How to Start a Small Business: Must-Have Checklist to Spark Success

If you’re reading this page, you’ve probably got an idea of what you want your business to be. Maybe you want to market your freelance writing skills. Or perhaps you want to sell handmade, needle-felted corgi dolls.

Whatever your great idea, you can improve your chances of success if you take the time to map out the creation of your business step-by-step. To help you with your plan, we created the checklist you need to fire up your start-up engines and fuel your entrepreneurial efforts into the future.

Starting a business begins with answering three questions: Who are you? Where will you work? And how will you make money? That means choosing a name, deciding on a location, and creating a business plan.

Who are you, anyway? What do you want your business to be known for? Choosing a name for your business is one of the most important aspects of becoming an entrepreneur, but it doesn’t have to be daunting.

First, don’t get too hung up on picking the perfect name in the beginning. The name you choose now may not be the name you end up with at the end of your business launch.

Next, report or register your business name in a few different places. Primarily, you’ll register with the government and online to set up a website. We’ll get into the details of registering and protecting your business name in the next section.

So for now, here are some tips on choosing a good name for your new business:

• Make it unique: Be creative. Choose a name that nobody else in your industry is using. You don’t want customers to be confused—or other businesses to sue you.
• Make it relevant: Your name should represent what your business does, how it makes customers feel, or how it’s unique—a combination of all three is a plus.
• Make it positive: Don’t choose something that will leave people with a bad taste in their mouth. And avoid picking a name that’s too cutesy or too inside baseball.
• Make it short: People will be googling your business, so it should be short enough to remember. You can drop the extra “Inc.” or “LLC,” except on certain required legal documents.
• Make it easy to spell: Again, if someone can’t remember how to spell your business, wish them luck finding you. One spelling aberration—à la Tumblr—is enough for uniqueness.

In today’s tech- and cloud-enabled economy, many new business owners have more of a luxury for choosing where they do business than in past decades.

You may choose to open a storefront in a leased or purchased building, work from your home, or even travel to a coworking space where you share an office with different businesses.

But if your customers live in a wider geographical area, you could operate without a physical storefront, provided you have space to create your products or services.

Working from home is an appealing option for many small-business owners. The comforts of a home office can be enticing. You control your space and your surroundings, and you can avoid a dreadful commute. But a home-based business carries some potential risks and drawbacks, such as extra distractions or a lack of human interaction.

Here are some details to consider when choosing your business location:

• Appearance and reputation of the area
• Employee needs
• Climate and seasonality (for example, a snowy climate may not be the best location for a surfing instructor business)
• Competitor location and behavior
• Start-up costs and long-term expenses
• Customer and community demographics
• Geography, travel, and distribution needs
• Physical demands, such as parking, hardware, and manufacturing
• State and local taxes, regulations, and licensing rules

Most experts recommend that new entrepreneurs create a business plan—but what is a business plan, exactly? And do you really need one?

Although writing a business plan isn’t a surefire path to success, studies show that people who create business plans tend to also become successful entrepreneurs, so it can’t hurt.²

Our advice? Whether you write a formal business plan, construct a mental plan, or discuss a plan with a partner, make an effort to create a business plan.

Here’s an outline with descriptions of a business plan’s key parts:

• Executive summary: Write a short overview of your business plan. Although it comes first in the document, it’s best to write the executive summary last. By the time you’re finished with the other sections, you should have a good idea of how to summarize the plan’s contents.
• Business description: Describe what you’re going to sell, how you’ll do it, and why. Give details about your business’s location and owners and about how your products or services will meet customers’ needs and market demands.
• Market analysis: Explain who your competitors are and what your target market is. Lay out your case for success—how your business will leverage its strengths and overcome its weaknesses.
• Products or services: Give relevant details about what you’ll sell customers, such as design, development, production, and distribution.
• People and business organization: Lay out your business structure and management organization. Describe the people involved and how they’ll work together.
• Sales and marketing strategy: Describe your sales process and how you will market, promote, and advertise your product or services. Define how you will measure the costs and successes of these strategies.
• Financial plan: Establish a plan to fund your business and keep it running. Include the costs to start and your financial projections for as far into the future as you can, preferably at least three years.
• Appendix (optional): Attach useful illustrations, charts, or notes that would help a reader understand your plan better.

That may sound like a lot, but don’t think that your business plan needs to be dozens of pages. Keep it short, concise, and readable for your audience.

For an easy-to-follow approach to writing a business plan, we like the basic framework laid out by the U.S. Small Business Administration.

The next steps are to register your small-business start-up with the government, officially define your structure, and protect your business by reserving the name online.

It’s important to note that the rules for making your business legal differ by state—and sometimes even by local community. Visit your state government’s website to learn the details.

Yet there are several steps that almost any new entrepreneur will need to take, and we list them below.

Every entrepreneur must decide how to structure their business for several reasons. What you choose affects your liability and taxes, as well as which laws and regulations you’re subject to.

There are four primary business legal structures. But which one is right for you? That depends on how many employees you have, how comfortable you are with taking on personal liability for business operations, and how you want to pay taxes on money earned by the business.

There are a few less common types of business structures too.

You’ll likely need a federal Employer Identification Number (EIN) to do business no matter where you’re located. The IRS says to get an EIN if any of the following apply:

• You have employees.
• You operate as a corporation or partnership.
• You file tax returns for employment; excise; or alcohol, tobacco, and firearms.
• You withhold non-wage taxes on income you pay to a “non-resident alien” (IRS definition).
• You have a Keogh plan, which is a retirement plan for some small businesses and self-employed people.
• Your business has relationships with certain organizations like estates, farmers’ cooperatives, nonprofit organizations, plan administrators, real estate and mortgage organizations, or trusts.

