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How to Start a Business

12 Steps to Starting your Business

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Essential Steps to Launch Your Business Successfully

Ready to launch your own business?

Starting a business is a rewarding journey filled with challenges. Along with securing funding, time, and support, you’ll need to pick the right business structure (we often suggest forming an LLC) and plan for essentials like taxes and bookkeeping.

No matter your choice or stage, we provide the resources you need to succeed.

Take our Entrepreneurship Quiz to see if you’re prepared to take the leap.

For detailed guidance on starting a business in your area, explore our state-specific business guides. Just select your state from the list below:

Or Simply use a professional service:

four point six out of five ZenBusiness

Three out of Five Stars LegalZoom

Step 1: Choose the Right Business Idea

The first step in your journey to business ownership is choosing the right business idea. Focus on a concept that aligns with your passions, personal goals, and strengths. By selecting something that resonates with you, you’ll stay motivated through challenges and significantly boost your chances of success.

Our free Business Ideas Generator will help you identify businesses that match your interests and lifestyle. Need more inspiration? Check out the latest small business trends.

 

Step 2: Plan Your Business

Building a successful business starts with thorough planning. Before investing significant time, money, and resources, take a step back to critically evaluate your business idea and develop a solid plan. At the very least, you should:

Pick a Business Name
What will your business be called? Choose a name that’s both available and compliant with your state’s naming rules, while also appealing to your target audience. Use our Business Name Generator to help brainstorm the perfect name, and check available domain names on GoDaddy for a matching website.

Once you register a domain name, we recommend choosing a business phone system to enhance your customer service. Phone.com provides a high-quality phone service that integrates with all devices. Try Phone.com.

Find a Business Location

Do you have a location in mind for your business? Whether you’re setting up a physical storefront or operating from home, your business’s location plays a critical role in determining the necessary licenses, permits, and the potential for growth. It also affects your target market, expenses, and overall operations.

 

Business Planning Resources

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 Women in Business series.

 

Step 3: Get Funding

When it comes to funding your business, it’s important to assess your financial situation before seeking outside funding. Understanding your startup costs will help you choose the best funding option for your needs. Once you have a clear picture of what’s required, create a detailed financial plan and manage your spending wisely.

Here are some popular funding options for small businesses:

  1. Bootstrapping: This is the self-funded route, where you finance your business using personal savings and current income. As your business generates profits, you reinvest them to fuel further growth.

  2. Friends and Family: Borrowing from friends and family can be an effective way to secure the capital you need, but it’s important to formalize the arrangement with a written agreement and clear repayment plan to avoid misunderstandings.

  3. Small Business Grants: Grants provide funding that you don’t have to repay. By applying for small business grants from various grantors, you can secure financial support without taking on debt.

  4. Small Business Loans: Banks and lending institutions offer small business loans that provide upfront capital. Though these loans require repayment, they can give you the funds needed to cover startup costs and expand your operations.

You can form an LLC yourself using our free guide, or you can have ZenBusiness form your LLC for you.

Selecting the right business structure is a crucial step in establishing your company. Registering your business as a legal entity, such as an LLC, corporation, or nonprofit, offers significant benefits, including increased credibility and protection from personal liability in case of lawsuits. Here’s a closer look at the most common business structures to help you decide which is best for your new venture:

Sole Proprietorship
A sole proprietorship is an informal business structure in which the business and owner are considered a single entity. This allows the owner to keep all profits but also means they are personally liable for any debts or legal issues the business faces.

Partnership
A partnership operates similarly to a sole proprietorship but involves multiple owners. It also lacks liability protection, meaning partners are personally responsible for business debts or legal obligations.

LLCs
A limited liability company (LLC) offers personal asset protection similar to a corporation but with the flexibility of a sole proprietorship or partnership. Many small businesses choose an LLC structure due to its simple management and tax advantages. Learn more about forming an LLC for your business.

You can use our free guide to set up an LLC independently, or you can have ZenBusiness handle the formation for you.

Corporations
Corporations are separate legal entities owned by shareholders. This structure involves more regulations than LLCs and is often preferred by investors. Large corporations, like Apple, typically follow this model.

Nonprofits
Nonprofits operate for a social cause and are funded by donations, not investors. They are usually tax-exempt organizations, like the Red Cross.

If you decide not to register your business as an entity, you’ll be personally responsible for any business-related debts or liabilities.

Additionally, owners of sole proprietorships and partnerships may need to file a DBA (Doing Business As), which allows the use of a business name different from the owner’s legal name. Note that a DBA is not a formal business structure. Only three states—Kansas, New Mexico, and South Carolina—do not require DBAs.

You can form an LLC yourself using our free guide, or you can have ZenBusiness form your LLC for you.

