How To Start a Business

Last updated: March 31, 2026

Quick Answer: To start a business: validate your idea by researching market demand, write a lean business plan, choose a legal structure (LLC is most common), register with your state, get an EIN from the IRS, open a business bank account, and launch with a minimum viable product.

Key Facts

About 20% of new businesses fail in their first year and 50% by year five
An LLC costs $50-$500 to form depending on the state
You can get a free EIN from the IRS in minutes online
The average cost to start a small online business is $3,000-$5,000
A one-page lean canvas is more useful than a 50-page business plan

Step 1: Validate Your Idea

Before investing time or money, confirm people will pay for what you're offering. Talk to potential customers, research competitors, and test demand with a landing page or pre-sales.

Step 2: Write a Lean Business Plan

Use a one-page lean canvas: problem, solution, target customer, revenue streams, cost structure, key metrics, and unfair advantage.

Step 3: Choose Your Legal Structure

Sole Proprietorship: Simplest but no liability protection
LLC: Most popular — protects personal assets, flexible taxation
S-Corp: Tax advantages for profitable businesses
C-Corp: Required for raising venture capital

Step 4: Register and Get Legal

Register your business name with your state, get an EIN from irs.gov, obtain required licenses, and open a separate business bank account.

Step 5: Launch with an MVP

Don't wait until everything is perfect. Launch a minimum viable product, get customer feedback, and iterate.

Step 6: Set Up Finances

Use accounting software from day one. Track every expense. Set aside 25-30% of income for taxes.

Sources

SBA — Launch Your Business public_domain