What Is Needed to Start a Business: The Crucial Steps You’ll Need to Take

When someone decides to start their own business, they’re faced with a mountain of different things to consider. Some are optional, while others are legal requirements that a business owner must address, such as selecting a business structure, complying with legal obligations, managing taxes, and planning for employee benefits. The way a person begins their company often dictates whether it will be successful in the long term. If you get it right at the beginning, it can save you time and money and prevent you from falling down some of the common pitfalls.

Perhaps you’re at this vital stage right now and are in need of some expert help and advice. If this is true, this article will provide you with the essential steps that you need to take.

Develop your business idea

The foundation of any successful business starts with a solid business idea. This involves identifying a gap in the market and crafting a solution that meets that need. A compelling business idea should be unique, innovative, and have the potential to generate revenue. Begin by brainstorming and conducting thorough research on your target market. Seek advice from mentors, industry experts, and potential customers to refine your concept.

When developing your business idea, consider these key factors:

• Market Demand: Is there a genuine need for your product or service? Conduct surveys, focus groups, and market analysis to gauge interest.
• Competition: Who are your competitors, and what sets your business apart? Identify your unique selling points and how you can offer something better or different.
• Financial Viability: Can your business generate enough revenue to be profitable? Create financial projections and assess your pricing strategy.
• Scalability: Can your business grow and expand over time? Consider the long-term potential and how you can scale your operations.

By carefully evaluating these factors, you can develop a business idea that stands a strong chance of success.

Choose a business structure

Selecting the right business structure is a critical decision that impacts your taxes, liability, and overall business success. There are several business structures to choose from, each with its own set of advantages and disadvantages.

• Sole Proprietorship: This is the simplest structure, easy to set up with minimal paperwork. However, it offers no liability protection, meaning your personal assets are at risk.
• Partnership: This structure allows shared ownership and decision-making. While it can be beneficial, it can also be complex to manage and set up. Plus, as with a sole proprietorship, there’s no personal liability protection.
• Limited Liability Company (LLC): An LLC provides personal liability protection and tax benefits over a corporation, making it a popular choice. It requires more paperwork and formalities than a sole proprietorship but offers significant advantages.
• Corporation: Corporations offer the most liability protection but are more complex and formal to establish and maintain.

When choosing a business structure, consider your business’s size, complexity, and long-term goals. Consulting with an accountant or lawyer can help you determine the best structure for your business.

Get registered

By getting registered with your state as a limited liability company (LLC) or corporation, you become a legal entity that is authorized to conduct business in your chosen area. You also gain personal liability protection, which usually shields your personal assets from lawsuits against the business. You will need to register with the government, which may require many forms and fees. The process can be very complex.

As for so many different things, your journey needs to begin on the internet. If you want to know where to register your business, there are specialist websites that serve as a preferred platform for entrepreneurs. You can obtain LLC and incorporation services and receive expert advice and customer support from platforms like ZenBusiness. It’s often possible to gain transparent pricing and assistance with things like accounting and digital signatures.

Selecting a suitable business location is crucial as it impacts factors such as taxes, legal obligations, and revenue generation. Additionally, acquiring specific business licenses and permits is necessary, and these requirements vary depending on the industry and the chosen business location. Therefore, researching local requirements is essential.

Make sure your company information is accessible on your website and social media platforms, as well as other online directories such as Google Business Profile or Yelp.

Open a business bank account

Opening a business bank account is essential for separating your personal and business finances. This step helps you manage your business’s cash flow, pay bills, and accept payments from customers efficiently.

To open a business bank account, you will typically need to provide documentation such as your business license, tax ID number, and Articles of Organization (for an LLC) or Articles of Incorporation (for a corporation). Meeting with a bank representative can help you discuss your business’s financial needs and goals.

Look for these key features in a business bank account:

• Low Fees: Choose accounts with low or no monthly fees and minimal transaction fees.
• High-Yield Interest: Consider accounts that offer high-yield interest rates to maximize your earnings.
• Online Banking: Opt for accounts with robust online banking capabilities for easy remote management.
• Customer Service: Select accounts with excellent customer service, including 24/7 support and dedicated business banking representatives.

By opening a business bank account, you can help ensure your business finances are well-organized and separate from your personal finances.

