Business Development

Start a Company from Scratch

The full roadmap to making your business legit — from choosing a DBA or LLC and getting your tax ID, to the insurance your business type needs and the legal mistakes to avoid. Steps follow U.S. rules; outside the U.S., ask your local business registry for the equivalent of each step.

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12 Steps to a Legit Company

An LLC filing packet, a tax ID letter and folders on a wooden desk — What the paperwork actually looks like: the state filing packet and the free IRS tax ID letter.

Work the list roughly in order — many steps depend on earlier ones. Most banks ask for your EIN and your state filing before they will open a business account. Most people finish steps 1–5 in a single week, and most of it costs nothing but time.

1
Pick your business idea and type
Decide what you sell and to whom. Use AI to test the idea: ask it for target customers, competitors and pricing.
2
Choose and check your name
Search your state's business registry, the USPTO trademark database, and domain names so no one else owns it.
3
Choose a legal structure
DBA, LLC or corporation — see the comparison below. When in doubt, most small businesses start as an LLC.
4
Register with your state
File a DBA with your county/state, or Articles of Organization (LLC) / Incorporation (corp) with the Secretary of State. Name a registered agent.
See a sample Articles of Organization →See a sample DBA Certificate →
5
Get your EIN (federal tax ID)
Free at IRS.gov in about 10 minutes. Never pay a website to get it for you. You need it to open a bank account and hire people.
See a sample EIN Letter (Tax ID) →
6
Write an operating agreement
Even single-owner LLCs should have one. It sets who owns what and what happens if a partner leaves.
See a sample Operating Agreement →
7
Get licenses and permits
City/county business license, state sales tax permit if you sell goods, and any professional license your industry requires.
See a sample Business License & Sales Tax Permit →
8
Open a business bank account
Keep business and personal money 100% separate. This protects your LLC shield and makes taxes easy.
9
Get the right insurance
Pick your business type below to see the coverage you need.
See a sample Certificate of Insurance →
10
Set up bookkeeping and taxes
Use accounting software, save receipts, and set aside 25–30% of profit for taxes. Pay estimated taxes quarterly.
See a sample Invoice →
11
Protect your brand and contracts
Use written contracts for every client, a privacy policy on your website, and consider a trademark.
See a sample Client Contract →
12
Stay compliant every year
File your annual report, renew licenses, and keep your registered agent current — or the state can dissolve your company.

See What Each Document Looks Like

Never seen an operating agreement or an EIN letter? Here are filled-in samples for a pretend business, "Maria's Kitchen LLC". The numbered circles on each page match the explanations beside it.

Sample

State of Texas · Secretary of State

Certificate of Formation — Limited Liability Company

Article 1 · Entity name

Maria's Kitchen LLC

Article 2 · Registered agent & office

Maria Lopez, 1420 Oak St, Austin, TX 78701

Article 3 · Principal office address

1420 Oak St, Austin, TX 78701

Article 4 · Management

☑ Member-managed ☐ Manager-managed

Organizer

Maria Lopez

Maria Lopez — Organizer

Filed
Mar 04 2026
Sec. of State

Step 4

Articles of Organization

What it is: The 1–2 page form you file with your state's Secretary of State to legally create an LLC. Once approved, your LLC exists.

Where you get it: Your state's Secretary of State website (search "[your state] Secretary of State LLC filing"). Most states let you file online in 15 minutes.

Cost: $50–$500 depending on the state, one time.

Reading the sample — what each number means

1The exact legal name — must include "LLC" and not match another company in your state.
2Registered agent: a person or company with a physical address in the state who accepts legal mail for you. You can be your own.
3Principal address: where the business operates. Can be your home, but it becomes public record.
4Organizer: whoever files the form (usually you).

Pro tips

Save the stamped approval copy as a PDF — the bank will ask for it.
Want privacy? Use a registered agent service (~$50–$150/yr) so your home address isn't public.

Sample for learning only — names, numbers and addresses are fictional. Forms vary by state.

DBA vs LLC vs Corporation

Sole Proprietorship + DBA

$10–$100

Cheapest and fastest. A DBA ("Doing Business As") lets you use a business name.

No protection: if the business is sued or owes money, your personal house, car and savings are at risk.

LLC (Limited Liability Company)

$50–$500 + yearly fee

Separates your personal assets from the business. Simple taxes. Best fit for most small businesses.

Yearly state fees and reports. Protection can be lost if you mix personal and business money.

S-Corp (tax election)

LLC/Corp + payroll costs

Can lower self-employment tax once profit is steady (often $50k+/yr).

Must pay yourself a reasonable salary through payroll; more bookkeeping.

C-Corporation

$100–$800 + yearly fee

The structure most venture investors expect, and it can issue stock.

Double taxation (company and owners), strict paperwork, board meetings.

What type of business are you starting?

Pick one to see the insurance you need and the legal risks to watch.

A trades owner shaking hands with an insurance agent across a workbench covered in policy paperwork — Most policies are quoted in a day. Get three quotes — prices for the same coverage can double between insurers.

Insurance you'll likely need

General Liability
Professional Liability (Errors & Omissions)
Cyber Liability if you handle client data

Legal risks for this business

Being sued for bad advice or missed deadlines
Giving legal, tax or medical advice without a license
No written contract = disputes over payment and scope

The Bad Side: Legal Mistakes That Sink Businesses

Two business partners reviewing a printed contract with a lawyer pointing at a clause — Read every clause before signing. A one-hour lawyer review is cheaper than a lawsuit.

These are the mistakes that actually close small businesses — not bad ideas. Most of them can be prevented cheaply, often for less than a month of rent. Fix the money separation and the contracts first; they cause the most damage.

Mixing personal and business money — a court can "pierce the veil" and come after your personal assets.
Treating employees as contractors (misclassification) — back taxes and penalties.
Skipping taxes or quarterly payments — IRS penalties and interest add up fast.
Operating without required licenses — fines or forced shutdown.
Making income or health guarantees in ads — FTC false-advertising violations.
Partnering on a handshake — no agreement means messy breakups.
Letting your annual report lapse — the state can dissolve your company.

An owner doing her books at a kitchen table at night with a laptop, calculator and receipts — Thirty minutes of bookkeeping a week keeps the tax season from becoming a crisis.

Use AI as your helper: ask it "I'm starting a [business type] in [state]. List every license, permit, and insurance policy I need, and the government website for each." Always confirm with the official site.

This guide is for education only and is not legal, tax or insurance advice. Fees and rules vary by state and country — confirm with an attorney, accountant or licensed insurance agent before you file.