How to start a small business in the US: the practical checklist

Most "how to start a business" guides are either too vague or too overwhelming. Here's the practical sequence — in order — for someone who has a service or product and wants to make it a legitimate business.

Step 1: Choose your business structure

Decide between sole proprietorship, LLC, or corporation. For most small businesses, an LLC is the right starting point. It's inexpensive, provides personal liability protection, and is straightforward to form.

Step 2: Register your business

File your LLC (or other entity) with your state. This is done through your state's Secretary of State website. Most states allow online filing. Costs range from $50-500 depending on the state.

Step 3: Get an EIN

Apply for an Employer Identification Number from the IRS at IRS.gov. Free, takes 10 minutes, and you need it for banking, payroll, and taxes.

Step 4: Open a business bank account

Do this before you accept any money. You need your EIN and business formation documents. Mercury, Relay, and Bluevine are solid options with no monthly fees.

Step 5: Get the required licenses and permits

Depending on your industry and location, you may need a general business license, a professional license (contractors, cosmetologists, real estate agents all require state licensing), a home occupation permit if you work from home, or a seller's permit if you sell physical goods.

Step 6: Get business insurance

At minimum, general liability. If you're hiring employees, workers' comp is required in most states. Next Insurance and Hiscox both offer fast online quotes for small businesses.

Step 7: Set up your accounting

Open an accounting tool (QuickBooks, Wave, or Xero) and connect your business bank account from day one. Starting clean is much easier than catching up later.

Step 8: Set up invoicing

If you bill clients, set up a system before you send your first invoice. FreshBooks and QuickBooks both handle this.

Step 9: Understand your tax obligations

Federal income tax, self-employment tax, quarterly estimated payments, and sales tax (if applicable). Consider a one-hour session with an accountant in your first year.

Step 10: Build your online presence

At minimum, claim your Google Business Profile (free) and set up a basic website. For local businesses, a Google Business Profile with good reviews often matters more than the website itself.