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HOW TO START A SMALL BUSINESS IN USA – STEP BY STEP GUIDE

Last Updated on Sep 1, 2022Sep 1, 2022 by Steve Goldstein | Reviewed by
Editorial Stuff


Starting a business is a great way to earn money. There are lots of benefits to
running your own company. For example, you can choose your hours and working
conditions, decide who reports to you, and even determine your tax obligations.
The downside is that starting a business requires significant time and effort.
If you want to start a small business, you’ll need to research the legal
requirements in your area. Then you’ll need to figure out whether you qualify
for a loan. Finally, you’ll need to create a plan for financing your startup. 

Starting a small business sounds simple. However, it can be challenging if you
don’t have any business planning. In this article, I have shared important
points on how to start a small business in USA. Read this article to know more
about the pros and cons of starting your own small business.



On this page, you’ll learn about the following:

 * How to Start a Small Business in USA
   * Step 1: Choose a Location
   * Step 2: Decide What Type of Business You Want to Operate
   * Step 3: Determine Whether You Need a License
   * Step 4: Find Out If Your State Has Any Special Requirements
   * Step 5: Obtain Financing
   * Step 6: Hire Employees
   * Step 7: Register With the IRS
   * Step 8: Open a Bank Account
   * Step 9: Get Insurance
   * Step 10: Launch
 * Small Business Ideas to Start in USA
   * LLC or Sole Proprietorship – Which is Better for a Small Business
 * Cost to Start a Small Business in the United States
   * Advantages of Starting a Small Business in the USA
   * Disadvantages of Starting a Small Business in the USA
 * F.A.Q.


HOW TO START A SMALL BUSINESS IN USA

Here, we’ll walk you through everything you need to know about starting a small
business in the United States. We’ll cover topics like finding the right
location, choosing a product or service, getting financing, hiring employees,
and much more. Let’s dive in!


STEP 1: CHOOSE A LOCATION

Choosing a location for your business is critical. Before you choose a location,
make sure you understand all of the legal requirements for operating a business
in your area. For instance, if you plan to sell products or provide services to
customers within 1,000 feet of a church, synagogue, or mosque, you must obtain a
special permit from the city government. Also, if you plan to operate a retail
store or restaurant, you’ll need to find out if you need a food license from the
health department.


STEP 2: DECIDE WHAT TYPE OF BUSINESS YOU WANT TO OPERATE

Once you’ve chosen a location, you’ll need to decide what type of business you’d
like to run. There are several different options when it comes to running a
business. Here are some popular choices:

 * Retail stores
 * Restaurants
 * Service businesses
 * Manufacturing
 * Distribution centers
 * Wholesale businesses
 * Professional offices
 * Nonprofit organizations
 * Home-based businesses
 * Other


STEP 3: DETERMINE WHETHER YOU NEED A LICENSE

Depending on the type of business you want to start, you may be required to get
a certain kind of license. For example, if you’re planning to open a retail
store, you will likely need a general business license. However, if you plan to
start an office that provides professional services, you won’t need any
licenses. Besides, depending on your business structure, you might need some
permits. If you’re planning to start an LLC, then read our guide on how to start
an LLC to know more about the regulations.


STEP 4: FIND OUT IF YOUR STATE HAS ANY SPECIAL REQUIREMENTS

Some states have additional licensing requirements beyond those mentioned above.
For example, California requires anyone providing home health care services to
register with the state. To learn more about specific requirements, check with
local authorities. On the other side, if you start an LLC in Texas or an LLC in
California, you must file a Franchise Tax. But, an LLC in Wyoming, Florida LLC,
and Montana LLC do not have such taxes. 


STEP 5: OBTAIN FINANCING

If you don’t already have enough money saved up to fund your new business, you
can apply for a loan. Banks offer many types of loans, including personal loans,
credit cards, and lines of credit. The amount of money you can borrow depends on
how much cash you have available and whether you meet other criteria set by the
lender.


