---
id: "action-formalize-payroll"
type: "action-item"
source_timestamps: ["p.7", "p.8", "p.12", "p.16"]
tags: ["finance", "hr", "compliance"]
related: ["concept-stage-3-stabilize", "framework-stage-3-graduation", "entity-quickbooks"]
speakers: ["Acquisition.com"]
outcome: "Ensures legal compliance, prevents tax surprises, and provides clear visibility into business finances."
---
# Set Up Proper Payroll and Tax Systems

## Action: Formalize Payroll, Accounting, and Banking

### The Action

**Implement a formal payroll provider and accounting software (e.g. [[entity-quickbooks|QuickBooks]]) to manage taxes and cash flow.**

### Concrete Steps

1. **Stop paying people informally** (cash, Venmo, mixed personal accounts).
2. **Implement a proper payroll service** to handle employee taxes and fees correctly.
3. **Set up W2s** for full-time employees and **1099s** for contractors.
4. **Separate personal and business bank accounts.**
5. **Check the business account daily** for cash visibility.
6. Install [[entity-quickbooks|QuickBooks]] (or equivalent) for P&L, invoicing, and bill management.

### Outcome

- Legal compliance.
- No surprise tax bills at year-end.
- Clear, daily visibility into business finances.
- Foundation for the more advanced financial measurement required in [[concept-stage-4-prioritize|Stage 4]] (lead-to-sale conversion, lead response times, basic financials).

### Step Number In Graduation Checklist

Step 2 ('Get Your Money In Order') of [[framework-stage-3-graduation]].