Top 10 Things to Do Before Starting a Business
Before starting a business, research your market, write a business plan, estimate your startup costs, and choose a legal structure, since these decisions shape everything that follows. Then line up financing, check required licenses and permits, and set up separate business banking before your first sale. State registration fees, where they apply, range from $35 to $500 depending on the state and structure.
By LLC Register · Last reviewed October 2, 2026
Comprehensive Guide
1. Research Your Market and Competitors
Before spending a dollar on formation or a lease, confirm there is real demand for what you plan to sell. The SBA's market research guidance recommends identifying your target customer, studying direct and indirect competitors, and estimating realistic demand, since this research is what tells you whether an idea is worth the cost of pursuing further.
2. Write a Business Plan
A business plan puts your product, customers, competition, and finances on paper before you commit money to any of them. The SBA describes a traditional format, with sections like an executive summary and financial projections, used when seeking a loan or investors, and a shorter lean format built around a single page for a straightforward business. See how to write a business plan for the full breakdown.
3. Calculate Your Startup Costs
List every one-time expense, such as a filing fee, equipment, or signage, and every expected monthly cost, such as rent or software subscriptions, then add roughly 10% as a buffer, following the SBA's approach. See how to calculate startup costs for the category-by-category method.
4. Choose a Legal Structure
A sole proprietorship or general partnership needs no state filing in most cases but offers no liability protection, while an LLC or corporation separates personal assets from business debts in most instances, for a one-time state filing fee ranging from $35 in Montana to $500 in Massachusetts. See how to choose a business structure for the full comparison.
5. Decide Where You'll Operate From
A home-based business, a leased commercial space, and an online-only business each carry different licensing, zoning, and insurance considerations before you open. Confirm your local zoning rules allow your specific business type at your chosen location, since this is checked separately from any state business registration.
6. Line Up How You'll Fund It
Personal savings, a small business loan, or outside investors each come with different trade-offs in control, cost, and speed. Decide this early, since a lender or investor will expect to see the business plan and cost estimate from the steps above before committing any money.
7. Check Required Licenses and Permits
Depending on your industry and location, you may need a general business license from your city or county, a seller's permit for sales tax, or a professional license tied to your field. The SBA treats this as a separate requirement from your legal structure, so confirm what applies with your local clerk's office and your state's licensing boards before you open.
8. Get an EIN and Open a Business Bank Account
Once your business is registered, if a state filing applies, apply for a free Employer Identification Number from the IRS, then open a dedicated business bank account. Most banks require an EIN to open a business account, and keeping funds separate from your personal accounts is one of the practical factors that supports your liability protection if you formed an LLC or corporation.
9. Decide on Insurance
General liability insurance, and additional coverage specific to your industry, protects the business itself from a claim, fire, or injury in a way that a legal structure's liability protection does not. Price this out before you open, since it is a recurring cost, not a one-time one.
10. Plan for Ongoing Compliance, Not Just Launch Day
Most states require a recurring annual report, biennial statement, or similar filing to keep a registered business in good standing, with fees from $0 to $500 a year, separate from any license renewal. Mark this on your calendar before you open, since missing it after you're busy running the business is one of the most common compliance mistakes.
Bonus: Build a Simple Online Presence
Even a business that doesn't sell online benefits from a basic website or business listing so customers can find your hours, location, and contact information before you officially open.
Bonus: Talk to a Tax Professional Before You Launch
How your income will be taxed depends on the structure you choose and your specific numbers. A short conversation with a tax professional before you open can save a costly correction after your first tax season.
Practical Considerations
Order These to Fit Your Business, Not a Fixed Sequence
A service business with no inventory and a retail store with a lease and employees don't need these ten items in the same order or with the same urgency. Use this as a checklist to make sure nothing is missed, not a rigid sequence everyone must follow identically.
Some Items Take Longer Than Expected
A professional license, a commercial lease, or a loan approval can each take weeks longer than planned. Start the items with the longest lead time first, even if they feel less urgent than picking a name or a logo.
Don't Let Perfect Planning Delay a Real Launch
Research and planning matter, but an idea that is 80% validated and in front of real customers teaches you more than a plan that is 100% polished and never tested. Set a reasonable point at which you stop planning and start operating.
Revisit the List After You Open
Several of these items, your cost estimate, your licensing needs, and even your structure, are worth revisiting after your first few months of real operation, since actual demand and expenses rarely match the plan exactly.
This Is Not Legal or Tax Advice
Requirements for licenses, structure, and taxes differ by state, industry, and your specific situation. Confirm current requirements with your state and local agencies, and talk to a tax professional or attorney before finalizing decisions with long-term consequences.
Sources
The official sources used for this article.
SBA: 10 steps to start your business | sba.gov/business-guide/10-steps-start-your-business |
|---|---|
SBA: Market research and competitive analysis | sba.gov/business-guide/plan-your-business/market-research-competitive-analysis |
SBA: Calculate your startup costs | sba.gov/business-guide/plan-your-business/calculate-your-startup-costs |
SBA: Choose a business structure | sba.gov/business-guide/launch-your-business/choose-business-structure |
SBA: Apply for licenses and permits | sba.gov/business-guide/launch-your-business/apply-licenses-permits |
IRS: Apply for an EIN online | irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online |
Created by: LLC RegisterLast reviewed October 2, 2026
Updated: October 2, 2026
Frequently Asked Questions
What should I do first before starting a business?
Research your market and competitors to confirm there is real demand, before you spend money on formation, a lease, or equipment. Everything else on a pre-launch checklist works better once you know the idea has real demand behind it.
How long should I plan before opening a business?
It depends on your industry and whether you need financing, a lease, or a professional license, any of which can take weeks longer than expected. Build in time for the slowest item on your checklist rather than assuming every step moves at the same pace.
Do I need a business plan even if I'm not seeking a loan?
It helps regardless. A shorter, lean-format plan still forces you to think through your customers, costs, and competition even if you never show it to a lender or investor, and it gives you something concrete to revisit once you're operating.
What's the biggest mistake people make before starting a business?
Skipping market research and moving straight to formation and licensing. Spending money on a legal structure, a lease, or equipment before confirming real demand is one of the most common and most expensive mistakes a new owner can make.
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