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1Research and plan
Check that people will pay for what you plan to sell, size up competitors, and write down how the business will make money. A one-page lean plan is enough to start; lenders and investors may want a fuller one.
Cost: Usually just your time. Free mentoring and workshops are available (see below).
Official reference: SBA: Market research · SBA: Write a business plan
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2Fund the business
Add up what you need to open and to run for the first months, then decide how to cover it: your own savings, a loan, or outside investors. Your formation costs belong in that first number.
Cost: Depends on the business. Start with your formation and first-year running costs.
Official reference: SBA: Estimate startup costs · SBA: Fund your business
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3Choose a location
Where you work affects taxes, zoning and licenses. Even a home-based business has a home state, and that is usually where you register. Working from a rented space means checking zoning before you sign.
Cost: Varies widely. Note that forming in another state usually adds cost rather than saving it.
Official reference: SBA: Pick your business location
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4Pick a structure
Your structure sets your personal liability, how profit is taxed and how much paperwork you take on. Most small owners choose between an LLC, a corporation (with or without an S-corp election) and, with partners, a partnership. A charitable mission points to a nonprofit.
Cost: The structure drives every later cost: state fees, tax returns and payroll.
LLC vs S-corp vs C-corp vs partnership →Side-by-side comparison with real costsWhich should I pick? quiz →Seven questions, a suggested starting pointNonprofit vs LLC →If your goal is a mission, not profitOfficial reference: SBA: Choose a business structure · SBA: Partnerships
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5Choose and check a name
Pick a name that your state will accept and that nobody else is already using for similar goods or services. Check your state’s business name database, the federal trademark database and the domain you want, before you print anything.
Cost: Searching is free. Name reservations, DBA filings and trademark applications carry fees that vary.
Official reference: SBA: Choose your business name · SBA: Trademarks
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6Register with your state
File your formation document with the state (articles of organization for an LLC, articles of incorporation for a corporation or nonprofit), name a registered agent and pay the filing fee. If you do business in other states, you may also need to register there.
Cost: Verified LLC filing fees in our data run from $35 (Montana) to $500 (Massachusetts), before yearly reports and taxes.
LLC cost by state →Filing fee plus yearly costs, every state + DCWhich state should I form in? →Home state vs Delaware, Wyoming and othersNonprofit cost calculator →State fees plus IRS 1023-EZ or 1023Official reference: SBA: Register your business · SBA: Get a registered agent
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7Get tax IDs and plan taxes
Get a free EIN from the IRS, then register with your state for any income, sales or employer taxes that apply. Decide early how you will pay tax on profit: as a default LLC, with an S-corp election, or through quarterly estimated payments.
Cost: An EIN is free from the IRS. Tax costs depend on your profit and structure.
S-corp calculator →Would an S-corp election save you tax?Quarterly tax calculator →What to send the IRS each quarterOfficial reference: SBA: Get federal and state tax ID numbers · IRS: Get an EIN
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8Licenses and permits
Most businesses need some license or permit: a general business license from the city or county, plus federal or state permits for regulated activities such as food, alcohol, transport or professional services.
Cost: Varies by city, county, state and trade. Ask your local licensing office.
Official reference: SBA: Apply for licenses and permits
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9Open a business bank account
Keep business money separate from personal money. A business account makes bookkeeping and taxes simpler and helps keep your liability protection intact. Banks usually ask for your formation documents and EIN.
Cost: Many banks offer low-fee or no-fee business checking; compare monthly fees and minimum balances.
Official reference: SBA: Open a business bank account
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10Get insurance
Insurance covers what your structure doesn’t: accidents, lawsuits and property damage. Once you hire, most states require workers’ compensation. General partners, who have no liability shield, have extra reason to look at coverage.
Cost: Premiums depend on your trade, state and payroll. Get quotes from more than one insurer.
Official reference: SBA: Get business insurance · U.S. Department of Labor: Workers' compensation
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11Hire your first employee
Before your first hire, register as an employer with your state, set up payroll and tax withholding, and learn the wage and hour rules. The real cost of an employee is well above their pay once employer taxes and insurance are added.
Cost: Employer payroll taxes, unemployment tax, workers’ comp and benefits on top of wages.
Official reference: SBA: Hire and manage employees · U.S. Department of Labor: Wages and the FLSA
Free help along the way
Small Business Development Centers, SCORE mentors and Women's Business Centers offer free or low-cost advice at every step. See free help & official resources.
Step order follows the U.S. Small Business Administration's Launch your business and Plan your business guides, summarized in our own words. Last reviewed October 28, 2026. FormCost isn't affiliated with or endorsed by any government agency. Links go to official public pages. General information, not legal or tax advice.