How to Start a Small Business

Getting your new small business up and running takes proper planning, solid decision-making, and flawless execution. A startup can be a true challenge, but you will be on your way if you begin by preparing correctly and understanding the work involved. The process of starting a small business is full of legal questions. At any time you have a question on how to start a business, please contact our business startup attorney in California for a free consultation.

Of course, the beginning of every business journey is full of questions and even some doubts. You must be confident in your decision to start a new venture and willing to ask for help when needed. From funding to equipment to staffing and even taking advice, we have compiled 14 steps that will serve to guide you through the process.

Begin with number one, or go straight to the step you are most interested in. We have tried to cover all the essential aspects here, from planning, to financing, to business structure, but if you are left with additional questions, get in touch with our California business lawyers & corporate attorneys at Nakase Wade. Let’s try to answer as many as we can in 14 easy steps on how to start a small business.

1. Starting a business: It All Starts With an Idea

Your business idea stems from what you are passionate about and also what you are well-equipped to do. While you should be prepared for your idea to change as you brainstorm and recalibrate, it should have a strong foundation that is rooted in an idea you have faith in. If you do not believe in your business idea, no one else will.

Do Some Research

Once you have your idea, conduct some research. What are other people doing in this field? Who are your competitors? What makes your idea different, interesting, and viable?

Your passion for your small startup will set you apart, so make sure you are committed to the idea and ready for periods of adversity. Also, be honest with yourself: are you an expert in the field? How much support do you need? Have you surrounded yourself with people you can trust?

Next, set focused goals, and begin to target prospective clients. You might even create a three, six, or nine-month set of goals. This might help you check back in, learn from the mistakes you made as well as your successes, and move forward positively with even more personal and small business growth.

Keep in mind that there is no “easiest” way to start a small company. Each business is different. Go forward with a solid combination of instinct and knowledge, and you will enjoy a sustained, exciting career. And as always, if you fail, get right back up again.

2. Write a Small Business Plan

A well-thought-out plan works to prepare you for all of the different chapters involved in starting a business. At this point, you might have a brief outline—now is the time to formalize that plan. Traditionally, a business plan will help you seek funding from banks or creditors. It also helps to clearly state your goals and how you plan on accomplishing them.

While this step is not the most complex, it is important to realize that not everyone is instantly prepared to write a clear, well-organized plan.

We recommend you ask fellow entrepreneurs for recommendations and advice and also check out resources found online. If you are struggling, you could even hire someone to help write or edit the plan; however, make sure to factor that into your cost analysis.

Learn more:

3. Choose and Assume a Structure When Starting a Small Business:

The manner in which you choose to organize your business is crucial to your upcoming goals. While it is important to be flexible in most aspects of your venture, it is also important to commit to a structure that you think will be not only advantageous but manageable. Furthermore, your structure should fit your business perfectly, in shape, it is in now. The structure you choose will impact taxation, liability, and much more.

From sole proprietorships to partnerships to LLCs, there are a lot of choices out there. Make sure to do the research as you decide what will work for you. Do not worry about what others are doing—this is an individual choice, and you must be honest with yourself about the size, potential, and aims of your entity. Generally, entrepreneurs with small companies choose LLCs because of the flexibility they provide, as well as an advantageous tax structure, but this choice is different for everyone. If you have questions about how the various business structures can and will impact your new venture, consult one of our trusted California attorneys as you start a small business.

Learn more: Compare Business structure

4. Name Your New Business Venture

Thought by some to be an unessential step, naming your business is actually quite important. Devising a name that encapsulates the purpose of your small business directly ties into building a brand. However, before you choose a name, you will want to run a check-in your state, and possibly county, to see if any other business is already using your name. Some businesses also look into getting a DBA, or “doing business as,” but whatever you decide, do not forget how important a business name is when you start a small business.

Learn more: How to Come Up with a Business Name: 11 Steps For Unique Name Ideas For A Small Business

5. Get a Federal Tax Number (ID)

An ID number is needed to register with the IRS, file your taxes, open your bank account or accounts, and complete other important financial tasks involved in starting a small business.

You’ve already arrived at a business name, so now it is time to start the application for a tax identification number as well as state numbers. You can do this via the website for the IRS. You will also need a license to do business in your home city. The US SBA can help you with this.

Note: all of these licensing and permitting requirements can be difficult, especially on top of all of your other business concerns. If you are unsure or overwhelmed, a business attorney can help you stay on top of these affairs. After all, there is a lot to keep track of when starting a small business.

6. Open Your First Company Bank Account

We are sure you have opened up bank accounts before, but business bank accounts are different. Having a distinct bank account dedicated to your new company’s needs helps to keep your records in order and should be relatively painless to get dialed in.

An accountant can help you with your new account, or you can do the research and set up your business account yourself. There are various types of accounting software available and reviews available across the web. However you go about your accounting, make sure it is established before you make your first sale.

Tip: there are also a few great apps for business accounting out there, so take a look. However, if time is a concern, look into simply hiring an accountant for your business needs.

