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How to Start a Business Step by Step
Step-by-step learn how to start a business in and truly bring your idea to life. Start your business, own your future.
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Step 1: Choose the right business idea
The first step toward business ownership is deciding what kind of business to start. Look for an idea that suits your interests, your personal goals, and your natural abilities. This will help you stay motivated when the going gets tough and will greatly improve your odds of success.
Step 2: Plan Your Business
Successful businesses are built through careful planning. Before committing a significant amount of money and other resources toward your business, critically analyze your idea and create a game plan. Tools like LivePlan.com are perfect for this step.
At a minimum, you should have good answers to the following questions.
Product Development
What problem does your business solve? What will set your product or service apart from the competition?
Sales & Marketing
Who are your potential customers? How will you get their attention and convert them into buyers?
People and Partnerships
What roles will you need to hire and what professional relationships will you need to form in order to succeed?
Financial Planning
How many clients or sales will you need in order to break even? How much money will it take to get there, and where will you get the funding?
The BEST business planning tool is LivePlan.com. LivePlan is the world's leading business plan software, built for entrepreneurs like you. You will be able to pitch, plan, and track your business from anywhere.
Step 3: Form Your Business
Registering your company as a business entity in , such as an LLC or a Corporation, has two major advantages:
- Increased credibility
- Protection from personal liability in the event your business is sued
For most small businesses, registering an LLC is a great option. In comparison to other business entities, LLCs are easy to set up and manage and they have favorable tax treatment. You can set up an LLC in here.
Another option is to register your business as an S Corp or a C Corp. Especially when it comes to self-employment taxes. You can setup a S Corp or C corp here.
If you choose not to register your company as a business entity, you will be held personally responsible for the debts and liabilities of your business. In addition, unregistered business owners may need to file a Trade Name, also known as a "DBA." Find out if your business is required to file a DBA.
Step 4: Register For Taxes
With limited exceptions, most businesses require a Federal EIN, also known as a Tax ID Number. An EIN is used to identify a business in its federal tax filings. Without an EIN, you can't hire employees or open a business bank account.
If your business is a sole proprietorship or single-member LLC, and if you don’t have any employees, then you are not required to get an EIN.
If your business is a partnership, a multi-member LLC, or if you do have employees, you will need to get one.
But no matter what kind of business you have, it is usually a good idea to get an EIN. Here are some advantages of having an EIN:
Most banks require an EIN in order to open a business banking account.
You will need an EIN before you can hire employees.
The quickest and simplest way to get an EIN is to apply for one here. You will need to answer the following questions:
- What type of business do you wish to start? (LLC, Sole Proprietorship, Corporation, etc.)
- How many owners does your business have?
- In what state is your business located?
- Why do you wish to start a business?
- Who will be the “responsible party” or principal officer of the business?
In addition, you will need to fill out the name, SSN or TIN, and contact information of your business’ responsible party.
The fastest and safest way to get an EIN: Apply For Your EIN Now
Step 5: Create Business Banking And Credit Accounts
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
You can protect your business with these two steps:
1. Opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
2. Getting a business credit card:
- Helps you separate personal and business expenses.
- Builds your company's credit history, which can be useful to raise capital later on.
Step 6: Set Up Accounting
An accounting system helps you track the performance of your business and simplifies annual tax filings. Quality accounting software lets you download your bank and credit card transactions, making accounting fast and easy. Learn more about the importance of accounting and how to get started with accounting today.
Step 7: Obtain Permits And Licenses
To operate your new business legally, you will need to comply with federal, state, and local government regulations. In many cases, this involves obtaining one or more business permits and/or licenses. For example, a restaurant will likely need health permits, building permits, signage permits, etc.
Visit our page on Business Licenses and Permits for more information.
Step 8: Get Insured
Business insurance helps you manage risks and focus on growing your business. The most common types of business insurance you should consider are:
- General Liability Insurance
- Workers Compensation Insurance
- Professional Liability Insurance
For more in-depth details please take a look here: Business Insurance
We recommend that all small businesses, including home based businesses, purchase a general liability policy. Businesses selling professional advice or services, such as consulting and accounting firms, should also consider a professional liability policy. In , businesses with employees are required by law to have workers compensation insurance. Note that officers and LLC members are counted as employees.
Step 9: Define Your Brand
The strongest and most memorable businesses are built on a solid brand.
When developing your brand, think about what your business stands for. What are the core values that drive your business? Customers and clients are looking for companies that have a compelling brand, as much as they are shopping for high quality products and services.
Learn more about branding and how to build a brand for your business.
Step 10: Establish A Web Presence
A professional website is critical to the long-term success of your business, regardless of what industry you are in. A website allows potential customers to find your business online and discover the products or services you offer, and it also enhances your business’ credibility.
In addition to a website, you should also consider other avenues for promoting your business online:
- Setting up social media profiles (Facebook, Twitter, etc)
- Creating accounts on review sites (Yelp, Google Reviews, etc)
- Registering for a local Google profile
Think, Automate, Grow has a very affordable starter kit that will get you the basics of everything you need to be noticed online and not break the bank. Download their 73 Point Check List here.
