Starting a Small Business From Scratch

One of the best things I did for myself and my family was officially “starting” my business in 2011. Getting the business started was only a small part of the battle, the real work came after the paperwork was filed.

Nearly three years later, I can tell you that it was worth the effort. I’ve learned a number of key things, including:

  • How to open and operate a business in a legal and compliant way.
  • How to keep accurate accounting and do the company’s taxes.
  • How to see business from an owner’s perspective, and how to be a better employee.
  • A taste what self-employment is like from many aspects.

Starting a business is not a decision to be taken lightly, but it’s also not as complicated as most people think. In my case, the parent company I wanted to set up for my blogs was straightforward enough to where I felt comfortable not involving lawyers and accountants.

Where a business needs to be financed, requires a physical location outside your home, or needs to hire employees, things can get infinitely more difficult with additional paperwork, regulation, and expenses. But if your goal is just to set up some structure for your online or home business, the road has been well-traveled.

Here’s what I did:


Figuring out the legal form for the business took a little bit of research on my part. It’s easy to find basic information online about the typical legal forms: sole proprietorship, partnership, LLC, and corporation. Once I had narrowed it down to a few forms, I took a trip to the local library and borrowed a few books that described the details.

I settled on the LLC because of its legal protection, simplicity in management, and pass-through taxation. In simpler terms, the LLC gives me the benefit of business protection with the simplicity close to that of a sole proprietorship.


Having selected my business form, I went on to do some research. Among other things, I looked for other companies with identical or similar names. It was important to honor any existing trademarks.

Depending on your business, you may also want to check out potential competitors in your industry, including as much data about their operations as you can find.

Most states have a business-focused website that deals with things like corporate registrations, LLC paperwork, and company lookups. These websites allow you to look up information and often also handle the business registration part if you don’t want to use a lawyer or filing service.

File Papers

With everything in place, I used my state’s filing website to file the “articles” and form my new LLC. Nearly everything was completed right online, but I did request hard copies of the filing papers for my records and future reference. Fees vary from state to state, but were pretty low (less than $150) where I live. That’s definitely better than some states I’ve heard about, like California, where even small businesses like LLCs can really take a hit.

Get Business Licenses

My local county requires all business to register and get a business license, also known locally as a tax receipt. Since I registered the business at my home address, this required me to prove that I could have a home-based business based on the zoning code. After that, it was just a matter of paying a very small local tax to get a business license and start operations in earnest!

Get an EIN

While a lot of businesses can and do operate under the social security number of their owners, I wanted to get an EIN (employee identification number) to use instead of my personal data. Thankfully, this was very easy to do online at the IRS website, and I had my EIN ready to use for setting up bank accounts and advertising/affiliate accounts, since these almost always ask for a tax identification.

Get Bank Accounts

With the EIN in place, I took a trip to the local bank to open a business account. All income and expenses for the business would be channeled through this account to avoid what’s known as “piercing the veil.” This is a legal concept that can put you in hot water if you try to claim liability protection through your business, but records show that you mixed personal and business funds in the past.

Getting a business account set up, with associated checks and a check card, took about an hour of work and the account has been up and running for three years with zero problems.

Set up Accounting and Filing

The last step I took before getting back to work for good was setting up good filing and accounting systems for the business. All my invoices and receipts are saved in a central location for each year, and every transaction is filed using Quicken Home & Business. At the end of the year, I’m able to quickly get data out of Quicken that allows me to do my business taxes in under an hour, and get on with my life.

If you’re thinking about starting your own business, I would strongly encourage you to carefully do your research about the industry you’re in and the best business form and setup you can have. Once you’re up and running, all I can do is wish you the best of luck!