Everything Your Small Business Needs

How to start a Business in 8 Steps

Starting a business doesn’t have to be complicated. A solid plan and due diligence will help set you on the right path.

1. Do Research

You have a business idea and now it’s time to dive in. What’s the market like? Who are your competitors? What will you sell? Where? And to whom?

In the research phase, you don’t necessarily need to answer all the questions that arise, but you’re getting in the weeds. You’re taking your business from “wouldn’t that be nice?” to “here’s how it might work.”

2. Write a Business Plan

With the first phase of research complete, you can start writing your business plan. The plan can be streamlined and simple or involved and detailed, depending on your needs.

Either way, it should outline the information needed to get started and keep going, such as:

• Business strategy
• Funding
• Goods/services for sale
• Sales mediums
• Value proposition
• Target customers

3. Choose a Name

It might not seem like a big deal, but choosing a business name is important enough that it gets its own step. Ideally, you want a business name that reflects your brand, is memorable, and doesn’t impede anyone else’s intellectual property rights.

While you can change your business name down the line, it’s easiest to have a lasting name in place prior to marketing, as rebranding can be costly. Need to make your business official before you’ve sorted out it’s public-facing name? Consider securing a DBA (doing business as) name after registration, but before marketing.

4. Select an Entity Type

Your entity type impacts your tax obligations, liability, state paperwork and fees, and operational flexibility. Most small businesses start as sole proprietorships, partnerships, or LLCs, as these have minimal set up requirements and are suitable for minor operations. Things can get more complex when registering other entities, like corporations or nonprofits.

Because your business structure impacts finances through fees and taxes, it may be wise to seek legal advice before making a decision.

5. Register with the State & Get a Registered Agent

If you decide to form an entity like an LLC or a corporation, you’ll need to register it with the state. States come with their own forms, fees, and rules.

Typically, you’ll file registration paperwork and fees with your Secretary of State’s office. (Some states use other agencies for business filings.) LLCs are formed by filing Articles of Organization. Corporations file Articles of Incorporation.

Registering your business also means you’ll need to appoint a registered agent. (Sometimes called a Statutory Agent, like in Arizona.) The agent’s primary purpose is to accept legal mail and service-of-process in person on your behalf. You can be your own registered agent or hire one, which can help keep more of your information private.

6. Apply for Licenses and Permits

Many businesses need to secure certain business licenses and/or permits to operate. Whether you need such documentation depends on what you’re selling and where you’re operating.

Some regulated industries (like cosmetology, food service, law) have licensing requirements of their own, in addition to any state- or city-specific licenses that may be required.

7. Get an EIN & Open a Business Bank Account

A business bank account helps keep your personal and business finances separate. Why does this matter? For your liability. If you muddle funds, your personal assets will be more at risk if legal action is taken against your business.

But liability aside, proper management of funds will help you stay organized, keep better track of profits and losses, and be ready to hire employees when the time comes.

To open a business bank account, you’ll typically need an EIN (employer identification number). While you can use your social security number in some cases, an EIN provides additional separation between you and your business and is necessary for future endeavors, like building your team. Getting an EIN is free through the IRS.

8. Begin Branding and Marketing

Now that the logistics are sorted, you’re ready to build your brand and get it in front of potential customers. Branding includes multiple facets of your business, such as:

• Business name
• Logo design
• Color choices
• Storefront aesthetics
• Social media presence
• Website content and design
• Tone of customer interactions
• Trademarks

These branding choices also impact your marketing efforts, helping to drive successful campaigns.

Should You Turn Your Sole Prop Into an LLC?

If you started as a sole proprietor or in a partnership, the question of whether to turn the business into an LLC will likely arise sooner or later. In addition to limiting your personal liability, starting an LLC opens up tax options that may benefit businesses earning higher profits, in particular.

Is it Time to Hire Employees?

Hiring employees is top of mind for growing businesses. When you find yourself turning down work because you’re too busy, feeling overwhelmed by your calendar, or losing track of payments, it might be time to bring employees into the fold. Even if you continue handling the high-level operations, employees can help with things like bookkeeping, marketing, or any of the other tasks you’d rather avoid.

Need help but aren’t ready to hire? Freelancers and contract workers can help bridge the gap. Just make sure you get solid contracts in place so that everybody understands the scope of work and expectations.

Do You Need an HR Policy?

Before bringing on employees, consider building out employment-related documents. In addition to essentials like employment contracts and employee handbooks, an HR policy can be extremely helpful over time.

Even without an HR department (perhaps especially if you don’t have one), getting all the need-to-knows and do’s-and-don’ts in writing is generally good for everyone involved. If you don’t have one yet, this is a good time to pull in a lawyer who can help ensure you’ve outlined the necessities and aren’t overstepping.

Are You Ready to Expand to New States?

As your business grows, it might make sense to expand operations into new states. Before you do, make sure to check the business registration and licensing requirements for any new locations.

Registered businesses are considered “domestic” entities in their formation state and “foreign” entities in any other state where they operate. To begin doing business in a new state, at a minimum you’ll likely need to submit foreign qualification paperwork (or equivalent) and fees to the relevant Secretary of State’s office.

How Will You Grow Your Brand?

Growing and maintaining your brand is a process. While your methods may shift over time, you’ll never be done shaping your business identity.

Of course, you’ll need to make sure your brand is consistent across platforms. You want customers to recognize your business whether they’re on Instagram, your website, or at your brick and mortar. Consistency builds trust for your business and loyalty over time.

And if you haven’t already, now’s the time to consider federal trademark registration. Doing so not only adds credibility to established brand elements like your business name, logo, or tagline, it helps prohibit others in your industry from using the same or confusingly similar versions.