7. Obtain financing/funding in order to start small business:

This one is always a pertinent question, often requiring entrepreneurs and new business owners to truly be honest with themselves. There are various sources of funding out there, with new methods popping up all the time. For example, if you are lacking capital, you will want to figure out exactly what loans or grants might suit your new venture and what aid you might qualify for.

This point is also dependent upon the amount of money you estimate you might need. In order to launch any size business, an investment is needed. You will also want to ensure you can cover estimated expenses before counting your new earnings.

Expect Expenses

What sorts of expenses should you be ready for? It depends on the business since a T-shirt shop requires different resources than a new French bistro, but here are some basic examples: office space, wifi, and other technological concerns, printers, software, web design, and other expenses small and large.

After you have made a list of initial expenses and estimated how much your new company would cost to run on the day-to-day level, you will want to figure out how to go about getting funded. While there are a plethora of options out there, here are a few of the most common. All of these will require a bit of research and due diligence:

Self-financing

One of the most accepted ways to gain capital you use your own savings, credit, loans, retirement, and personal assets to build up your financing.

Friends and Family

While we do not necessarily condone mixing money and important relationships together, many business owners call on the people around them to invest. It has worked out for many businesses—but remember to document everything.

Grants

Grants.gov offers a database of over one thousand programs for business grants, all sanctioned by the federal government. Learn more: Free money to start a business

Crowdfunding

A relatively new addition to funding businesses, these platforms, such as GoFundMe, can help out if you do not mind soliciting financing from friends, family, and strangers alike.

Advances

A new business partner, customer, or even friend might be able to provide a cash advance in return for some sort of return investment. You never know until you try.

Other ideas: Angel Investors, venture capital investors, startup accelerators, and bartering your services with other professionals in exchange for funding.

Tip: However you fund your small business, make sure to do the appropriate research, document every move that you make in your records, and be honest with yourself and your business about your goals.

8. Apply for Business Credit

Credit cards can be dangerous for Americans; we all know that. But the truth is that a credit account that is dedicated to your business can be a real advantage, especially early in your journey. A solid card with good interest rates can enable you to purchase essentials without using all of your capital. Make sure, however, to pay off your statement every month, as opposed to letting your business accrue too much debt. Another advantage of your new card is the ability of your business to begin to build credit, which will help your ability to spend and even expand in the long run.

Tip: Designate some “work time” to shop around for the best deal and one that suits the size and aims of your outfit. There are some great business cards out there, and it helps to understand the key differences between them.

9. Create a Small Business Website

These days, a dynamic website is crucial for myriad reasons. Much of our business is done online, especially since the pandemic. A strong web presence is also an excellent way to advertise and get the word about your company out to a different demographic. There are a variety of things one can do online, from linking up with social media to set up an online store.

Remember when we talked about your business name? It makes sense to check on the availability of your domain name, too, so that your branding matches up.

Tip: If you aren’t too technologically gifted, or establishing a website seems like just another complicated task to add to your list, why not hire a web designer? These days, finding someone to help you hit the ground running can be very reasonable. Also, if you do have some of that DIY aesthetic, there are various programs that are easy to learn, such as Squarespace, and these help you to create your own site.

10. Accepting Payment & Financial Software

Whether your business is large or small, expanding or just getting off the ground, you need to sort out exactly how you will accept payment. After all, you want to collect profits immediately and do it smoothly and easily. You will need to get a processor for payments, a bank account for merchants, card readers, and possibly some additional equipment. These days, there are also apps and programs that turn your everyday iPhone into a merchant machine, so if you are interested, check those out.

You also need to familiarize yourself with the software that can help organize and markdown your profits, work to track business performance, analyze information regarding sales (locations, demographics, trends) and other data points. Choose the software that works best for starting your small business, and go from there.

11. Hire Employees

Depending on the starting size of your new venture and your early goals, you might want to hire some employees to help run your business. Or, perhaps you are not ready to do this now, but in the future, you hope to, as the business grows. Of course, some entrepreneurs decide that they will go it alone and structure their company as a sole proprietorship, but if you do decide you need some help, here are some tips.

Now, you may not possess the capital, as you start, to staff your business. Or, you might decide to start with a “skeleton crew” consisting of a lawyer, a brand designer, and perhaps an accountant. It is all dependent on your business plan and funding, as well as your level of personal expertise. Other options include hiring a full team of employees who are full-time or hiring some part-timers. You could also hire people as needed or sign up some interns or freelancers—if you are allowed to hire them legally in California.

Whomever you hire, certify that they are there to work hard and help the company progress first, just as you are.

Learn more:

12. Don’t Forget Taxes

We have good news and bad news. The bad news is that as a small business owner, your tax season just became more complicated since you now have a business to deal with in addition to your personal tax situation. The good news is that business owners automatically receive some tax benefits and breaks, so make sure not to overlook those.

Tip: the business structure you have decided upon by now directly impacts your liability and the way in which your business is taxed. Make sure that you are aware of these distinctions.