Step 5: Form Your Business

Once you’ve selected a business structure, it’s time to officially form your business. While specific requirements vary by structure, here are some general steps to get started:

  1. Choose a Business Name
    Decide on a unique name that meets your state’s naming guidelines.

  2. Select a Registered Agent
    Designate a person or entity to receive tax and legal documents for your business.

  3. Obtain an Employer Identification Number (EIN)
    An EIN, issued by the IRS, identifies your business for tax purposes.

  4. File Formation Documents
    Submit the required paperwork to your state to register your business officially.

Each structure has unique requirements. For LLCs, you can choose a professional LLC formation service or follow these steps for a DIY approach:

Forming an LLC in Six Steps:

  1. Select Your State
  2. Name Your LLC
  3. Choose a Registered Agent
  4. File Your LLC with the State
  5. Create an LLC Operating Agreement
  6. Get an EIN

These steps make forming an LLC straightforward, with minimal paperwork compared to other business types

Read our full guide on How to Form an LLC or have a professional service form an LLC for you.

Starting a Corporation

If you believe a corporation structure suits your business, here’s a five-step guide to get started. First, consider which type of corporation best fits your needs: C Corporation, S Corporation, or B Corporation.

  1. Name Your Corporation
    Select a unique business name that complies with your state’s naming guidelines.

  2. Choose a Registered Agent
    Designate a person or entity to receive tax and legal documents on behalf of your corporation.

  3. Hold an Organizational Meeting
    Conduct an initial meeting to establish bylaws, appoint directors, and take other formal steps for setting up the corporation.

  4. File Formation Documents
    Submit the necessary articles of incorporation to your state to register your corporation officially.

  5. Get an EIN
    Obtain an Employer Identification Number (EIN) from the IRS to identify your corporation for tax purposes.

Following these steps will ensure your corporation is set up legally and primed for growth.

Read our full guide on How to Start a Corporation or have a professional service form a corporation for you.

Starting a Nonprofit

Forming a nonprofit organization follows steps similar to creating a corporation or LLC, but with the added benefit of applying for tax-exempt status (501(c)(3)) through the IRS. Here’s a quick guide:

  1. Name Your Nonprofit
    Choose a distinctive name that complies with your state’s nonprofit naming requirements.

  2. Choose a Registered Agent
    Designate an individual or entity to receive legal and tax documents for your nonprofit.

  3. Select Your Board Members and Officers
    Appoint a board of directors and necessary officers to oversee and manage your nonprofit’s activities.

  4. Adopt Bylaws and a Conflict of Interest Policy
    Create bylaws and a conflict of interest policy to guide your nonprofit’s operations and ensure transparency.

  5. File Articles of Incorporation
    Submit the articles of incorporation to officially register your nonprofit with the state.

  6. Get an EIN
    Obtain an Employer Identification Number (EIN) from the IRS for tax purposes and to open a bank account.

  7. Apply for 501(c)(3) Status
    Submit Form 1023 or 1023-EZ to the IRS to gain tax-exempt status, allowing your nonprofit to accept tax-deductible donations.

Completing these steps properly will lay a strong foundation for your nonprofit, enabling you to focus on your mission and receive tax benefits.

Read our full guide on How to Form a Nonprofit or have a professional service form a nonprofit for you.

Step 6: Set Up Business Banking, Credit Cards, and Accounting

Using dedicated business banking and credit accounts is critical to protect your personal assets from potential business liabilities. Mixing personal and business finances could expose your personal property, such as your home and car, to business-related lawsuits, a risk known as piercing the corporate veil in business law. Here’s how to safeguard your assets effectively:

Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business

Open a Business Bank Account

  • Keeps your personal and business finances separate, which is essential for safeguarding personal assets.
  • Simplifies accounting and tax preparation, making financial management smoother and more organized.

Read our full guide on How to Form an LLC or have a professional service form an LLC for you.

Get a Business Credit Card

  • Separates personal and business expenses, streamlining financial tracking and reporting.
  • Builds a credit history for your business, which can improve eligibility for future funding options like small business loans and grants.

Set Up Business Accounting

  • An accounting system tracks your business’s financial performance and simplifies tax filing.
  • Quality accounting software automatically downloads bank and credit card transactions, saving time and reducing errors.
  • You can also hire a business accountant to manage everything from payroll to sales tax, ensuring compliance and smooth financial operations.

Recommended: An accounting service could be saving your business thousands of dollars a year. Try our recommended accounting sotware today to help simply your taxes.

Step 7: Get Insured

Business Insurance helps mitigate risks and allows you to focus on expanding your business. Consider these essential types of insurance:

  • General Liability Insurance: Protects your business against claims of injury or property damage.
  • Workers’ Compensation Insurance: Covers medical expenses and lost wages for employees injured on the job.
  • Professional Liability Insurance: Essential for businesses offering professional advice or services (e.g., consulting, accounting), protecting against claims of negligence.

