How to start a business

How Do I Start a Business?

Every business has unique needs and challenges, but there are some important steps almost everyone should follow:

1. Identify a customer need

Every successful business starts by solving a problem or giving people something they want. Before you jump into action, do some research. You need to find out if people will actually be interested in what you’re offering.

Even if your idea is brand new and you’re sure there is demand for it, you should still study the market to find ways to attract customers.

2. Research and plan

Once you know what you want to sell or offer, it’s time to plan. Some important questions to consider include:

• Will you be going it alone, or will you have business partners?
• Will the new business be your full-time job or a side hustle?
• Will this be an online business, or will you need a physical location outside your home?
• What kind of funding will you need to get started? You have many options for obtaining funding, including small business loans and crowdfunding.

3. Find partners (if needed)

While some people like working alone, having a partner can make business easier. A good partner might have a skill set that complements yours. For example, you might know a lot about your product, but your partner might be good at marketing or handling money.

A good working relationship with your business partners is crucial, so it’s important to work with someone you trust and communicate well with.

Your business partners will play a large role in your life – choose carefully!

4. Choose a business structure

Next, you need to decide what kind of business you want to have. A sole proprietorship is the easiest option, but it doesn’t protect your personal assets if something goes wrong.

A partnership lets you share the work—and the risks—with others. If you want more protection, you might choose a corporation or a Limited Liability Company (LLC). These can help protect your personal money and property if the business runs into trouble.

5. Pick a business name

Your business needs a name that’s easy to remember and not already taken. Many states let you search online to see if the name you want is available. You can also check the U.S. Patent and Trademark Office’s database to see if anyone has registered a trademark for the name.

In some places, you can even reserve the name for a while (by filing a name reservation form and paying a fee) so nobody else takes it while you’re getting ready.

6. Make a Business Plan

A Business Plan is a roadmap that charts how you will reach your business goals. It includes ideas and strategies for avoiding and dealing with problems. An effective Business Plan covers everything from the beginning of the journey to the exit strategies that will help you close or sell the business when you’re ready.

Rocket Lawyer offers a free Business Plan template that helps you outline issues like business goals, projections, marketing strategies, and financing.

7. Get started on marketing

Even before your business opens, you can get a head start on marketing by building excitement. Reserve a website name, create social media pages, and start sharing your ideas. You can use platforms like Instagram, TikTok, LinkedIn, or YouTube, depending on your audience. Good marketing helps people find their business and get excited about it!

SEO is another important part of your marketing plan. Your business website won’t help if no one can find it. It’s also advisable to have Terms & Privacy on your website from the very start.

Finally, don’t forget the importance of graphic design. A memorable logo can serve your business even better than a strong social media presence.

8. Obtain funding

Starting a business usually costs money. You might get a loan from a bank, use crowdfunding websites, or apply for help from groups like the Small Business Administration (SBA). A strong business plan can help convince others to invest in you.

However, if you take money from investors, you must comply with federal and state securities exemptions and any required filings.

9. Create your business entity

Now it's time to create your business entity by filing the right paperwork with your state. If you chose an LLC or corporation, you’ll need to register it.

You will also need to appoint a registered agent who can receive official papers and legal notices for the business.

You may file an assumed name, also known as a DBA (“doing business as”), if you have a sole proprietorship or general partnership. But a DBA is only a name—it doesn’t create liability protection. LLCs and corporations may also use DBAs, and they are best to keep finances and formalities separate.

10. Get an EIN

Obtaining an Employer Identification Number (EIN) from the IRS gives your business a unique ID number. Banks and other financial service providers will require an EIN. Sole proprietors without employees and retirement plans aren’t required to have an EIN, though it’s still recommended.

11. Open a business bank account

A business bank account helps you keep your personal and business finances separate. This is especially important for LLCs and corporations, where you must maintain limited liability protection.

Once you start having cash flow, all business revenue should go into the business’s account. Similarly, a business credit card keeps business debts separate from personal debts.

12. Get licenses and permits

Depending on your business, you may need different licenses or permits:

• A business that operates an online store but has no physical location might need a sales tax license.
• Businesses with physical locations might need a certificate of occupancy, a fire marshal permit, or even a liquor license.
• Most LLCs/corps must file Beneficial Ownership Information (BOI) with FinCEN within 30 days of formation.

Always check with your state or local government to find out!

13. Open for business!

With everything set, you can officially launch your business.

How Much Does It Cost to Start a Business?

The startup costs for a new business can vary. Registering a business entity with the state requires a filing fee, which can range from around $100 to $500. Market research can also be time-consuming and expensive, especially if you hire a marketing firm to help.

Unfortunately, there are few low-cost options for starting a business. However, you might be able to get financial assistance from programs in your state. The SBA offers some financing options that can help reduce costs.

Whatever type of business you’re thinking of starting, Rocket Lawyer is here to help. All we need is a little information about you and your business to get your paperwork started.