Starting a business requires preparation, practical thinking, and attention to financial and legal details. Whether you’re beginning with a small home-based operation or planning to grow into a larger company, following a clear path can help you reduce mistakes and increase your chances of sustainability. Below is a detailed step-by-step guide for starting and building a business in 2025.
1. Find the Right Opportunity
Choosing a business idea depends on your skills, interests, available time, and financial situation. Some businesses require minimal upfront investment and can be run from home, such as freelance services, online stores, or consulting. E-commerce and digital services remain popular due to their flexibility and scalability. Consider whether your business idea has a clear customer base and potential for revenue.
Explore:
- 50 best small-business ideas
- 44 online business ideas
- 16 e-commerce business ideas
- 40 home-based business opportunities
2. Write a Business Plan
A written business plan outlines your goals, the market you plan to serve, your competition, financial projections, and operational structure. This plan serves as a reference tool to keep your business on track and is often necessary if you seek funding.
Include projected income, expense estimates, and break-even analysis. Financial forecasts should be revisited and adjusted as new information becomes available.
Helpful resources:
- How to write a business plan, step by step
- Business budget templates and tools
- Financial planning software for startups
3. Choose a Business Structure
Your business structure affects your taxes, personal liability, and paperwork requirements. Common options include:
- Sole Proprietorship – Simplest structure, but no legal separation between owner and business.
- LLC (Limited Liability Company) – Offers liability protection and flexibility.
- Corporation (S-Corp or C-Corp) – Suitable for businesses planning to raise capital or scale.
- Partnership – For businesses started with more than one owner.
Consulting with a tax advisor or legal professional can help you choose appropriately.
Compare:
- Sole proprietorship vs. LLC
- Partnership vs. Corporation
4. Get a Federal Tax ID (EIN)
An Employer Identification Number (EIN) is issued by the IRS and is used for tax filing, opening a business bank account, and hiring employees. Even if you’re not hiring right away, having an EIN is recommended. The application is free and can be completed online.
Resources:
- How to apply for an EIN
- Why an EIN may be useful for your business
5. Apply for Licenses and Permits
Your business may need licenses at the local, state, or federal level depending on the industry. For example:
- Food businesses often require health inspections
- Contractors may need trade-specific licenses
- Retail stores may need a sales tax permit
Check with your city’s business office or small business support center to learn what’s required.
Read:
- Do you need a license to sell online?
- How to get a business license
6. Open a Business Bank Account
Separating your business and personal finances helps with accurate record-keeping and can simplify tax reporting. Many banks offer low-cost or free business checking accounts, including those tailored to sole proprietors or LLCs.
Compare:
- Best free business checking accounts
- Best accounts for freelancers and LLCs
7. Understand Your Financing Options
Startups often rely on personal savings or alternative financing methods, especially since many lenders require six to twelve months of operations.
Funding options include:
- Crowdfunding platforms
- Grants for small businesses
- Asset-based lending (secured by business equipment or invoices)
- Equity investment in exchange for ownership
Compare:
- Startup loan options
- Pros and cons of equity financing
- How crowdfunding works
8. Get a Business Credit Card
A business credit card can help manage cash flow, cover early expenses, and keep business purchases separate. Many small-business cards base approval on your personal credit. Responsible use helps build business credit, which may help in securing larger financing later.
Learn more:
- How to apply for a business credit card
- Best cards for new businesses
- 0% APR promotional options
9. Choose Accounting Software
Maintaining accurate records of income and expenses is essential. Many accounting platforms offer invoicing, payroll, and tax tools.
As your business grows, hiring a bookkeeper or accountant may improve accuracy and efficiency.
Recommended tools:
- Best accounting software for startups
- Free software options
- Online bookkeeping services
10. Prepare to Pay Your Taxes
Small-business owners may need to make estimated quarterly tax payments.
Setting aside a portion of your income regularly can reduce the chance of unexpected tax bills. You may also be eligible for certain deductions. Working with a tax professional can help you understand your obligations and identify savings opportunities.
Guides:
- How estimated quarterly taxes work
- Tax software for small businesses
- How to find a business tax advisor
11. Protect Your Business With Insurance
Insurance reduces your financial risk in the event of legal claims, property damage, or other issues.
Most businesses start with general liability insurance. Depending on your industry, you may also need:
- Professional liability
- Product liability
- Workers’ compensation (if hiring)
Learn more:
- What is a business owner’s policy (BOP)?
- Average insurance costs for small businesses
12. Establish an Online Presence
Building an online presence early helps customers find and engage with your business. Even a basic website with contact info and business hours can help.
Use social media platforms that match your target audience and consider email marketing or SEO once you’re more established.
Resources:
- How to build an e-commerce site
- Social media marketing for beginners
- Best website builders for small businesses
13. Set Up a Payment System
If you accept credit or debit card payments, you’ll need a payment processor and potentially a POS (point-of-sale) system.
Compare fees for in-person vs. online transactions. Some services include both hardware and software bundles.
Explore:
- Credit card processing basics
- POS systems for small businesses
- Cheapest payment processors
14. Hire Employees (If Needed)
When you’re ready to expand, hiring employees means handling payroll, insurance, and compliance.
Consider starting with a part-time or freelance worker before hiring full-time.
Guides:
- How to hire your first employee
- Best payroll software
- What is workers’ compensation insurance?
15. Seek Financing for Expansion
After establishing a revenue history, you may qualify for loans or lines of credit to grow your business.
Expansion funding can support equipment purchases, new locations, marketing efforts, or inventory. Compare lenders and repayment terms carefully.
Compare:
- Term loans vs. business lines of credit
- SBA loans and eligibility
- Inventory financing
Starting a business is a step-by-step process that requires planning, attention to regulations, and financial management. While each step may take time, building a strong foundation increases your likelihood of long-term success.
