How to start your own business in the US
Starting a business requires the right legal structure and financial footing. Here are the steps to take so you can get started as soon as possible, and download our guides to state taxes, permits, industry trends, and more.
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Steps to start a business
Before you race ahead with your business, you need to get set up! Here are the essential first steps:
Establish your business’s legal footing
Are you creating an LLC, sole proprietorship or corporation? Your choice of business structure affects how you pay tax and handle financial risk.
Read more info from the IRS on business structuresAre you creating an LLC, sole proprietorship or corporation? Your choice of business structure affects how you pay tax and handle financial risk.
Read more info from the IRS on business structuresYou need to register a unique business name for both marketing and legal purposes.
More info from the government on registering your business nameYou need to register a unique business name for both marketing and legal purposes.
More info from the government on registering your business nameThis is effectively a Social Security number for your business. You need an EIN to open a business bank account.
Apply for an EIN on the IRS website.This is effectively a Social Security number for your business. You need an EIN to open a business bank account.
Apply for an EIN on the IRS website.Each state has its own rules for business licensing and permits, so discover which you need for your industry and location. You can find local permit requirements on your city or county government website.
Each state has its own rules for business licensing and permits, so discover which you need for your industry and location. You can find local permit requirements on your city or county government website.
Zoning laws control how land is used – for example, local laws may restrict a business’s size and opening hours if it’s in a residential area. Check your local planning department’s website to find your area’s zoning designation and rules.
Zoning laws control how land is used – for example, local laws may restrict a business’s size and opening hours if it’s in a residential area. Check your local planning department’s website to find your area’s zoning designation and rules.
The taxes your business pays depend on its business structure. Possible taxes include federal income tax, employment tax, self-employment tax, excise tax, and state and local taxes, including sales tax. The Internal Revenue Service (IRS) and state tax agencies require businesses to keep accurate records of their income and taxes. There are usually financial penalties for businesses that don’t pay their taxes on time. If this sounds daunting, remember that small businesses are often eligible for tax deductions and credits that can lower their tax bills. You can also use an accountant or bookkeeper that can give you great advice on your situation. Accounting software like Xero is a big help in tracking your finances and reporting to the IRS.
Find an advisorXero accounting softwareThe taxes your business pays depend on its business structure. Possible taxes include federal income tax, employment tax, self-employment tax, excise tax, and state and local taxes, including sales tax. The Internal Revenue Service (IRS) and state tax agencies require businesses to keep accurate records of their income and taxes. There are usually financial penalties for businesses that don’t pay their taxes on time. If this sounds daunting, remember that small businesses are often eligible for tax deductions and credits that can lower their tax bills. You can also use an accountant or bookkeeper that can give you great advice on your situation. Accounting software like Xero is a big help in tracking your finances and reporting to the IRS.
Find an advisorXero accounting software
Download the guide to starting a business
Learn how to start a business, from ideation to launch. Fill out the form to receive this guide as a PDF.
Starting a Business Is Hard. Xero Makes It Easier.
From day one, managing finances can feel overwhelming. With Xero’s powerful tools, small businesses can stay organized and confident.
Major industries in the US
With a revenue of $1.331.8B in 2024, healthcare is one of the biggest industries. People will always need access to hospitals and care, although unpredictable factors such as pandemics can make for unique challenges. Most likely there’ll be a growing demand for preventative healthcare and ways to enhance people’s wellbeing. No doubt technology will play an ever-growing role, too.
Here’s what McKinsey expects from the US healthcare market. Healthcare industry in USWith a revenue of $1.331.8B in 2024, healthcare is one of the biggest industries. People will always need access to hospitals and care, although unpredictable factors such as pandemics can make for unique challenges. Most likely there’ll be a growing demand for preventative healthcare and ways to enhance people’s wellbeing. No doubt technology will play an ever-growing role, too.
Here’s what McKinsey expects from the US healthcare market. Healthcare industry in USThe rise of AI in the workplace continues to put technology experts and businesses in the spotlight. All industries will be affected with early adopters likely to see great benefits.
Check out the Xero guide to AI for small businesses.The rise of AI in the workplace continues to put technology experts and businesses in the spotlight. All industries will be affected with early adopters likely to see great benefits.
Check out the Xero guide to AI for small businesses.Retail is another huge industry in the US. An area that’s expected to grow quickly is sustainable consumption, as customers and investors look for businesses that can prove their low carbon output. Because consumers are now doing much of their shopping online, retailers – whatever their brand or product – are keen to integrate consumers’ digital and physical shopping experiences. Here are more insights from the National Retail Federation.