STEP 6: HIRE EMPLOYEES

If you plan to hire employees, you’ll need to determine whether they should be
independent contractors or full-time employees. Independent contractors usually
work for themselves and aren’t considered part of the company’s workforce.
Full-time employees typically receive benefits such as paid vacation time, sick
leave, and retirement plans.


STEP 7: REGISTER WITH THE IRS

When you first start a business, you’ll need to file paperwork with the Internal
Revenue Service (IRS). This includes registering your business name, filing tax
returns, and paying taxes. Depending on the type of business, you may need to
pay quarterly estimated taxes instead of monthly payments. 


STEP 8: OPEN A BANK ACCOUNT

You’ll also need a bank account to deposit money into and withdraw funds from.
Many banks allow small businesses to open checking accounts without having a
minimum balance. Others require at least $1,500 in deposits.


STEP 9: GET INSURANCE

It’s important to protect yourself against financial losses caused by lawsuits,
employee injuries, property damage, and theft. Most insurance policies cover
these risks. Some policies even include coverage for advertising expenses and
lost profits.


STEP 10: LAUNCH

Once you’re done with all these things, you can easily launch your small
business. After you lunch your business and start selling, you must gradually
continue with other documents like annual reports, tax filing, and such.


SMALL BUSINESS IDEAS TO START IN USA

There are so many small business ideas that can help you make some good money.
Having one of these businesses on your own will also help you to pick up your
own time of work, unlike any job. 

FREELANCE WRITING

Freelancing is one of the best ways to make money online. You get paid per
project or per word depending on the agreement with clients. Freelancing allows
you to work from home and set your own schedule. 

AFFILIATE MARKETING

Affiliate marketing is another popular method of making money online. This
involves partnering up with other businesses (referred to as affiliates) to
promote their products and services. As an affiliate marketer, you will
typically pay your affiliates a commission fee when they send you customers. 

HOME-BASED BUSINESS

A home-based business is one that operates entirely from home. Some examples
include Graphic Design, Web design, Photography, Virtual assistant,
Transcription, Translation, Tutoring, and Data Entry. If you love being
creative, then these types of jobs may be perfect for you. Many people like
creating things and having control over their own schedules. Plus, you can do
them anywhere you want.

FOOD DELIVERY SERVICE

Food delivery service is a booming industry in the United States. People are
always looking for new food options, and restaurants are trying to stand out
from the crowd. If you’ve got a knack for cooking and a passion for delivering
delicious meals, then starting a food delivery service might be right up your
alley.

DOG WALKING

Dog walking is a growing industry in the US. With the population of pet owners
increasing every year, dog walkers are needed to keep our furry friends happy
and healthy. If you enjoy spending time with dogs and would like to make extra
cash, then dog walking could be a good side hustle for you.

LANDSCAPING SERVICES

There is a huge demand for landscapers across the country. Whether you live in a
rural area or somewhere in between, you can make money by providing landscape
services. Just make sure to check local regulations before getting started.

HOUSEKEEPING

Housekeepers often provide cleaning services to homeowners. They usually perform
basic chores such as vacuuming, dusting, mopping, washing windows, and scrubbing
toilets. Although housekeeping is not a very lucrative job, it does allow you to
use your hands and stay busy while earning additional income.

PERSONAL CARE ASSISTANT

Personal care assistants help seniors maintain daily living activities. For
example, personal care assistants clean homes, cook meals, shop for groceries,
transport residents to doctor appointments, and manage medication
administration. The tasks performed by personal care assistants vary greatly due
to individual needs and preferences, but most of them have similar duties.

REAL ESTATE AGENT

Real estate agents are hired by sellers to sell their properties and by buyers
to buy property. Most real estate license requirements involve completing
courses related to law, ethics, and sales techniques, although some states
require none at all. In return, real estate agents receive commissions based on
the sale price of the property.

