It might be called a “small” business, but it’s no small feat to start one. From writing a business plan to securing funding and finding resources to help, here’s what you need to know about starting a business.
If you’re looking to start a small business, you probably have an idea of what product or service you’ll be providing. And if you don’t there are dozens of tried and true businesses out there to consider. With a general idea in mind, here’s how to bring that idea to life.
Gathering information about pricing, competitors, revenue and the economy is important when starting a business. This research will help you determine which business structure you want, who your ideal customer is, and how you’ll market your service or product.
Some things to start researching include:
Great resources for research:
Will you start an LLC, or are you creating a corporation? Your structure will affect how you register your business, pay your taxes, establish your liability, conduct your banking and file documents with local, state and federal government entities. Each business structure has different rules.
The structure of your business also determines whether you need an Employer Identification Number (EIN), which is a federal tax identification number for businesses. For example, if you’re a sole proprietor and don’t have employees, you don’t need an EIN to file taxes. But if you form a corporation or have employees, you’ll need one. However, having an EIN can be a helpful tool, you may even be able to apply and qualify for a business loan using your EIN instead of your Social Security number.
If you need an EIN, you can apply for one through the IRS.
| Structure | Best for … | Description | Requires EIN |
|---|---|---|---|
| Sole proprietorship | Running your business on your own. | You’re going it alone with complete control over your business. If you do business activities, you’re automatically considered a sole proprietorship. | No |
| Partnerships, LP, LLP and LLLP | Running a business with someone else equally. | Two or more people can enter into a partnership, sharing the money, property, profits and losses of the business. | Yes |
| Limited liability companies, LC, LLC, Ltd., Co. and PLLC | All small businesses, as it offers personal liability protection. | Limited liability protects your personal assets. Can be single-member, corporation or partnership. | Often |
| Corporation | For large-scale businesses. | A business owned by its shareholders. | Yes |
US laws and regulations mean you’ll need to educate yourself about your particular industry and create a tangible business plan. Also, if you need some funding, a business plan is a typical application requirement for many business loan providers.
Take this time to choose a business model as well. Do you want to start from scratch or open a franchise? Will you be a home-based business looking for a loan? Are you a subscription service or a manufacturer? Narrowing down your exact model will help you craft your business plan.
A business plan should include:
If you’re going to run your business out of a brick-and-mortar location, you’ll need to decide if you’ll buy or rent a place and whether your location aligns with your target market.
If you’re operating your business online, you’ll need to decide if you’ll make your own website, list your products on specific online stores, and more.
If you choose to manage your business out of a physical location, making a website is also a wise idea to make it easier for potential customers to find your business. It’s also worth considering creating social media accounts so customers can find and interact with you on multiple platforms.
Once you’ve decided on your business structure, you’ll need to register your business with the federal and state governments.
If you want an LLC (often considered ideal for a small business), you need to pick a name and fill out a document called articles of organization, which establishes an LLC on a state level.
To choose a name, first check if it’s available on the United States Patent and Trademark Office (USPTO). Then, complete an Articles or organization, which includes information such as the business’ name, purpose, the registered agent (legal contact), members, business structure, the duration you want the LLC for and the business’ address.
If you’re looking to form a corporation, you’ll need to file your articles of incorporation with your state. This set of documents marks your intent to create a corporation with details as to your services or products, how you run your company, any stock you’ll issue and other information.
You’ll also need to get some licenses and permits for some businesses on a federal and state level. Federal licenses are required if you’re selling alcoholic beverages, firearms, radio, television broadcasting and more. There are also state-level permits required for cleaning services, farming, restaurants, retail stores and others.
This may be one of the most important steps: Organizing all your finances, payment methods for employees and your customers, and getting funds to grow your business.
Some financial items to sort out include:
A bank account built for small business
Connect every part of your business to one bank account
The cost to start a business depends on a lot of factors.
“Startup costs for small businesses can vary widely depending on your location, business type, and your goals in general,” says Stefan Chekanov, the co-founder and CEO of Brosix. “When my brother and I launched our business years ago, it wasn’t that costly, but we were working on software solutions and had a solid background of clients to bounce off of. Starting an online business could cost you as little as $100, to [as much as] hundreds of thousands of dollars for businesses with physical locations, inventory, and employees.”
Since business loans tend to have requirements around years in business and minimum revenue, it can be tough for a startup to secure funding through traditional routes. Chekanov acknowledges the funding struggle for new businesses but offers alternative funding options to consider:
“Startups can consider approaching banks, credit unions, and alternative lenders for options like business lines of credit, term loans, or SBA microloans. You need a good credit score and spending history to help you secure a good deal. Additionally, personal finances might be necessary for borrowing funds.”
Though you aren’t required to hire a professional to start your business, an expert in your field could help prevent future problems. For example, if you’re not experienced with taxes, hiring a tax professional can help avoid potential issues with the IRS. Or if you’ve never built a website and you want to start an online business, hiring a web developer to make your site can really help.
Experts to consider hiring to help you start or grow your business include:
We won’t lie — starting a business from scratch isn’t easy. Some of the hardest parts of the journey include acquiring funding, managing your finances and doing all the necessary paperwork to make sure your business is above board. There are many business accounts that offer software integrations and business management tools to help you along, and plenty of resources to help you get started.
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Need quick cash? See how BMG Money helps employees handle emergencies without a credit check.
Legit lenders don’t offer guaranteed approval loans, but some options come pretty close if you can meet the lenient requirements to qualify.
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Top alternatives to Kikoff for easy credit-building include Self, Cleo, Grow Credit, Fizz and One Finance.
The $500 Axos Bank bonus is now expired, but you can still earn $50 per qualifying referral, plus up to $400 with a new business account.
Find out if Priority Plus Financial’s advertised loans are worth it or just a sales hook.
How I can transfer the money from Outside country to USA to start business for EB-5 visa ?
Hi Takbir,
Thank you for reaching out to Finder.
If you are planning to send a large amount to start a business in the US, you may also want to read on the article below to assist you on the tax guidelines of doing this. The page also offers a list of providers that you could reach out to in completing this process.
Tax guidelines and regulations for large money transfers into US
Hope this helps!
Cheers,
Reggie