Good for you for quickly catching the phonics sequence and the absolute necessity for beginning at the beginning! You are right on top of the game.
Little Stories for Little Folks is a two-year reading program that students begin in Kindergarten. [Actually, the program's flash cards and word blend exercises begin in the pre-school years!] It is expected that the student entering first grade has already completed all the pre-reading exercises in the Parents' Guide, and then finished Level 1 of the stories.
Since your son has missed these vital first steps, it would be prudent this summer to read carefully through the Parents' Guide and then follow the steps and assignments right to the end of Level 1, Book 15. If your son already has had some phonics, these exercises will move very quickly, and provide a time of review prior to first grade.
If your son has not had prior reading instruction, then it would be best to follow the same steps so that he will be prepared for first grade reading. If he doesn't complete Level 1 before the school year starts, not to worry. One of the great benefits of homeschooling is that lessons can be made to fit the child, rather than the child made to fit the lessons. Following this approach, your son will soon catch up and be ready for first grade reading.
You haven't even begun homeschooling, and yet you are already an alert teacher!
May God bless and guide you and your son through this wonderful adventure,