To get an EIN, complete and submit an application with the IRS. You’re eligible for an EIN as long as the person who applies has a valid Social Security number (SSN) or other Taxpayer Identification Number (TIN).

With your fancy new EIN, you can register your company name with your state and local governments. Again, the rules governing the whens and hows for name registration vary.

Registering a trademark with the United States Patent and Trademark Office provides federal protection for your business against those who may try to steal or threaten your brand identity. You can use different trademark names than what you use to register for DBA.

Finally, you should register your web domain name. This protects your address from copycats and helps customers find you. Your domain name can be anything you’d like, but—as with your business name—it should be short and easy to remember.

If you sell certain products or services, you may have to pay sales tax to your state and local governments.

The taxes you pay may also depend on your business structure. To cover yourself, register with your state tax department using a valid TIN and prepare to collect sales and other taxes when required.

In addition, if you bought your business, you may have to pay additional taxes—and you may also be eligible for tax credits. Check with your state tax department to learn more about taxes that apply to buying a business.

Depending on the kind of business you do, you may need special licenses or permits to operate legally. Get to know your state and local business licensing and permit rules and the fees required to obtain them.

Here are some examples of federal business licenses you may be subject to:

• Agriculture
• Alcohol
• Firearms
• Radio and TV
• Transportation

One final note: keep good records. From registrations to licenses and every cost and fee you pay, record and store the information securely. You may need to access them later, and you’ll thank yourself for planning ahead.

You’ve got to have money to get your business off the launchpad. Fortunately, there are several ways to fund your start-up even if you don’t have mountains of cash lying around—it just takes hard work to get it.

First, you need a place to put the money your business earns. Although it’s not always required to open a separate bank account for business income, we recommend doing so for several reasons. These are just a few:

To apply for a business account, you usually need your EIN, business creation and ownership docs, and any licenses or permits required by the government.

Capital is the money you need to roll out your entrepreneurial goal. But how do you get your hands on it? If your brilliant business idea needs tons of cash to start up, you may need to ask investors to pitch in for your fledgling organization. But that’s not your only option.

• Try crowdsourcing: From Kickstarter to GoFundMe, many entrepreneurs have found success by taking their idea to the masses and soliciting small donations to get their start-up off the ground.
• Go to the government: Look into local financing, grants, tax credits, and other incentives for business owners. SBA-guaranteed loans, which are backed by the federal government, may be easier to get approved for, and they offer extended payback periods.

Once you have the foundation and funds to start up your new businesses, it’s time to look into the products and services to keep it running. But how should you sort through the thousands of available options? And which choices do you need to make immediately when it comes to services?

That’s where we come in—below are the business services and software that Business.org recommends for new businesses.

Check out some of our business internet guides, reviews, and comparisons below:

• 5 Best Internet Service Providers for Small Business of 2018
• How to Choose an Internet Service Provider for Your Business
• DSL vs. Cable vs. Fiber vs. Satellite Internet—Compare Internet Types

Maybe you can get away with using your cellphone for some business calls, but chances are you’ll need special business phone services too.

For offices that need multiple lines, you can get traditional phone, digital voice, or Voice over Internet Protocol (VoIP) services—or a combination. Whatever works for your business, we’ve got the resources to help you get started:

• How to Choose a Phone System Vendor for Your Business
• How to Set Up a Phone System for Your Small Business

No business is without risk, and some organizations require more protection than others—that’s what business insurance is for. But do you need it?

The answer depends on your structure; whether you have employees; and certain local, state, and federal laws. Business insurance protects your personal assets if your business structure leaves them at risk. Some types also protect your employees, your property, and your ideas.

• Commercial property insurance: Cover your business property and assets, including buildings, equipment, and outdoor items, with commercial property insurance.
• Workers compensation: Required in many states if you have employees, workers compensation insurance pays for your employees’ health and other expenses if they are injured or get ill on the job.

The software you need for your business depends heavily on the type of company you’re starting. But here are some of the most common categories of business software that may help your organization operate smoothly:

• Accounting and auditing: Track finances, pay employees, invoice vendors, bill customers, and secure tax records.
• Cloud storage and backup: If your business produces and works with large amounts of data, you need a place to safely store it—and a way to restore lost data in emergencies.
• Communication: Download email, chat, and collaboration software that keeps your communication lines open and your customers and employees connected.
• Customer relationship management (CRM): Use cloud-based tools for customer data management to improve customer service and automate marketing functions.

Not every business needs a fax machine, but there are a few items that nearly every small-business start-up should buy in the early stages.

You’ve got the name, the funds, the systems, and the legal cred: now it’s time to get the customers. Successful businesses leverage the best tools to help them find and acquire the right customers—and provide experiences that keep them coming back.

Here are some key documents, services, and software you need to turn strangers into happily paying customers:

Starting a business takes commitment, patience, and hard work. Following a plan—like this checklist—can make your entrepreneurial process easier and more successful.

Your business starts with an idea, which turns into a name and eventually becomes a reality. Make sure you have the right structure, financial plan, services, and protection for your business to keep customers happy and the money flowing.

How will you jumpstart your business plan and achieve your entrepreneurial goals?

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.