Starting a business in the United States is both simpler and harder than it looks. Simpler, because there is a well-worn path: the US Small Business Administration (SBA) lays out the process in ten steps, from market research to opening a business bank account, and most of the official steps are free. Harder, because each step involves real decisions — about your legal structure, your name, your taxes, and your money — and getting one of them wrong can cost you months and hundreds of dollars to fix.
This guide follows the SBA’s ten-step framework, in the SBA’s order, and explains what each step actually involves, what it costs, and where people most often go wrong. It is general information, not legal or tax advice: rules, fees, and requirements vary by state and industry, and they change over time, so confirm the details with your state government and the IRS before you file anything.
Step 1: Conduct market research
Before you spend a dollar, find out whether anyone will pay for what you plan to sell. Market research sounds corporate, but for a small business it can be as simple as talking to twenty potential customers, checking what competitors charge, and testing whether people will pre-order, sign up, or put down a deposit.
The SBA puts research first for a reason: it shows whether your idea could become a successful business, and it shapes everything that follows — your prices, your location, and your business plan. Ask who your customers are, what problem you solve for them, what they currently pay for alternatives, and how you will reach them. If you cannot find people willing to pay, it is far better to learn that now than after you have signed a lease.
Step 2: Write your business plan
The SBA calls the business plan the foundation of the business: a roadmap for how you will structure it, run it, and grow it. You do not need a 40-page document. A lean, one-page plan that answers the right questions is enough to start, and you can expand it if you apply for a loan.
A useful plan covers your product or service, your target customers, how you will reach them, what you will charge, what it will cost you to deliver, and how much money you need to get started and survive the first months. The discipline matters more than the format: writing the numbers down forces you to confront whether the business can actually make money.
Step 3: Fund your business
Almost every business needs some money before it earns any. The SBA’s framework asks you to work out how much you need and where it will come from: personal savings, a loan, a grant, or investment from others. Be honest about the total, including the unglamorous costs — licenses, insurance, a website, initial inventory, and several months of living expenses if the business will be your income.
The SBA itself offers loan programs, most famously the 7(a) loan program, which guarantees a portion of loans made by private lenders to small businesses. SBA loans are not free money and they are not fast, but they can offer longer repayment terms than a standard bank loan. Grants exist too, but they are competitive and usually narrow — aimed at specific industries, communities, or research areas — so be wary of anyone promising easy grant money. Many small businesses fail not because the idea was bad but because they ran out of cash before customers arrived. If you are weighing outside investment instead of a loan, read how startup funding works first: What Is a Startup? How Funding Rounds Actually Work. Before you commit, check the wider economic picture too — jobs, inflation, and interest rates all affect a new business: US Economy 2026: Jobs, Inflation, and Interest Rates Explained.
Step 4: Pick your business location
Location affects your taxes, your legal requirements, and your revenue — and “location” includes an online store, not just a storefront. A home-based business has different zoning and licensing rules from a retail shop; a business that sells across state lines faces different tax questions from one that serves a single neighborhood.
Step 5: Choose a business structure
Your legal structure is one of the most consequential decisions you will make, and it is worth slowing down for. It affects your registration requirements, how much you pay in taxes, and your personal liability — whether your house and savings are at risk if the business is sued or falls into debt.
The four main options, as the SBA describes them, are sole proprietorship, partnership, limited liability company (LLC), and corporation. A sole proprietorship is the simplest: you and the business are the same legal entity, with no separation between your personal and business assets. A partnership is similar, shared between two or more people. An LLC separates your personal assets from the business while keeping paperwork relatively simple, which is why it is the default choice for many small businesses. A corporation offers the strongest liability protection and the easiest route to raising investment, but it comes with more paperwork, more formalities, and often higher costs.
Step 6: Choose your business name
Pick a name that is easy to say, easy to spell, and easy to remember — and then check that nobody else is already using it. Search your state Secretary of State’s business database, check the US Patent and Trademark Office database for federal trademark conflicts, and check whether the matching domain name and social media handles are available. Grab them early if they are.
