Starting a Small Business: The Federal Checklist, Explained

Plan first

The SBA's business guide lists planning steps including market research and competitive analysis, writing a business plan, calculating startup costs, establishing business credit and funding the business. It also covers buying an existing business or franchise as an alternative path.

Then make it official

The SBA notes that new owners need to register the business, pay taxes, and get licenses and permits where they locate. An Employer Identification Number, it explains, is the business's federal tax ID, needed to pay federal taxes, hire employees and open a bank account.

What market research is for

The guide's first step is not paperwork but evidence: market research and competitive analysis. The SBA frames research as a way to learn whether an idea has customers, who they are, and what competitors already offer them. The output of that work feeds the business plan, which the guide describes as the roadmap for how the business will be structured, run and grown.

Structure, money and the order of operations

The guide treats the choice of business structure as a decision with tax and liability consequences, to be made before registration. Startup costs come next: the SBA advises calculating them before seeking funding, so that the amount requested matches a plan rather than a guess. Only after those steps does the guide turn to registration, tax IDs, and licenses and permits, which vary by state, locality and industry.

The practical lesson of the sequence is that the cheap steps come first. Research and a written plan cost time; registration, leases and inventory cost money. Owners who reverse that order often discover the research after the money is spent.