To Start a Business, Follow These Ten Simple Steps:
Are you ready to start your own business?
Creating a business of your own can be challenging. You will need adequate funding, time, personal support, and professional support in order to move forward successfully with entrepreneurial dreams.
To see if you're prepared to take the leap, check out our Entrepreneurship Quiz.
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. At a minimum, you should have good answers to the following questions:
What will you name your business? When naming a business, you'll want to choose an available name that follows your state’s naming rules and resonates with your customers.
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?
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?
- Our Business Planning Guide helps you analyze your business idea and gets you access to free planning tools.
- Use our Business Name Generator to find the perfect brand name and website.
- Need Help? Find organizations in your local area that can assist you with planning.
- If you’re a woman in business, find funding, tools, and resources with this great new Women in Business series.
Step 3: Form Your Business
Registering your company as a legal business entity — such as an LLC, corporation, or nonprofit — has two major advantages:
- Increased credibility
- Protection from personal liability in the event your business is sued
Fnd out which business structure is right for your new business.
A limited liability company (LLC) combines the personal asset protection of a corporation with the tax flexibility of a partnership or sole proprietorship. Most small businesses prefer the LLC structure due to its easy maintenance and favorable tax treatment.
- Learn More About What an LLC Is
- Form a Limited Liability Company
- Find Out if You Should You Start an LLC for Your Small Business
A corporation is a separate legal entity that is owned by its shareholders. Corporations have more formal regulations than LLCs and tend to be more attractive to investors. Most large companies like Apple fall under the corporate category.
A nonprofit organization is one that is funded by donations instead of investors. Nonprofits are typically created to further a social cause and are exempt from paying taxes. The Red Cross is an example of such an organization.
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, partnership and sole proprietorship business owners may need to file a DBA, sometimes known as a “fictitious name,” “trade name,” or “assumed name” depending on the state. A DBA IS NOT A BUSINESS STRUCTURE.
Find out if your business is required to file a DBA. Note that three states (Kansas, New Mexico, and South Carolina) do not have DBAs.
Step 4: Register For Taxes
With limited exceptions, most businesses require an Employer Identification Number (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.
You should also be aware of important state taxes that may apply to your business:
If you are selling a physical product, you will typically need to register for sales tax in your state. Five states (Alaska, Delaware, Montana, New Hampshire, and Oregon) do not have sales tax.
If you hire employees, you will typically have to register for Unemployment Insurance Tax and state income tax withholding on behalf of your employees.
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 (e.g., small business loans) 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.
Step 8: Get Insured
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.
Each state has its own workers’ compensation requirements and often depends on the number of employees a business has.
Step 9: Define Your Brand and Promote your Business
The strongest and most memorable businesses are built on a solid brand. When developing your brand, you should consider:
- what your business stands for
- what are your core values
- what will earn customer trust
Once you feel confident about your answers to these questions, it’s time to move onto your business name. Your business name is the cornerstone of good branding and a successful business. To learn more about creating the best name for your business, read our How to Name a Business guide.
Last but not least, try our Free Logo Generator to get a unique logo for your business. Our logo maker is free (no sign-ups or email address needed) and it comes in all social media sizes. It’s easy and hassle-free--with no design experience required!
Promoting Your Business
There are many different methods to promote your business, but the two most effective methods are:
- Press Releases
Press releases are a great way to promote your brand and are one of the most cost-effective strategies as they:
- Provides publicity
- Establish your brand on the web
- Improve your website's SEO, driving more customers to your website
- Are a one-time cost in terms of effort and money
- Have long-lasting benefits
Recommended: TRUiC has negotiated a 25% discount for you on a service that will write and distribute press releases for you.
A Facebook page is a great, free way to interact with your customers. But, it does require ongoing effort to be successful.
A Facebook page can be used to:
- Establish your local business presence
- Showcase your business products and services
- Communicate with your customers
- Get and share reviews from customers
- Promote your business through ads, though this may not be suitable 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’s 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
While starting a business is difficult, you must also be ready to maintain that business for years to come.
Luckily, there are a variety of resources across the country that are dedicated to helping small businesses like yours grow. We've curated a list of the best public and private resources in each state so that you can find the support that you need.