business days. Kept on file, never filed with the government
- [Form W-9](https://lopifi.com/md/glossary/form-w-9): The IRS form a US payee gives a payer to certify its name, tax classification and taxpayer identification number — collected before the first payment, because it drives 1099 reporting and backup withholding
- [Form 1099-NEC](https://lopifi.com/md/glossary/form-1099-nec): The IRS information return for nonemployee compensation paid to a contractor in the course of business — required at $600 a year for payments through 2025 and $2,000 from 2026 (indexed from 2027), due to the recipient and the IRS by January 31
- [Backup withholding](https://lopifi.com/md/glossary/backup-withholding): Federal income tax a payer must withhold at 24% from reportable payments — contractor fees, interest, dividends, card settlements — when the payee has not given a correct TIN or the IRS has notified the payer to withhold. Deposited and reported on Form 945
- [Payroll liabilities](https://lopifi.com/md/glossary/payroll-liabilities): What an employer owes on wages it has already paid — the income tax and the employees' share of Social Security and Medicare withheld from their pay, plus the employer's own payroll taxes — until it is deposited with the government. The withheld part was never the employer's money: IRS Pub. 15 calls it trust fund taxes
- [Invoice](https://lopifi.com/md/glossary/invoice): A claim on a customer
- [Bill](https://lopifi.com/md/glossary/bill): A claim against us
- [Payment terms](https://lopifi.com/md/glossary/payment-terms): The agreed timing of payment and any early-payment discount — Net 30, Net 30 EOM, 2/10 net 30, due on receipt; the due date that aging is measured from
- [Aging](https://lopifi.com/md/glossary/aging): Grouping open receivables or payables into buckets by days past due date — current, 1–30, 31–60, 61–90, 90+
- [Payment run](https://lopifi.com/md/glossary/payment-run): A batch of payments released together
- [Subledger](https://lopifi.com/md/glossary/subledger): The detail, by customer, vendor or asset, whose total must equal its control account in the GL
- [Monthly schedule depositor](https://lopifi.com/md/glossary/monthly-schedule-depositor): An employer whose lookback-period tax was $50,000 or less, and every employer in its first year: the federal income tax withheld and both halves of FICA on a month's paydays are deposited by the 15th of the next month
- [Form 941](https://lopifi.com/md/glossary/form-941): The quarterly return of wages paid, federal income tax withheld and both halves of Social Security and Medicare tax, reconciled to the quarter's deposits. Due April 30, July 31, October 31 and January 31 — ten days later if every deposit was on time
- [Form W-2](https://lopifi.com/md/glossary/form-w-2): The year-end statement of an employee's wages and withholding — boxes 1, 3 and 5 for income tax, Social Security and Medicare wages — furnished to the employee and filed with the SSA by January 31, with no automatic extension
- [Form 940](https://lopifi.com/md/glossary/form-940): The employer's annual FUTA return, due January 31 of the next year — February 10 if every FUTA deposit was on time — with Schedule A for wages paid in a credit-reduction state
- [Form 1120](https://lopifi.com/md/glossary/form-1120): The federal income tax return of a domestic C corporation, filed every year whether or not it has taxable income — due the 15th day of the 4th month after year end, April 15 for a calendar year, with tax at 21% of taxable income under IRC §11(b)
- [Form 7004](https://lopifi.com/md/glossary/form-7004): The IRS application for an automatic extension of time to file business income tax returns — six months for Forms 1120, 1120-S and 1065 — filed by the original due date. It extends the time to file, not the time to pay
- [Corporate estimated tax](https://lopifi.com/md/glossary/corporate-estimated-tax): The four installments a corporation pays toward the current year's income tax when it expects $500 or more — on the 15th day of the 4th, 6th, 9th and 12th months of its tax year, each 25% of the required annual payment, through EFTPS. Underpayment is figured on Form 2220; Form 1120-W is historical
- [Period](https://lopifi.com/md/glossary/period): A fiscal reporting window

- **Next track:** [Entity types](https://lopifi.com/md/learn/entities)
- **The course:** https://lopifi.com/md/learn