SOCIAL WORK

Social workers work with clients who need assistance with issues such as family
problems, substance abuse, mental health concerns, child support, and more.
Social workers also assist families during times of crisis.


LLC OR SOLE PROPRIETORSHIP – WHICH IS BETTER FOR A SMALL BUSINESS

A sole proprietor operates his/her own business under one legal entity: the
individual himself/herself. An LLC is created when several individuals form a
limited liability company. In this case, each member owns a share of the
company. There is a handful of rules and regulations you need to follow if you
want to start an LLC. Check out StartMyLLC for the articles on LLC and how to
start one.

The advantages of operating a business as an LLC are numerous. First, it allows
owners to pass ownership of the business down through generations. Second, it
protects members from being personally liable for debts and obligations incurred
by the company. Third, it provides members with protection from creditors if the
company becomes bankrupt. Finally, it enables members to sell their shares of
the company to others without giving up control over the business.

The disadvantages of operating a business as a sole proprietorship are that
there is no limit to the number of people who can become shareholders. Also, all
assets belong to the owner, not the corporation.


COST TO START A SMALL BUSINESS IN THE UNITED STATES

Starting a business requires a lot of upfront capital. However, the cost of
starting a business varies depending on the industry. Here are some examples of
startup costs for different industries:

 * $0-$49,999 – Foodservice
 * $50,000-$99,999 – Retail trade
 * $100,000-$249,999 – Professional services
 * $250,000+ – Information technology

In addition to the initial investment, many entrepreneurs spend additional money
on marketing and product development. The total amount of money needed depends
on the size of the business and its growth potential.

STARTUP COSTS FOR A SMALL BUSINESS

In order to get started, you’ll need cash. You might have enough saved up to
fund your business idea, but you’ll probably want to borrow more money. There
are two main types of loans available for small businesses:

 * A loan secured by real estate (also called a mortgage)
 * A line of credit (a revolving loan)

You may be able to obtain both types of financing. If so, you’ll pay interest on
the loan while using the money. If you’re planning to start a new business, you
should consider the following factors before deciding which type of loan will
work best for you.


ADVANTAGES OF STARTING A SMALL BUSINESS IN THE USA

Here are some benefits of starting a small business in the United States. 

 1. Start-up Costs Are Low: The cost of starting a business in the United States
    is low compared to many countries around the world. There are no upfront
    costs associated with opening a business in the U.S., and the government
    provides assistance to small businesses. In addition, start-up capital
    requirements are minimal. You do not need much money to get started.
 2. Taxes Are Low: Income taxes in the U.S. are relatively low. If you make
    $50,000 per year, then you only have to pay about 10% income tax. Compare
    that to some European countries where income taxes can reach 50%.
 3. Government Assistance Is Available: If you run into trouble, the government
    offers several programs to help entrepreneurs. These programs include loans,
    grants, and free legal advice.
 4. Job Opportunities Are Abundant: There are plenty of jobs available in the
    U.S. According to the Bureau of Labor Statistics, employment opportunities
    increased between 2010 and 2020. By 2020, job openings were expected to
    increase by 17 percent.
 5. The Economy Is Strong: According to the Federal Reserve Bank, the economy
    grew at a rate of 4.1% in 2014. That was higher than any other year since
    2005. Many economists believe that the economy will continue to grow
    throughout 2015.
 6. The Workforce Is Highly Skilled: U.S. workers receive training throughout
    their careers. As they advance in their careers, they often obtain
    additional education.