Step 7: Register your business
Registration happens at the state level, not the federal level. For an LLC or corporation, you file formation documents — Articles of Organization for an LLC, Articles of Incorporation for a corporation — with your state’s Secretary of State office. Filing fees vary by state, so check your state’s current fee schedule before you budget; published guides put typical LLC filing fees roughly between $35 and $500 depending on the state, but the exact figure is set by your state and can change.
Most LLCs and corporations must also appoint a registered agent — a person or service available during business hours to receive legal documents on the business’s behalf. You can often serve as your own agent for free if you have a physical address in the state and are available during business hours, or you can hire a service.
Sole proprietors generally do not file formation documents, but they may still need to register a trade name and obtain local licenses. And if your business name is already taken in your state, you will need a different one — another reason to check availability in Step 6 before you pay any filing fee.
Step 8: Get federal and state tax IDs
Your Employer Identification Number, or EIN, is a federal tax ID issued by the IRS — the business equivalent of a Social Security number. You need one if you have employees, operate as a partnership or corporation, or file certain tax returns, and many banks ask for one to open a business bank account. Even sole proprietors often get one so they do not have to share their Social Security number with clients.
The EIN is free, and you can apply online directly through the IRS in a single session. The IRS says you can get an EIN for free directly from the IRS in minutes, and warns against websites that charge a fee for it — if a site asks for your credit card to file an EIN application, you are not on the real IRS site. The IRS limits applications to one EIN per responsible party per day, and the online tool requires the responsible party to have a valid Social Security number or Individual Taxpayer Identification Number. The online application cannot be saved partway through, so gather your details before you start. Some states also require a separate state tax ID, though not all do — check your state revenue agency.
Step 9: Apply for licenses and permits
Licenses and permits are not one-size-fits-all. What you need depends on your industry, your state, your city or county, and sometimes your specific activities — selling food, offering professional services, or handling regulated products each bring their own requirements. The SBA offers a license-and-permit lookup as a starting point, and your city clerk’s office can confirm local requirements.
Step 10: Open a business bank account
A small business checking account helps you handle legal, tax, and day-to-day issues — and the SBA lists it as the final step before opening your doors. Keeping business money separate from personal money is not just tidy bookkeeping: it protects the liability shield of an LLC or corporation, makes tax time dramatically easier, and gives you a clear picture of whether the business is actually making money.
Frequently asked questions
How much does it cost to start a small business in the US?
It varies enormously by state and industry. The EIN is free, LLC filing fees typically run from roughly $35 to $500 depending on the state, and licenses, insurance, and startup costs vary widely. The SBA’s steps themselves cost little; the business you build around them is where the money goes.
Do I need an EIN if I am a sole proprietor?
Not always. A sole proprietor with no employees can often use a Social Security number, but many banks ask for an EIN to open a business account, and an EIN keeps your Social Security number off client paperwork. Since it is free from the IRS, most sole proprietors get one anyway.
Should I form an LLC or stay a sole proprietor?
It depends on your risk and plans. A sole proprietorship is simplest but offers no separation between your personal and business assets. An LLC separates them and is the common default for small businesses with any meaningful liability. Talk to an accountant or attorney about your specific situation.
Sources
- U.S. Small Business Administration, 10 Steps to Start Your Business, via SCORE (republishing the SBA guide): https://www.score.org/mi/ann-arbor-area/checklists/10-steps-start-your-business/
- U.S. Small Business Administration 10-step framework and business structure guide, summarized: https://www.howmuchtostart.com/guides/how-to-start-a-business
- Internal Revenue Service, Employer Identification Number — apply free online, one EIN per responsible party per day: https://www.irs.gov/businesses/employer-identification-number?ref=blog.phumraphee.me
- IRS EIN application process and hours, via LegalClarity: https://legalclarity.org/how-to-apply-for-an-ein-online-free-irs-application/
- SBA 10-step guide, October 2026 summary: https://hooraynews.com/story/sba-free-10-step-guide-start-business