So, you’ve got an ironclad business idea rattling around your head. You’re pretty sure it’s going to be the next big thing—maybe even as successful as Apple, Google, or Microsoft (or all three combined).
But when it comes to opening your own enterprise, where do you even start?
You don’t have to be Bill Gates, Elon Musk, or Steve Jobs to create a thriving small business (in fact, you might be better off that way). All you need is hard work, passion, and this comprehensive starting a business checklist. Let’s dive in!
Step 1: Conduct research to create a viable business plan
A business without a plan is like a ship without a sail—you won’t get very far, no matter the weather.
A well thought out plan starts with thorough research:
- Market analysis to understand current trends, forces, and competition
- Research and development to fine-tune your products or service offerings
- Marketing strategizing for attracting and retaining customers
- Financial projections to ensure a stable five-year financial forecast
This information, once compiled into an engaging business plan, will be invaluable during investor pitch meetings, loan applications, and personal planning. Working through a startup checklist ensures that your new business has a chance at success. Investors are going to want to see a marketing plan that includes financial projections and future cash flow.
Step 2: Secure funding
It’s time to take your million-dollar idea to the bank (or perhaps a private investor).
If you don’t have the cash-on-hand to set up shop tomorrow, there are plenty of routes available to raise the capital you need:
- Venture capital from investors – Set up meetings with individual investors or firms. Create a concise, compelling pitch presentation. Vet the interested investors before accepting their funds. Not all venture capital opportunities are created equal.
- Crowdfund online– Become a business of the people by sourcing money from the community and providing a small incentive in exchange.
- Take out a loan – Meet with banks, credit unions, and private lenders to secure a small business loan to get you started. Consider an SBA-guaranteed loan if traditional lenders won’t grant you the funds you need.
Step 3: Pick a name & location
Good businesses have great names—something clever, welcoming, professional, or whatever you want your brand identity to be. Double-check that the name isn’t trademarked or already registered. If so, you’ll have to go back to the drawing board.
Your location type will determine your next steps:
- Home-based business – If you’re taking “home office” to the next level by running your business out of your living room, you’ll first have to check the zoning requirements in your area.
- Commercial business property – Start looking into rental properties in your desired area. Don’t forget to factor in nearby neighborhoods with potential customer bases, available workforce, competing locations, and property taxes.
Step 4: Determine your business structure & incorporate, if necessary
Select the type of business entity that works best for you. Make sure that your business entity type is a good choice for your business model, including your marketing plan. These are the most common types of business structures:
- Sole proprietorship
- Partnership
- Corporation
- S corporation
- Limited liability company (LLC)
If you decide to incorporate or form an LLC, you’ll have several subsequent steps to follow, in addition to choosing a name and location:4
- Select managing personnel—either the directors of your corporation or the managers and members of your LLC
- Appoint a registered agent to receive and forward you important legal and tax documents
- File official documents in the state of your choice (which doesn’t have to be the same as your state of residence)—complete the Articles of Organization for LLCs or the Articles of Incorporation for corporations
- Create legal agreement—either an LLC operating agreement or corporation bylaws
- Apply for an EIN (but more on that shortly)
Step 5: Register your business
As a newly-formed LLC, corporation, partnership, or nonprofit, you’ll likely have to register with the appropriate state agency where your business operates. This includes any state where you or your business:2
- Has a physical location
- Conducts regular face-to-face client meetings
- Receives a substantial chunk of revenue
- Employs individuals
On a local level, you may also have to register your business’s trade name (a DBA, or “Doing Business As” title) with your city or county. Setting up the legal structure for your business is a critical step on our business startup checklist. Your business cannot thrive if you find yourself in legal trouble.
Step 6: Obtain federal & state tax identification numbers
On the federal level, you’ll need an Employer Identification Number (EIN) to pay business taxes and hire employees.
An EIN separates you, the business owner, from your company, the business entity, which can sometimes protect you financially if your company goes under. You’ll also need it to open a business bank account and establish solid credit, which will make it easier to take out commercial loans later on.
Every state is different, but many require a state tax identification number (or state EIN) if your business has to pay state taxes. Check in with your state department for the specific process in your jurisdiction.
Step 7: Secure requisite licenses, permits, & certifications (oh my!)
Most businesses require at least one type of permit or license; some require several, on the federal, state, and municipal levels.
Here’s a breakdown of what you might need for your company:
Federal permits – Most businesses can skip this step, but some of the more heavily regulated industries require federal approval to conduct their operations:
- Drug manufacturing
- Ground transportation
- Investment advisement
- Broadcasting
- Tobacco, alcohol, and firearms sales
- Meat product preparation
State licenses – Every state is different, but you may need a few licenses depending on your services offered and products sold. Industries like insurance, accounting, real estate, construction, and more usually require a state license, plus sales of alcohol, gasoline, firearms, and lottery tickets.
Seller’s Permit – For any physical products sold within state lines, you’ll likely need a State Seller’s Permit or Resale Permit to properly collect, calculate, and remit sales tax.
Business license – At the very least, many companies need a business license from the city or county to run their operation.
Step 8: Purchase business insurance coverage
As we near the end of our checklist, you can see just how much work you have to put into getting your business up and running.
You wouldn’t want all that hard work to go to waste, would you?
Insurance coverage is an essential piece of the pie, both for legal reasons and financial security. These insurance types are either mandatory or strongly suggested:
Workers’ compensation insurance – If your business has employees, you legally need workers’ compensation insurance in almost all 50 states to protect your staff in the event of workplace injury or illness.
General liability insurance – The most basic type of business coverage, general liability insurance provides investigation, defense, and settlement against non-employee third-party claims of bodily injury, property damage, and personal and advertising injury.
Commercial property insurance – To cover accidental loss or damage to your own property, rather than the homes of clients or job sites you work at, for example, you’ll need commercial property insurance to cover damages from fire, theft, and other natural disasters. To cover loss or damage to your own equipment that you regularly take with you on your jobs, you’ll need Business Equipment Protection.
Professional liability insurance – For experts and professionals, professional liability insurance protects you from the financial ramifications of providing bad advice, missing important deadlines, or otherwise making a costly mistake in your line of work.
There are other types still, but this is a great place to start.
Step 9: Get to work!
With all this information under your belt, you’re almost there! Although, there is one final box to check off: rely on available resources to help you with the process.
The U.S. Small Business Administration is specifically designed to help you plan, create, and expand your small business with free consultations, business loan assistance, and government contracts. Your local and state departments will have similar programs to help you thrive.
For business insurance, here at Thimble, we provide convenient, affordable monthly and on-demand general liability and professional liability insurance. If you opt for a monthly plan, we’ll bundle it with Business Equipment Protection. This optional add-on ensures that your tools are covered too.
Click “Get A Quote” or download the app, and you can have insurance in under 60 seconds—if only the other requirements on the list could be that simple!
Put Your Best Business Foot Forward
Launching your own business can be scary, but it’s not impossible. With the right idea and a good head on your shoulders—plus this useful business checklist—you’ll be up and running in no time.
What are you waiting for? You’ve got a business to start!
Sources:
- Biz Filings. Incorporate Your Business Today: LLC, S Corp, C Corp, Non-Profit.
- U.S. Small Business Administration. Register your business.