We recommend that all businesses, even home-based ones, invest in general liability insurance. Workers’ compensation requirements vary by state and typically depend on the number of employees.

Find out how much it will cost to keep your business protected: Get a Free Quote

Step 8: Obtain Permits and Licenses

To operate your new business legally, it’s essential to comply with various federal, state, and local regulations. This often involves obtaining the necessary permits and licenses. The specific requirements depend on your industry, location, and the type of business you are running. For example:

  • Health Permits: Required for businesses in the foodservice or healthcare industries to ensure safety standards are met.
  • Building Permits: Necessary if you’re renovating or constructing a physical space for your business.
  • Signage Permits: Required for placing signs on the exterior of your business location to ensure compliance with local zoning laws.

Each industry and locality will have its own set of regulations, so be sure to check with your local business office or use online resources to identify the necessary permits for your specific business type.

Step 9: Hire Employees

Building a strong team is a critical step in growing a successful business, especially if you plan to hire employees. However, along with hiring, it’s important to ensure compliance with legal requirements for managing employees. Here are key steps to follow:

  1. Register with the IRS for Employee Taxes: You’ll need to apply for an Employer Identification Number (EIN) if you don’t already have one. This number is required for tax purposes and is essential for reporting employee wages and paying payroll taxes.

  2. Follow Legal Hiring Practices: This includes verifying that all new hires are eligible to work in the U.S., ensuring compliance with the Fair Labor Standards Act (FLSA) for minimum wage and overtime pay, and following anti-discrimination laws during the hiring process.

  3. Set Up Payroll: A reliable payroll system will help you issue paychecks on time, track employee hours, and comply with tax withholding and reporting requirements. Consider using a payroll service that handles payroll processing, tax filing, and benefits administration, saving you time and reducing the risk of errors.

Ensuring that you stay compliant with these processes not only avoids penalties but also helps foster a professional and well-organized business environment.

Step 10: Define Your Brand

Building a strong, memorable brand is essential to the long-term success of your business. When developing your brand, consider the following foundational elements:

  1. What Your Business Stands For: Clearly define your mission and the purpose behind your business. Understanding what your business is striving to achieve helps establish a clear vision and gives your business direction.

  2. Core Values: Identify the core values that will guide your business decisions and interactions. Values such as integrity, innovation, or customer service should be reflected in every aspect of your business, from products to customer relationships.

  3. Earning Customer Trust: Trust is the foundation of strong relationships with your customers. Focus on delivering high-quality products, providing excellent customer service, and consistently meeting or exceeding customer expectations. Transparency and honesty can also go a long way in building trust.

Once you’ve established the core of your brand, it’s time to focus on the practical elements, such as your business name. The name should be memorable, easy to pronounce, and relevant to your brand’s message. Your business name is often the first impression customers will have, so take the time to get it right.

To help with the branding process, you can use tools like our Free Logo Generator to create a unique logo for your business. This tool is easy to use, free, and doesn’t require sign-ups or email addresses. It’s designed to provide logos in various social media sizes, so you’re ready to start promoting your brand. Alternatively, you can explore options with other logo generators, such as Tailor Brands, to find a design that suits your vision.

 

Step 11: Build Your Business Website

After defining your brand and creating your logo, the next step is to build a website for your business. While the idea of building a website may seem daunting—especially if you don’t have technical experience—advancements in web technology have made it much simpler for small business owners to create professional websites on their own.

Here’s why you should not delay building your website:

1. All Legitimate Businesses Have Websites

Regardless of the size or industry of your business, having a website is essential. In today’s digital world, consumers expect businesses to have an online presence. Without a website, your business might appear less credible or trustworthy. It’s a crucial step toward legitimizing your business.

2. Social Media Isn’t Enough

While platforms like Facebook and LinkedIn are useful for marketing and customer engagement, they cannot replace a website. Social media accounts are limited to their platforms and can’t offer the same control and flexibility as a website that you own. A website allows you to have full control over your branding, messaging, and customer experience.

3. Website Builders Make It Easy

Thanks to website builder tools like GoDaddy Website Builder, creating a website has never been easier. These platforms provide easy-to-use drag-and-drop tools, pre-designed templates, and simple customization options that allow you to create a professional-looking website without needing to hire a web developer or designer.

4. Quick and Simple Process

Building a website can be done in as little as 2-3 hours. With the help of step-by-step guides and user-friendly tools, you can create a website that meets your needs without getting bogged down by technical details. The process is fast and painless, allowing you to focus on what matters most—running your business.

