Business launch checklist: 12 steps from idea to opening day
A plain-English checklist for starting a U.S. small business: test the idea, add up costs, register, get an EIN, licenses, a bank account and insurance.
Most of starting a business is a long list of small, specific jobs, done roughly in order. This checklist follows the U.S. Small Business Administration’s business guide and groups the steps the way most new owners work through them: plan it, make it official, then get ready to sell.
Rules differ by state, city and industry, so treat each step as something to check for where you are.
Part 1: Plan it
1. Check that people will pay
Before you spend real money, find out who would buy and what they pay now. Look at competitors’ prices and reviews, and talk to people who fit your customer. The SBA’s guide starts here, with market research.
2. Write a short business plan
It doesn’t need to be long. One or two pages on what you sell, who buys it, how they’ll find you, what it costs and how you’ll make money will guide every step below. Lenders and investors will ask for a fuller version later.
3. Add up your startup costs
List the one-time costs to open, plus the monthly costs to keep going. The SBA suggests counting at least a year of monthly costs. The startup costs guide walks through it.
4. Decide how you’ll pay for it
Savings, a loan, investors, or starting smaller so early sales pay for the next step. The total from step 3 tells you how much you need.
Part 2: Make it official
5. Pick your location
Where you operate decides your taxes, zoning and many of the rules you’ll follow, even for a home business. Zoning is usually set locally, so check with your city or county before you sign a lease.
6. Choose a business structure
The common choices are a sole proprietorship, a partnership, an LLC or a corporation. A sole proprietorship isn’t a separate legal entity, so you can be personally responsible for the business’s debts; an LLC or a corporation separates them. Switching later can come with restrictions and tax effects, so it’s worth some reading, or a talk with an accountant, now.
7. Choose and protect your name
A business name can be registered in four separate ways, and each one stands on its own:
- Entity name with your state, which may be required depending on your structure.
- DBA (“doing business as”) if you trade under a name other than your own or your entity’s. Most states require you to register one if you use one.
- Trademark, which protects the name nationally in your industry.
- Domain name for your website.
Check that the name is free in all four before you print anything.
8. Register your business
Registration is usually done with your state. LLCs, corporations and partnerships generally also need a registered agent, a person or company that accepts legal mail for the business. What you need depends on your structure and on your state, county and city.
9. Get your tax ID numbers
Your federal tax ID is an Employer Identification Number (EIN). It’s free from the IRS and you apply online in one sitting. The IRS warns never to pay a website for one. You need an EIN to hire employees, and banks usually ask for it when you open a business account. Your state may also need its own tax ID, for example if you collect sales tax.
10. Get licenses and permits
What you need depends on what you do and where. Federal licenses only apply to regulated work like alcohol, firearms or aviation; most of the rest comes from your state, county and city, and the fees vary. Your city or county business office is the place to ask.
Part 3: Get ready to sell
11. Open a business bank account
Keep business money separate from personal money from the first sale. Banks usually ask for your EIN, your formation documents and your business license.
12. Get the insurance you need
Once you have employees, some coverage is required, such as workers’ compensation and unemployment insurance. Beyond that, general and professional liability insurance are common ways to protect the business from claims.
One habit to start on day one
Keep a receipt or invoice for every business purchase. The IRS says your records should show who you paid, how much, when, and what it was for. It makes taxes easier and shows you where the money goes.
Sources
- U.S. Small Business Administration, “Business guide”: www.sba.gov/business-guide/10-steps-start-your-business
- U.S. Small Business Administration, “Launch your business”: www.sba.gov/business-guide/launch-your-business
- U.S. Small Business Administration, “Choose your business name”: www.sba.gov/business-guide/launch-your-business/choose-your-business-name
- U.S. Small Business Administration, “Calculate your startup costs”: www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs
- IRS, “Get an employer identification number”: www.irs.gov/businesses/small-businesses-self-employed/get-an-employer-identification-number
- IRS, “What kind of records should I keep”: www.irs.gov/businesses/small-businesses-self-employed/what-kind-of-records-should-i-keep
General information, not legal, tax or financial advice. Rules differ by state, county, city and industry, so check with your local officials or a professional before you act.