Starting a small business can feel overwhelming, but it doesn’t have to be. Whether you’re launching a side hustle or building a full-time business, having a clear plan is essential.

This step-by-step guide walks you through everything you need—from idea validation to making your first sale—so you can start your business the right way.

Step 1: Define Your Business Idea

Why It Matters: Not every idea is a good business. You need to validate demand, competition, and profitability.

Action Steps:

• Identify a problem your business solves.
• Research if people are already paying for this solution.
• Ask potential customers if they’d buy from you.

Pro Tip: Use tools like Google Trends and AnswerThePublic.com to see what people are searching for.

Step 2: Choose a Business Structure

Why It Matters: Your business structure affects taxes, liability, and legal protections.

Popular Options:

• Sole Proprietor – Simple, but no liability protection.
• LLC (Limited Liability Company) – Protects personal assets; best for most small businesses.
• S-Corp or C-Corp – Best for high-growth businesses or those seeking investors.

Pro Tip: Use IRS.gov’s Business Entity Comparison Tool to determine the best structure for you.

Step 3: Register Your Business and Get an EIN

Why It Matters: You need to legally operate, pay taxes, and open a business bank account.

Action Steps:

• Register your business name with your state.
• Apply for an EIN (Employer Identification Number) at IRS.gov (it’s free).
• Check if you need business licenses or permits.

Pro Tip: Use SBA.gov’s Business License Lookup Tool to see what’s required in your state.

Step 4: Open a Business Bank Account

Why It Matters: Mixing personal and business finances is a huge mistake and can cost you at tax time.

What You Need:

• Your EIN (Employer Identification Number).
• Business registration documents.
• Initial deposit (varies by bank).

Pro Tip: Look for free business checking accounts at banks like Chase, Novo, or Bluevine.

Step 5: Set Up Your Business Finances

Why It Matters: You need a system for tracking income, expenses, and taxes from day one.

Action Steps:

• Choose an accounting system. QuickBooks Online is best for small businesses.
• Set up a simple bookkeeping process to track every dollar in and out.
• Save 25 to 30 percent of income for taxes in a separate account.

Pro Tip: Automate bookkeeping by linking QuickBooks to your bank account.

Step 6: Build Your Online Presence

Why It Matters: Ninety-three percent of people look for businesses online before buying. You need a website and social media presence.

What to Set Up First:

• A simple website using Shopify, Wix, or WordPress.
• A Google Business Profile so people can find you in search.
• Social media accounts. Pick one or two platforms where your audience is active.

Pro Tip: Even a one-page website with contact info and services is better than nothing.

Step 7: Get Your First Customers

Why It Matters: A business isn’t a business without sales.

Proven Ways to Get Customers Fast:

• Networking – Reach out to friends, family, and industry groups.
• Cold Outreach – Email or message potential clients directly.
• Social Media – Share valuable content to attract leads.
• Referrals – Offer a discount for customer referrals.

Pro Tip: Make your first offer irresistible with discounts, bonuses, or limited-time deals.

Step 8: Plan for Taxes and Compliance

Why It Matters: The IRS doesn’t play when it comes to small business taxes.

Action Steps:

• Know your quarterly tax deadlines. Self-employed individuals pay taxes four times per year.
• Track all deductible expenses, including home office, software, and mileage.
• Work with a bookkeeper or accountant to stay compliant.

Pro Tip: Use a tax calculator to estimate what you owe before tax season.

Final Thoughts: Your Next Steps

Starting a small business is exciting but overwhelming. By following these steps, you’ll avoid common mistakes and set yourself up for success.

Want to take the guesswork out of your business finances?  (Click below.)