How to Start a Business: The Free Starter Guide

What to learn first, licensing pointers and best practices for 19 small businesses, trades and licensed careers.

Jump to your business

Before you start: 10 best practices

1. Pick your business structure

Sole proprietorship, LLC, partnership or corporation each handle liability and taxes differently. Compare them on the SBA's business-structure guide before you file anything, and ask a CPA or attorney if you're unsure.

How to do it

1. List what matters to you: personal liability protection, taxes, paperwork, and whether you'll have partners or investors.
2. Read the SBA's comparison of sole proprietorships, partnerships, LLCs and corporations.
3. Check your state's filing requirements and ongoing fees on your Secretary of State website.
4. Ask a CPA or attorney which structure fits your plans before you file.
5. Keep a copy of every formation document in one safe place.

Official source: sba.gov/business-guide

2. Register your business

Most businesses register with their state (and sometimes their county or city). If you use a name other than your own, you may need a DBA ("doing business as") filing. Check your state's Secretary of State website.

How to do it

1. Brainstorm names that are easy to say, spell and search.
2. Search your state's business name database and the USPTO trademark search for conflicts.
3. Check that a matching web domain and social handles are available.
4. Register your business and file a DBA if you'll use a name that isn't your legal or entity name.
5. Set a calendar reminder for any annual report or renewal your state requires.

Official source: sba.gov/business-guide/launch-your-business/register-your-business

3. Get an EIN

An Employer Identification Number is free from the IRS. You'll usually need one to hire, open a business bank account or form certain entities. Apply only at irs.gov; you never have to pay a third party for it.

How to do it

1. Go only to irs.gov/ein; the application is free.
2. Have your legal name, structure and responsible party details ready.
3. Save the confirmation notice the IRS gives you as a PDF and a printout.
4. Use the EIN on bank, tax and vendor forms instead of your Social Security number where allowed.

Official source: irs.gov/ein

4. Licenses and permits

Requirements vary by state, county, city and industry. Many trades and licensed careers need a state license, but the rules differ by state. Start with the SBA's license-and-permit guide, then your state licensing board and local business office.

How to do it

1. Use the SBA's licenses-and-permits guide to see the federal, state and local layers.
2. Call or visit your city or county business license office and ask what applies to your exact service.
3. Look up your state licensing board for your trade or profession.
4. Ask about home-occupation rules if you'll run the business from home.
5. Make a list of every license and renewal date and keep it with your formation documents.

Official source: sba.gov/business-guide/launch-your-business/apply-licenses-permits

5. Insurance

General liability, commercial auto, workers' compensation and professional liability are common types. What you need depends on your work, your state and your clients' contracts. Talk to a licensed insurance agent.

How to do it

1. Write down what could go wrong: property damage, injury, vehicle accidents, mistakes in advice, stolen equipment.
2. Ask a licensed agent about general liability, commercial auto, workers' compensation, professional liability (errors and omissions), inland marine (tools and equipment) and bonding.
3. Ask what your state requires once you hire employees.
4. Ask what your future clients' contracts usually require before you bid.
5. Get quotes in writing and compare coverage, not just cost.

Official source: sba.gov/business-guide/launch-your-business/get-business-insurance

6. Pricing basics

Know your true cost per job (labor, materials, travel, overhead and taxes) before you set a price. Price from your own numbers, not from a competitor's guess, and recheck them every season.

How to do it

1. Estimate your time per job honestly, including travel and setup.
2. Add direct costs: materials, supplies, fuel, platform or payment fees.
3. Add a share of overhead: insurance, software, phone, equipment wear, marketing.
4. Add taxes you'll owe and the profit you want the business to keep.
5. Your price = (labor + direct costs + overhead share) + profit. Use your own numbers, never a guess from someone else.
6. Recheck your numbers every season or whenever costs change.

7. Bookkeeping and taxes

Open a separate business bank account from day one. Log every sale and expense, keep receipts and plan for self-employment and estimated taxes. The IRS Small Business and Self-Employed Tax Center is the official starting point.