Obtain licenses and permits

Securing the necessary licenses and permits is a crucial step in starting a business. The requirements can vary based on your business’s location, industry, and type.

Common licenses and permits include:

• Business License: A general license that allows you to conduct business in your state or locality.
• Sales Tax Permit: This permit enables you to collect sales tax from customers.
• Employer Identification Number (EIN): A unique number assigned to your business by the IRS for tax purposes.
• Zoning Permit: This permit allows you to operate your business in a specific location.

To obtain these licenses and permits, you will typically need to submit an application and pay a fee. You may also need to meet with a government representative to discuss your business’s specific licensing and permitting needs. Ensuring you have all the necessary licenses and permits helps you stay compliant and avoid legal issues.

Fund your business

Securing funding is a critical step in getting your business off the ground. There are several ways to fund a business, including loans, grants, investors, and crowdfunding.

Consider these common funding options:

• Small Business Administration (SBA) Loans: These loans are guaranteed by the SBA and offer favorable terms and interest rates.
• Community Development Financial Institutions (CDFI) Loans: These loans are provided by non-profit lenders that serve underserved communities.
• Venture Capital: Private investors can provide significant funding and expertise in exchange for equity.
• Crowdfunding: Platforms like Kickstarter and Indiegogo allow you to raise money from a large number of people, often in exchange for rewards or equity.

When choosing a funding option, consider your business’s financial needs, creditworthiness, and growth potential. Consulting with a financial advisor can help.

Get business insurance

Having the proper coverage in place helps protect your business and personal assets. Without adequate coverage for yourself and others involved in your business, you could lose everything if something goes wrong on the job. This could include if someone decides to sue because of an injury or other incident at the workplace.

Obtaining general liability insurance is crucial to protect against potential legal claims, safeguarding both business and personal assets.

Some business insurance policies you should consider taking out are:

• Employer’s Liability Insurance
• Professional Indemnity Insurance
• Public Liability Insurance
• Product Liability Insurance
• Stock Insurance
• Buildings and Contents Insurance

Decide what you’re going to sell

You need to identify what goods or services you’ll be providing — and where, how, and to whom. Assess whether there’s a market for them, and consider how your product is different or better than the competition.

You need to find out about your target audience. If you already have a business website up and running, you can use analytical tools to learn more. For instance, what are your target audience’s genders, ages, interests, and locations? Your website and marketing activities need to be based on these answers.

Create a business plan

Your business plan should outline how you’ll operate your business, what resources you need to get started, and how much it will cost. It should provide a detailed description of your business and how it’s going to make money. Once you’re up and running, all future investments that are made into your company should be done in line with the goals outlined in this document.

Understanding various aspects of running a business tailored for small business owners is crucial, including legal obligations and growth considerations.

Potential investors who are looking at providing their time or resources will want to know exactly what they’re getting themselves into before they commit. They’ll want to view a well-laid-out business proposal that allows them to see the potential risks as well as rewards before making such decisions.

Understanding legal requirements for new businesses, such as financial regulations and tax requirements, is crucial. Entrepreneurs must navigate various obligations to ensure smooth operations and growth.

Set up a company website

This is your opportunity to make your business name, logo, and branding public online. It will help establish company credibility and give visitors an idea of what services or products you offer. For business owners, having a professional online presence is crucial as it significantly impacts business credibility and customer reach.

A good company website will have a professional design and a structure that’s easy to navigate. This should apply regardless of how people access it (laptop, PC, smartphone, or tablet). To increase your online visibility, you can include product pages or online catalogs, as well as blogs.

Get on social media

The next step is to ensure that at least two social media accounts (for example, X and Facebook) are created for your company. This is important because these pages have been proven time and again to help increase website traffic organically over time — and more effectively than using traditional forms of promotion such as buying advertisements.

Once you’ve ticked off each of these steps, you’ll be ready to move forward into your exciting future. It will be hard work (especially at the start), but further down the road, you may begin to reap the financial benefit. Your company can grow and become an established provider of quality goods or services.

John Pearson is a serial entrepreneur and writer who is passionate about helping small businesses launch and grow. His work has been featured in Huffington Post, Entrepreneur, and Forbes.

Next Up: Check out our “How to Start a Business in the USA for Noncitizens” post.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.