Here are more insights from the National Retail FederationRetail is another huge industry in the US. An area that’s expected to grow quickly is sustainable consumption, as customers and investors look for businesses that can prove their low carbon output. Because consumers are now doing much of their shopping online, retailers – whatever their brand or product – are keen to integrate consumers’ digital and physical shopping experiences. Here are more insights from the National Retail Federation.
Here are more insights from the National Retail Federation
Regional differences
Another crucial decision when starting a small business is your location. States vary in their business climates, tax rates, infrastructure, availability of talent, and access to funding.
- Wyoming and South Dakota, for instance, don’t charge any state corporate tax
- Alaska, Illinois, Minnesota, and New Jersey all charge more than 9%
- When it comes to renting office space, New York City prices might make your eyes water while Dallas is much more affordable.
Consumer behavior
Your business strategy should consider your target consumer and how they will behave when faced with different prices, levels of quality, shopping experiences, and so on.
- Some businesses focus on high sales volumes at a low price in response to their consumers’ preferences
- Other business models try to deliver great customer service for high-paying consumers.
- Market research is invaluable when starting a business.
US consumers can be complex in their tastes and preferences, so go out and gather data to strengthen your business plan.
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Extra resources and tips for starting a business
Your business idea is clearly inspired. But it’s good to check you’re not the only one who thinks so.
Guide to market researchYour business idea is clearly inspired. But it’s good to check you’re not the only one who thinks so.
Guide to market researchWriting a business plan helps you nail down your idea and gives you a blueprint for executing it.
How to write a business planWriting a business plan helps you nail down your idea and gives you a blueprint for executing it.
How to write a business planIt’s time to run some numbers on your business idea. Budgeting and forecasting helps with that.
Budgeting and forecastingIt’s time to run some numbers on your business idea. Budgeting and forecasting helps with that.
Budgeting and forecastingYour prices affect your sales and profits on each transaction.
Pricing strategies and cost of goods soldYour prices affect your sales and profits on each transaction.
Pricing strategies and cost of goods soldYour business structure can affect how much tax you pay and your legal status.
Types of business structuresYour business structure can affect how much tax you pay and your legal status.
Types of business structuresIf you’re starting a business, you need to learn some accounting basics.
Small business accountingIf you’re starting a business, you need to learn some accounting basics.
Small business accountingAfter all the excitement of starting a business, you’ll have some paperwork to do.
Registering a business and other admin tasksAfter all the excitement of starting a business, you’ll have some paperwork to do.
Registering a business and other admin tasksTreat your website like it’s your storefront. It’s the first impression for many customers and potential investors.
How to create a business websiteTreat your website like it’s your storefront. It’s the first impression for many customers and potential investors.
How to create a business websiteNow that you’re in business, you want to stay there. Xero has resources and solutions to help.
Tools and guides for your businessNow that you’re in business, you want to stay there. Xero has resources and solutions to help.
Tools and guides for your businessA Xero survey of 1,000 North American startups reveals why and how they started their businesses.
What starting a business looks likeA Xero survey of 1,000 North American startups reveals why and how they started their businesses.
What starting a business looks like
What business ownership is really like in the US
Amanda Nguyen had the idea for her online cake-making business, Butter&, while working in the tech industry. She started by making cakes for friends and family, but recognized a business opportunity when she got her first order from a stranger. Part of her business mission is to pay her employees a liveable salary and to give them full benefits and equity in the company. Her business has since featured in the press, including USA Today.
Read more about Amanda’s business insightsMark Windsor, founder of Full Windsor, specializes in sustainable outdoor gear. He designs products to last a lifetime and which appeal to consumers who care about the environment. His business model is to be a one-man band and outsource any extra work.
Read more about Mark’s business insightsAnother designer of sustainable products is Amy. She left the corporate world of fashion to make one-of-a-kind upcycled clothing for her Navajo-owned brand 4Kinship. Amy hires designers and makers from around the world, including indigenous people.
Read more about Amy’s business insightsWhy Xero knows how to start a business
Xero is home to millions of small businesses, who use our software to run their finances and accounting. About 200,000 accountants and bookkeepers use us too. We asked some of those owners and experts how to start a business, then put their insights into this guide.
Handy resources for small businesses
People asking how to start a business often find these resources helpful.
Business plan template
Download a template and map out your pathway from idea to launch.
Guide to finance
Need a few extra bucks to get off the ground? Learn what your options are.
Business trends report
Get a stat-packed insight into what small business owners are doing right now.
Disclaimer
Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.
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