Don’t let fear or uncertainty hold you back. Building a website is a straightforward process that can have a significant impact on your business. Get started today and create a digital presence that enhances your brand and connects you with potential customers.

Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Step 12: Promote and Market Your Business

Promoting Your Business

There are numerous methods available to promote your business, but some of the most effective strategies include:

  • Press Releases
  • Facebook
  • YouTube
  • Google My Business

Press Releases

Press releases are an excellent tool for promoting your business, offering numerous benefits at a minimal cost. Here’s why press releases are such a valuable promotion tool:

  1. Provides Publicity
    Press releases help get your business noticed by the media, journalists, and potential customers. A well-crafted press release can lead to news coverage, interviews, and a wider audience reach.

  2. Establishes Your Brand on the Web
    Press releases increase your brand’s visibility online. By distributing your release to news outlets, you generate backlinks to your website, which can improve your online reputation and establish authority in your industry.

  3. Improves Website SEO
    Press releases are a great way to enhance your website’s SEO. As your press release gets picked up by other websites and news outlets, you’ll receive valuable backlinks, which can boost your search engine rankings and drive more traffic to your website.

  4. One-Time Cost
    Creating and distributing a press release involves a one-time effort and financial investment. Once it’s published, it continues to work for you, providing long-term benefits without the need for continual spending.

  5. Long-Lasting Benefits
    A press release has a lasting impact. It can continue to generate interest in your brand long after it has been initially published. The digital nature of press releases allows them to remain accessible, providing ongoing exposure for your business.

By using press releases, you can gain visibility, build credibility, and attract new customers, all while maintaining a cost-effective marketing strategy.

Recommended: TRUiC has negotiated a 25% discount for you on a service that will write and distribute press releases for you.

Promoting your business effectively requires a strategic approach across multiple platforms. Here are some great ways to boost your business visibility and engagement:

Facebook

A Facebook page is a free and powerful tool for interacting with your customers. While it requires ongoing effort, a well-maintained page offers several benefits:

  1. Establish Your Local Business Presence
    Facebook allows you to connect with the local community, showcasing your business to nearby customers who may be interested in your products or services.

  2. Showcase Products and Services
    Use your Facebook page to display your offerings. Posting regular updates, photos, and videos can highlight new products, special offers, or any upcoming events.

  3. Customer Communication
    Engage directly with your customers through messages and comments. A quick response to inquiries can build trust and foster stronger relationships with your audience.

  4. Get and Share Reviews
    Encourage satisfied customers to leave positive reviews on your page. Positive testimonials help establish credibility and can influence potential customers.

  5. Promote Your Business Through Ads
    If your budget allows, Facebook ads can be a great way to reach a broader audience. However, it’s important to target the right demographic to make the most out of your advertising spend.

YouTube

With billions of active users globally, YouTube is a powerful platform for promoting your business. A well-maintained YouTube channel can help you reach a large audience and improve your business’s online presence. Here’s how:

  1. Improve Your SEO
    By posting engaging video content on YouTube, you can improve your SEO and increase your Google ranking. Videos can also drive higher conversion rates as they provide more in-depth information to potential customers.

  2. Drive Social Media Engagement
    Posting videos on YouTube fosters deeper engagement with your audience. It offers an opportunity to build stronger bonds by addressing customer questions, showcasing your expertise, or providing behind-the-scenes content.

  3. Detailed Explanations About Products/Services
    Videos allow you to explain complex products or services in a way that text alone cannot. A video demonstration or tutorial can help clarify what you offer and how it can benefit potential customers.

Google My Business

Google My Business is a free tool that allows you to control how your business appears in search results and Google Maps. Here’s how you can use it to promote your business:

  1. Provide Important Business Information
    Ensure your Google My Business listing includes accurate details like your website URL, physical address, hours of operation, phone number, and customer reviews. This makes it easier for potential customers to find and contact you.

  2. Increase Brand Awareness
    Google My Business enhances local SEO, helping your business rank higher in local search results. A strong listing improves visibility and drives traffic to your website, which is crucial for attracting local customers.

  3. Engage with Customers
    Responding to customer reviews and messages increases your business’s credibility. Google My Business allows you to communicate directly with customers, addressing concerns, answering questions, and strengthening relationships

What’s Next?

Starting a business is an exciting venture, but it also comes with its challenges. It’s important to be prepared for the long-term journey of managing and growing your business.

Fortunately, there are numerous resources available across the country designed to assist small businesses like yours. To help you navigate these options, we’ve compiled a list of the top public and private resources in each state, ensuring you have access to the support you need to succeed.

Find Local Resources in Your Area

Empowering individuals by providing accessible, actionable information is key to helping them achieve success. By equipping people with the knowledge and tools they need, we enable informed decision-making and foster personal and professional growth.

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