DISADVANTAGES OF STARTING A SMALL BUSINESS IN THE USA

Along with some benefits, there are some disadvantages as well in starting a
small business in the United States. Here are some demerits of having a small
business,

 1. Licensing Requirements: Starting a business requires obtaining licenses and
    permits from various agencies. Depending on the industry you choose, you may
    need to obtain licenses from several departments. For example, if you plan
    to open a restaurant, you will need to get food service licenses from both
    the Department of Health (DOH) and the Department of Agriculture (DA).
 2. Government Regulations: Government regulations are rules established by the
    government to protect consumers and ensure safety. Many industries are
    regulated by the government. For example, banks, insurance companies, and
    healthcare providers are heavily regulated. As a result, they cannot operate
    without meeting certain standards. If you plan to work in any of these
    fields, make sure you understand the regulations governing them.
 3. Competition: Businesses often face competition from larger corporations.
    Before opening your business, find out whether there are already competitors
    in your area. If there are, learn about their strengths and weaknesses.
    Also, determine whether your product or services are unique enough to stand
    out among competitors.
 4. Legal Issues: Legal issues arise when people do something illegal.
    Sometimes, laws are unclear or ambiguous. For example, if someone breaks the
    law, he or she might think that his or her actions were justified. However,
    if the same person does the same thing again, he or she could end up being
    prosecuted. Therefore, it is important to research the laws related to your
    field of interest.
 5. Personal Risk: When running a business, you take risks. Risks include losing
    customers, employees, and even investors. To mitigate risk, you should
    always try to minimize losses. For example, you can reduce employee turnover
    by offering competitive salaries and benefits. Similarly, you can lower
    customer attrition by providing excellent customer service.


F.A.Q.

How do I get started with a small business?

If you want to start a small business, then you need first to determine what
kind of business you want to run. Do you want to be a consultant, a web
designer, a lawyer, etc.? Once you know what you want to do, you should decide
how much money you want to spend on starting up your new venture. Next, you
should find out whether you need any licenses or permits for your business.
Finally, you should create a plan for your business. This includes things like
how you will market yourself, where you will sell your product/service, and how
you will finance your business.

Where can I find startup capital?

There are several sources for funding a startup, such as angel investors,
venture capitalists, crowdfunding platforms, and government grants. Angel
investors are individuals who invest money into early-stage startups. Venture
capitalists invest money into later-stage startups. Crowdfunding platforms allow
entrepreneurs to raise funds from large numbers of people at once. Government
grants are available through various agencies, such as the Small Business
Administration.

How do you choose your first product or service?

The best way to start a business is to find something that you love doing. If
you don’t know what you want to do yet, then think about what you would like to
learn. Then look for opportunities where you could teach others how to do it.
This is called “learning by teaching.”

How long will it take to open a business?

The first step to starting a business is to find out what kind of business you
want to run. Once you know what kind of business you would like to do, then you
need to decide which state you want to operate from. After deciding where you
want to be located, you should check whether any licenses are needed for your
business. If you don’t already have a license, you may need to apply for one.
Depending on the size of your business, you may also need to register with your
local government.

How much money do I need to start a business?

The amount of money needed to start a business depends on several factors, such
as how big the market is for your product/service, what kind of business
structure you want to use, and whether you plan to hire employees or work alone.
However, starting a business requires at least $10,000 in the capital. This
includes everything from buying equipment to hiring employees.

IN CONCLUSION

Starting a business is not easy. It takes time, effort, and dedication. But if
you follow the above-mentioned steps, then you might start your small business
easily. You must know one thing you won’t get a chance to earn profit overnight.
It will take some time. If you have any other questions or any feedback to
share, you can share it with us by commenting below.

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IN THIS POST

 * How to Start a Small Business in USA
   * Step 1: Choose a Location
   * Step 2: Decide What Type of Business You Want to Operate
   * Step 3: Determine Whether You Need a License
   * Step 4: Find Out If Your State Has Any Special Requirements
   * Step 5: Obtain Financing
   * Step 6: Hire Employees
   * Step 7: Register With the IRS
   * Step 8: Open a Bank Account
   * Step 9: Get Insurance
   * Step 10: Launch
 * Small Business Ideas to Start in USA
   * LLC or Sole Proprietorship – Which is Better for a Small Business
 * Cost to Start a Small Business in the United States
   * Advantages of Starting a Small Business in the USA
   * Disadvantages of Starting a Small Business in the USA
 * F.A.Q.

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