The ten steps every new business owner works through, from the first market check to opening a bank account.
Knowing how to start a business comes down to 10 decisions, and the U.S. Small Business Administration (SBA) lists them in order. Every business in our directory made each one. Here is what each step means and where to get free help.
Starting a business is a series of small, concrete decisions. The U.S. Small Business Administration (SBA) groups them into ten steps. You do not have to finish them in strict order, but skipping one usually costs time or money later.
1. Do your market research
Find out who will buy, how many of them there are and what they pay today. Free sources include Census Bureau data, industry associations and simply talking to 20 potential customers.
2. Write your business plan
A plan turns an idea into numbers: what you sell, to whom, at what price and what it costs to deliver. Lenders and investors will ask for one. See our guide to writing a business plan.
3. Fund your business
Work out how much you need to reach your first sales, then decide where it comes from: savings, family, a loan, a grant or investors. Most small businesses start with the owner’s own money.
4. Pick your business location
Location affects taxes, zoning, licenses and rent. Online and home-based businesses still need to check local zoning and home-occupation rules.
5. Choose a business structure
Sole proprietorship, partnership, LLC or corporation: the choice changes your personal liability, taxes and paperwork. Many owners talk to an accountant or attorney before deciding.
6. Choose your business name
Check that the name is not already registered in your state or trademarked, and that the web domain and social media handles are available.
7. Register your business
Register with your state (and file a fictitious business name, or DBA, with your county if you use a name other than your own).
8. Get federal and state tax IDs
An Employer Identification Number (EIN) from the IRS is free and takes minutes online. Your state may require its own tax or seller’s permit number.
9. Apply for licenses and permits
Requirements depend on your industry, city and county. Ask your city’s business license office what applies to you before you open.
10. Open a business bank account
Keeping business money separate from personal money protects you, makes taxes simpler and builds a record lenders will want to see.
Key takeaways
- Talk to real customers before you spend real money.
- Your business structure affects liability and taxes: decide it on purpose.
- An EIN is free from the IRS; never pay a third party for one.
Sources
Photo: U.S. Department of Agriculture, Public domain, via Wikimedia Commons