13. Protect and Insure Your Small Business

We cannot emphasize this enough: it is essential that you protect your new company in every way possible. Think about it: you’ve worked diligently and put your heart and soul into this venture. You are carefully preparing so that you might have a long and illustrious business journey. But as we all know, accidents happen. Although there is a lot of information available online these days, our recommendation is to speak with an insurance agent who is familiar with small business policies and find one that is right for you.

The importance of protecting your company, as well as personal assets, simply cannot be underestimated.

14. Expect the Unexpected and Stay Positive

No one said this was going to be easy, right? As a new small business owner, you have already shown the determination, optimism, and dedication that it takes to succeed. There will be obstacles that appear, however—some that you could have predicted, and others you could never have imagined. You will have great successes and also withstand failures and periods of adversity.

Get In Touch with a Licensed Attorney

Overall, we hope this list not only helps you prepare and answers some of your questions but also gives you an added push in the right direction. Have faith in yourself, and good luck on your business journey, wherever it takes you. If you have questions that are better suited to a business lawyer, contact Nakase Wade today.

Have a quick question? We answered nearly 2000 FAQs.

See all blogs: Business | Corporate | Employment

Most recent blogs:

How To Write An LLC Article of Organization

How To Name An LLC

A comprehensive guide on how to name an LLC.

How To Create An LLC

Strategic Role of America’s National Debt: Benefits and Misconceptions

This article explores the complex role of America's national debt, highlighting its strategic benefits to the economy and addressing common misconceptions about its impact. It emphasizes the necessity and functionality of debt in managing economic stability and growth, while dispelling fears related to government financial management.

5 Businesses That Have the Highest Success Rate for Profits

Top 5 business most likely to succeed and profits backed up by data.

Types of Businesses That Often Fails

Many entrepreneurs, about two-thirds, never start their businesses due to fear of failure. This article will highlight businesses with both high and low failure rates, guiding you toward a more promising venture.

What is NAICS code for small business

NAICS codes determine if your company qualifies as a small business for federal contracts, based on specific size standards. The SBA uses these codes for statistical analysis and opportunity identification, essential for GSA contractors.

Do you need a business license to sell on Shopify

Selling on Shopify often doesn't require a business license, but there are exceptions based on earnings, regulated inventory, and specific product types. Understanding tax obligations, including sales tax and nexus, is crucial for Shopify sellers, regardless of business structure.

Do you need a license to start a business

Obtain the necessary licenses for your business in California, ensuring compliance with state, local, and possibly federal regulations. Simplify the process with guidance on where and how to apply, tailoring to your business needs and location.

How to get a seller’s permit in California

Gain the ability to sell in California with a crucial seller's permit, applicable to many businesses. Secure your permit easily through the CDTFA, with no cost for application, enhancing your operational compliance.

Transfer LLC to another state

Navigate the complexities of moving your LLC to another state with insights on dissolution, domestication, and foreign registration. Ensure a smooth transition by understanding the tax, legal, and procedural implications.

Articles of organization vs Operating agreement

Navigate the essentials of starting an LLC with our breakdown of Articles of Organization versus operating agreements. Understand the necessity, benefits, and filing process for both to ensure your business's legal foundation.

Anonymous LLC States

Unlock the benefits of privacy and asset protection with an anonymous LLC in states like Wyoming, Delaware, Nevada, and New Mexico. Ensure your business advantages while maintaining owner anonymity and confidentiality.

LLC Tax Deductions

Maximize your LLC's tax benefits with our guide on essential tax deductions. From home office expenses to vehicle costs, ensure you're not missing out on valuable savings.

SS4 instructions: Simple step by step

Get your EIN by completing IRS Form SS-4 with our simple guide, highlighting the importance and steps for business tax purposes. Avoid common pitfalls and ensure accuracy in your application process for smoother IRS filings.

What should I name my LLC

Learn how to choose the perfect LLC name that meets legal requirements and resonates with your brand in our step-by-step guide. Discover tips for brainstorming, checking availability, and securing your LLC name.

How to start a freelance business

Learn how to overcome initial doubts and launch a successful freelance business with steps from goal setting to client acquisition. Discover strategies for selecting profitable niches, branding, and pricing to kickstart your freelance career.

Start a Business with $5000

Discover how to start your own business with just $5,000, turning your tax refund or small savings into a long-term investment. Explore viable startup ideas from online tutoring to real estate entrepreneurship within a budget.

Sue for breach of contract

Understand the legal standing of both written and oral contracts, including the ability to sue for breach. Learn the significance of documentation and the challenges of proving verbal agreements in court.

Owning a store checklist for business owner

Discover the essential checklist for aspiring retail store owners, focusing on meticulous planning and relationship building over mere sales. Learn the crucial aspects of POS systems, hiring, marketing, and financial metrics for a successful start.

Types of Businessman

Explore the diverse world of entrepreneurship and the vital skills needed to thrive as a businessman in 2024, including understanding different entrepreneur types. Learn how to navigate the entrepreneurial journey, from digital ventures to lifestyle businesses, and transform from a wantrepreneur to a successful entrepreneur.