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Starting a business is a sequence of decisions and filings: plan the business, estimate what it will cost and how to pay for it, choose a location and legal structure, pick and protect a name, register, get your tax IDs, confirm licenses and permits, then open a bank account and arrange insurance. The U.S. Small Business Administration (SBA) organizes its startup guidance around ten steps that follow this general path. The exact order, and the filings you need, depend on what you sell, where you operate, and how you organize ownership. Treat the sequence below as a framework to check against your state and local requirements, not as a checklist that applies everywhere.
The sequence at a glance
| Stage | What you decide or file | What it depends on |
|---|---|---|
| 1. Market research and plan | Customers, competitors, a written business plan | Your industry and target customers |
| 2. Startup costs and funding | A cost estimate, funding sources, business credit | Location, wages, rent, insurance, government fees |
| 3. Location and structure | Where you operate; sole proprietorship, partnership, LLC, or corporation | Taxes, personal liability, ownership rules, state law |
| 4. Name | Business name, DBA, trademark, domain | Entity registration rules and local DBA rules |
| 5. Registration | State entity filings and any local registrations | Structure and where you conduct business |
| 6. Tax IDs | Federal EIN and any state tax ID | Whether you hire employees, open accounts, or need certain licenses |
| 7. Licenses and permits | Federal, state, and local approvals for your activity | The activity, the location, and the responsible agency |
| 8. Bank account and insurance | A business bank account and business insurance | The business and its risks |
Step 1: Research the market and write a business plan
Market research establishes who will buy and what competitors already offer. A competitive analysis then helps you identify an advantage you can realistically sustain. The SBA treats both as the first job, before any filing.
The written plan turns those findings into a working document. The SBA describes a plan as a roadmap for structuring, running, and growing a business, and as the way to make the case to lenders, investors, or partners. A lean plan suits a relatively simple business or one you expect to revise often. The SBA’s planning guidance includes templates and a startup-cost calculator.
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Step 2: Estimate startup costs and decide how to fund them
Estimate costs before you decide how much to raise or borrow. The SBA identifies expenses that vary by geography, including wages and minimum wage rules, property values and rent, insurance, utilities, and government fees. Because these vary so widely, a general startup-cost figure is not meaningful; build your own estimate from your location and activity.
Once the estimate is done, the SBA’s planning resources cover funding options and how to establish business credit.
Step 3: Choose a location and legal structure
Location
Where you operate determines which taxes, zoning rules, and regulations apply, and it drives costs such as wages, rent, utilities, insurance, and government fees. The SBA advises weighing your target market, potential partners, and location-specific costs and restrictions together.
Legal structure
Structure affects your taxes, how you can raise money, how much paperwork you carry, and whether your personal assets are exposed to business debts. The SBA compares sole proprietorships, partnerships, LLCs, and corporations, and advises choosing a structure before state registration. Its comparison is general guidance. Ownership, liability, tax, and filing rules vary by state, so business counselors, attorneys, and accountants are worth consulting before you decide.
| Structure | Who can own it | Personal liability | Tax and filing (general pattern) | Raising money |
|---|---|---|---|---|
| Sole proprietorship | One owner | Owner is personally liable for business debts | Business income is reported on the owner’s personal return; no separate entity filing | Owner’s own funds and personal borrowing |
| Partnership | Two or more owners | Partners are generally personally liable for partnership debts (general partnership) | Partnership files an information return; profits pass through to partners | Partner contributions and partnership borrowing |
| LLC | One or more members | Generally separates owners’ personal assets from business debts, subject to state law and how the business is run | Default tax treatment can be changed by election; state filings vary | Can admit members or investors under the operating agreement |
| Corporation | One or more shareholders | Separate legal entity; shareholders generally are not personally liable for corporate debts | C corporations are taxed at the entity level; S corporations generally pass income through; state filings vary | Can issue stock, including different classes |
Use this table to frame questions for an advisor, not to pick a structure on its own. The general patterns above do not replace your state’s rules or a tax professional’s review of your situation.
Step 4: Choose and protect your name
A business name can involve four separate tools, and each is legally independent of the others:
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- Entity name registration with the state, if your structure requires it.
- Federal trademark, which protects a brand name used in commerce.
- A DBA (“doing business as”), which lets you operate under a name other than your legal name. A DBA does not itself provide legal protection.
- A domain name, which is a web address and carries no legal protection by itself.
Registering one does not secure the others. Check requirements for your structure and location before you commit to a name.
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Registration depends on your structure and location. Many LLCs, corporations, partnerships, and nonprofit corporations register in the states where they conduct business. Some businesses operating under the owner’s legal name may not need entity registration. Local governments may separately require permits or DBA registration. Some states also require an initial report or a tax-board filing after registration.
To confirm what applies to you:
- Check the state agency that handles business entity filings for registration and any post-registration reports.
- Check the state tax agency for state tax ID and withholding requirements.
- Check your city or county for business licenses, permits, or DBA filings.
Step 6: Get your tax IDs
The federal EIN
An Employer Identification Number (EIN) is the federal tax ID used for federal taxes and other tasks, including hiring employees, opening a bank account, and applying for some licenses and permits. The SBA says applying for an EIN is free, and warns against sites that charge fees for it. Apply through the IRS directly. Whether you need an EIN depends on your circumstances; a sole proprietor without employees may still need one for banking or licensing.
State tax IDs
State tax ID requirements differ from state to state. Some states issue their own tax registration numbers for sales tax, withholding, or payroll. Confirm with your state tax agency which numbers apply to your activity.
Step 7: Check licenses and permits
License and permit requirements, along with their fees, depend on the business activity, the location, and the agency that regulates it. A federally regulated activity may require a federal license or permit in addition to state and local requirements. The SBA gives examples such as certain agricultural activities and alcohol manufacturing, wholesale, import, or retail sale. If your activity is regulated, identify the agency responsible for it and confirm the specific requirements with that agency.
Step 8: Open a bank account and arrange insurance
The SBA’s launch guidance includes opening a business bank account and obtaining business insurance as launch items. Treat both as things to investigate for your business, not as a single provider or policy that suits everyone. Ask about coverage that matches your activity, and compare what each policy excludes.
Questions to answer before you file anything
- What exactly will you sell or do, and does any part of it require a license?
- In which state and cities will you operate, and where are your customers?
- How many owners will there be, and how much personal liability can you accept?
- Will you hire employees, and will you need an EIN for payroll?
- Do you need an in-state agent for an entity you form in another state? Registered-agent services exist for this purpose.
Once you have answers, the state business registry, the state tax agency, your local government, the IRS for the EIN, and the responsible licensing agency will tell you which filings apply. Check the current versions of the SBA guides as well, since requirements and fees change.
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