How Do I Start a Small Business? A Step-by-Step Guide
A 10-step checklist for starting a business in the US: validate the idea, plan, fund, register, get licenses, set up your books and land first customers.
Validate your idea with real customers, write a simple business plan, estimate costs and funding, choose a structure (often an LLC), register your business name, get an EIN and any licenses, open a business bank account, set up bookkeeping and insurance, build an online presence, and launch to your warmest audience first.
In this article
- Step 1: Validate your business idea
- Step 2: Write a simple business plan
- Step 3: Work out your costs and funding
- Step 4: Choose a business structure
- Step 5: Name and register your business
- Step 6: Get your EIN, licenses and permits
- Step 7: Set up banking, bookkeeping and insurance
- Step 8: Build your brand and online presence
- Step 9: Launch and get your first customers
- Step 10: Get paid and stay compliant
- Your startup checklist
- Free help for new business owners
- Common mistakes new business owners make
- FAQ
Starting a small business in the US is more accessible than ever. You can form a company online in days, sell from your phone, and run most of the back office with free tools. What hasn't changed is that most new businesses struggle because of avoidable mistakes: no real demand, money running out, or messy paperwork. This step-by-step guide walks you through the decisions in the order you should make them.
Step 1: Validate your business idea
Before you spend money, prove people will pay. Validation is about evidence, not enthusiasm from friends.
- Define the customer and the problem. Who exactly will buy, and what problem does it solve for them?
- Look at the competition. Competitors are usually a good sign: they prove demand. Your job is to find a reason customers would pick you.
- Talk to 10 to 20 potential customers. Ask how they solve the problem today and what it costs them. Listen more than you pitch.
- Get a real commitment. A pre-order, a deposit, a signed letter of intent or a paid pilot is the strongest validation there is.
Need inspiration? See businesses you can start with little money.
Step 2: Write a simple business plan
You don't need a 40-page document unless you're seeking a bank loan or investors. A one- to two-page plan that covers your customer, offer, pricing, marketing, costs and revenue goals will sharpen your thinking. Our guide on how to write a business plan includes a simple template.
Step 3: Work out your costs and funding
List your one-time startup costs (equipment, inventory, website, legal fees) and monthly running costs (rent, software, insurance, marketing). Then decide how you'll pay for it: savings, revenue from early customers, friends and family, a small business loan, or investors. Read how much it costs to start a business and how to get a small business loan.
Step 4: Choose a business structure
| Structure | Best for | Liability protection | Taxes |
|---|---|---|---|
| Sole proprietorship | Testing an idea, very low-risk work | None | Profit on your personal return (Schedule C) |
| LLC | Most small businesses | Yes, generally | Pass-through by default; can elect S corp |
| S corporation (tax election) | Profitable owners who can pay themselves a salary | Through the LLC or corporation | Can reduce self-employment tax on profits |
| C corporation | Startups raising venture capital | Yes | Corporate tax, plus tax on dividends |
For most first-time founders, an LLC hits the right balance of protection and simplicity. Our step-by-step guide to starting an LLC covers it.
Step 5: Name and register your business
- Check your state's business name database, and search trademarks so you don't build on a name you'll have to change.
- Register a matching domain name and social handles.
- File your LLC or corporation with your Secretary of State, or register a DBA ("doing business as") if you're a sole proprietor using a business name.
Step 6: Get your EIN, licenses and permits
- EIN: a free federal tax ID from IRS.gov. You'll need one to hire employees, and banks often require it.
- Business license: most cities or counties require a general business license.
- Industry licenses: food service, childcare, contracting, cosmetology, health care and many trades need state licenses.
- Sales tax permit: required if you sell taxable goods or services in your state.
- Zoning or home occupation permit if you run the business from home.
Step 7: Set up banking, bookkeeping and insurance
Open a business checking account and run every business dollar through it. Choose a bookkeeping system on day one, even a simple tracker, and keep every receipt. Talk to an insurance agent about general liability insurance, and professional liability if you give advice or provide professional services.
Start tracking income and expenses from your first sale.
Open the free trackerStep 8: Build your brand and online presence
At minimum you need a simple logo, a website or landing page, a Google Business Profile if you serve a local area, and professional business cards and invoices. Read how to make a website for your business.
Step 9: Launch and get your first customers
Start with the warmest audience: people you know, the customers you interviewed, and local or online communities where your buyers spend time. Offer a launch incentive, ask every early customer for a review, and track which channels bring buyers. Our guide to marketing a small business with no budget has 15 tactics to try.
Step 10: Get paid and stay compliant
Send clear invoices, set payment terms, and follow up promptly. Put tax deadlines on your calendar, including quarterly estimated taxes if you're self-employed, plus state annual reports and license renewals.
Send professional invoices from day one, with your logo and payment terms.
Create an invoiceYour startup checklist
| Task | Where | Cost |
|---|---|---|
| Validate idea with real customers | Interviews, pre-sales | Free |
| Write a lean business plan | Your notes, SCORE templates | Free |
| Choose structure and register | Secretary of State | State filing fee |
| Get an EIN | IRS.gov | Free |
| Licenses and permits | City, county, state agencies | Varies |
| Business bank account | Bank or credit union | Often free or low cost |
| Bookkeeping system | Tracker or accounting software | Free to low monthly fee |
| Insurance | Business insurance agent | Varies by industry |
| Website and Google Business Profile | Website builder, Google | Low monthly cost; profile is free |
| Invoices, cards and branding | Free tools | Free |
Free help for new business owners
- SCORE: free one-on-one mentoring from experienced business people, plus workshops and templates.
- Small Business Development Centers (SBDCs): free or low-cost advising on planning, financing and growth, usually hosted by universities.
- Women's Business Centers and Veterans Business Outreach Centers: SBA-supported training and counseling.
- Your local library and chamber of commerce: market research databases, networking and events.
- SBA.gov: guides on every step, plus the Lender Match tool for financing.
Talk to someone who's done it. An hour with an owner of a similar business in another town (so you're not competitors) can save you months of trial and error. Most people are happy to share what they wish they'd known.
Common mistakes new business owners make
- Building for months before talking to a single customer.
- Underpricing to win customers, then struggling to cover costs.
- Mixing personal and business money.
- Running out of cash because of slow-paying clients or unplanned expenses.
- Ignoring taxes until April.
Frequently asked questions
What do I need to legally start a business in the US?
At minimum: a business structure (sole proprietorship, LLC or corporation), registration with your state if you form an entity or use a business name, any required local and state licenses, and an EIN if you'll hire employees or form a multi-member LLC.
How long does it take to start a small business?
The paperwork can take as little as a few days to a few weeks, depending on your state and industry licenses. Validating your idea and finding customers usually takes longer.
Can I start a business while working full time?
Yes, many founders start as a side business. Check your employment contract for conflicts, and keep the work separate from your employer's time and equipment.
What is the best type of business to start?
One that solves a real problem you understand, for customers you can reach, with startup costs you can afford. Service businesses using skills you already have are usually the fastest and cheapest to start.
This article is general information for US readers, not legal, tax or financial advice. Rules, prices and platform policies change, so confirm details with official sources or a qualified professional.