How to do it

1. Open a separate business bank account and use it for every business sale and expense.
2. Choose a simple system: a spreadsheet or bookkeeping software.
3. Record income and expenses weekly and keep receipts (photos are fine).
4. Move a share of every payment into a separate tax reserve account; ask a tax professional what share fits you.
5. Read the IRS pages on estimated taxes and self-employment tax, and mark the payment dates on your calendar.
6. Review your numbers monthly: what came in, what went out, what's owed.

Official source: irs.gov/businesses/small-businesses-self-employed

8. Contracts and written estimates

Put the scope, price, schedule, payment terms and cancellation terms in writing before work starts. Have an attorney review your standard agreement once.

How to do it

1. Write every estimate with the scope, what's not included, price, schedule and how long the quote is good for.
2. Use a written agreement with payment terms, change-order process and cancellation terms.
3. Get a signature (paper or electronic) before work starts.
4. Document the job with notes and photos before and after.
5. Have an attorney review your standard agreement once, then reuse it.

9. Marketing basics

Claim your free Google Business Profile, ask happy customers for honest reviews (never buy, fake or filter them), and keep every claim you make true and provable. The FTC's advertising guidance applies to small businesses too.

How to do it

1. Claim and fill out your free Google Business Profile with accurate hours, service area and photos of your own work.
2. Ask every satisfied customer for an honest review, and never pay for, fake, filter or bribe reviews.
3. Ask happy customers for referrals and thank them.
4. Make sure every claim in your ads is true and you can prove it.
5. Track where each new customer heard about you.

Official source: ftc.gov/business-guidance/advertising-marketing

10. Customer communication and consent

Get a customer's permission before you send marketing texts or calls. Honor STOP and similar replies (stop, quit, end, revoke, opt out, cancel, unsubscribe) right away, and within 10 business days at most. Send texts only between 9 AM and 8 PM in the customer's local time, and check your state's rules, since some states set narrower hours or limit Sundays and holidays. Follow the FCC's rules on robocalls and texts and the FTC's CAN-SPAM rules for email. This isn't legal advice.

How to do it

1. Collect each customer's permission for texts and record when and how you got it.
2. Put "Reply STOP to opt out" in marketing texts and stop as soon as someone opts out.
3. Keep a simple log of opt-outs and check it before every send.
4. Use templates so your messages stay professional and consistent.
5. Review any AI-written message before it goes to a customer.

Official source: fcc.gov/consumers/guides/stop-unwanted-robocalls-and-texts

Your first 30 days

Running your own business? Use every step. Joining a licensed firm, brokerage, carrier or employer? Do the steps marked "Everyone" and follow your section's checklist; save the "Own business" steps for if you later go independent.

• □Own business: Week 1: choose your structure, check your business name and register it (and a DBA if needed).
• □Own business: Week 1: get your free EIN at irs.gov/ein.
• □Own business: Week 2: open a business bank account and a separate tax reserve account.
• □Everyone: Week 2: look up every license and permit for your service and start the applications.
• □Everyone: Week 2: talk to a licensed insurance agent and get written quotes.
• □Own business: Week 3: build your pricing from your own costs and write your estimate template.
• □Own business: Week 3: get a written agreement template reviewed.
• □Own business: Week 3: set up your bookkeeping system and a receipt folder.
• □Own business: Week 4: claim your Google Business Profile and create simple social pages.
• □Own business: Week 4: tell your personal network you're open and ask for referrals.
• □Own business: Week 4: set up your customer consent and opt-out log.
• □Own business: Week 4: book your first jobs and review what you learned.

Before you quit your job

These apply if you're leaving a job to run your own business. If you're changing careers into a licensed firm, focus on the cushion, benefits, household and plan items.

• □I've tested demand with real paying customers, not just compliments.
• □I know my true cost per job and my prices cover it.
• □I've saved a personal cushion for slow months; a financial professional helped me set the amount.
• □I know how I'll get health coverage and other benefits I'd lose.
• □Any license, insurance and registration I need is in place.
• □I've checked my employment agreement for non-compete or side-work rules.
• □My family or household understands the plan and the risks.
• □I have a written plan for my first 90 days and a point where I'd reassess.

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Share this free guide with someone who's thinking about starting a business.

General education only. Not legal, tax, financial or licensing advice. Rules vary by state, county and city, so confirm with the official sources named here and a qualified professional. No income, earnings or business results are promised or implied. Published by Ryan Via, doing business as The Collective.