Why starting a business
takes so many steps

Most people who start a business expect the hard part to be the business itself. Building the product. Finding customers. Figuring out pricing. And yeah, that stuff is hard.

But then you Google "how to start an LLC" and suddenly you're buried in 47 tabs about registered agents, EINs, operating agreements, sales tax permits, and something called a "Certificate of Good Standing." It feels like the government designed a maze specifically to discourage you from trying.

It's not a maze. There's a logical order to all of it, and each step exists for a real reason. This guide walks through why.

You need an address before you can do anything

This surprises people. You'd think the first step is filing paperwork to create your company. But almost every form you'll fill out, from incorporation to banking to state registration, asks for a business address. Your home address works legally, but it becomes public record in most states. If you don't want your apartment on the Delaware Division of Corporations website, you need an alternative.

A virtual mailbox gives you a real street address (not a PO Box, which many forms won't accept) for about $15/month. Stable and Anytime Mailbox are two good options. They scan your mail and forward packages. It takes about ten minutes to set up. If you already have a commercial lease, you can just use that address instead.

LLC or C-Corp: the one decision that shapes everything else

This is the most important choice you'll make early on, and people overthink it.

If you're raising money from investors (angel, VC, any kind of equity deal), you almost certainly want a C-Corporation incorporated in Delaware. That's not because Delaware is special for small businesses. It's because investors expect it. Delaware corporate law is well-established, predictable, and every VC's lawyer already knows how it works. A C-Corp also makes it easy to issue stock, create option pools for employees, and handle multiple classes of shares.

Stripe Atlas exists specifically for this. You pay around $500, and they handle the Delaware incorporation, your EIN, initial stock issuance, and even set up a bank account. The whole thing takes about a week. LegalZoom also does C-Corp formation if you want more flexibility in how things are structured.

If you're not raising equity, an LLC is almost always the right call. It protects your personal assets from business liabilities, the taxes are simpler (profits pass through to your personal return, so no double taxation), and there's less ongoing paperwork. You form it in whatever state you actually operate in. LegalZoom walks you through the whole process. Costs vary by state, but expect $100-300 total including filing fees.

There's a third camp: people who plan to fund their business with a loan (SBA, bank, personal line of credit). LLC is still the move. Lenders don't care about your entity type the way equity investors do. They care about your revenue, your credit, and your ability to pay them back.

Grab your domain name early

Domain names cost $10-12 a year. They're also first-come-first-served. The longer you wait, the more likely someone else snags yourcompanyname.com, or a domain squatter parks on it and wants $2,000 for it.

Register it as soon as you know what you want to call your business. Namecheap is our go-to. Free WHOIS privacy (so your personal info isn't in the public registry), straightforward pricing, no upsell games. You'll need this domain for your business email in the next step.

Professional email is not optional

Sending invoices from yourname@gmail.com tells clients and vendors one thing: this operation is not established yet. It shouldn't matter, but it does. Banks, partners, and customers all take you more seriously when your email matches your company name.

Google Workspace is $7-14/month per user and gives you yourname@yourcompany.com plus Google Drive, Calendar, Meet, and Docs. If you already live in Gmail, there's zero learning curve. It takes about 30 minutes to set up once you have your domain.

Separate your money. Immediately.

This is the one thing every accountant, lawyer, and tax advisor will yell at you about. If you run business expenses through your personal checking account, you're "piercing the corporate veil." That's a legal term that means a court could decide your LLC or Corp doesn't actually protect your personal assets. You went through the trouble of incorporating for liability protection. Don't undo it by mixing your money.

Open a business bank account as soon as you have your incorporation docs and EIN (which your formation service handles for you). Mercury is our top pick. No monthly fees, great software integrations, and they actually understand startups. Rho is another strong choice, especially if you want built-in expense management and corporate cards from day one.

Both are free to open. Both are online. Both take a few days to verify your documents and get you running.

If you incorporated in Delaware but live in Texas, you're not done

This catches a lot of first-time founders off guard. You incorporated in Delaware because that's what Stripe Atlas does. But you live and operate in, say, Texas. Delaware doesn't know or care where you actually work. Texas does. And Texas wants you registered as a "foreign entity" doing business in their state. (Foreign here means out-of-state, not out-of-country.)

If you formed an LLC in your home state, you can skip this. You're already registered where you operate. But C-Corp founders in any state other than Delaware need to handle this extra step.

Discern automates state registration and tracks your ongoing compliance obligations. They figure out which states you need to be registered in and handle the filings. LegalZoom also offers foreign entity registration as a one-off service.

State taxes: the other thing nobody warns you about

Incorporating creates your legal entity. Registering in your state gives you permission to operate there. But you also need to register with your state's tax authority. This is a separate step.

If you sell physical products (or digital goods in some states), you'll need a sales tax permit. This means you collect sales tax from customers and send it to the state. The rules vary wildly. Some states have no sales tax. Some tax digital products. Some don't. It's a mess, and it's one of the main reasons Discern exists.

If you're a service business with no physical products, you still need to register for state income tax. Your state's Department of Revenue website will have the forms. It's usually free but takes a week or two to process.

Licenses and permits: the part most people skip

Not every business needs a special license. A SaaS company probably doesn't. A freelance designer probably doesn't. But if you're in construction, food service, healthcare, financial advising, real estate, or any kind of trade work, you almost certainly do.

The tricky part: licenses come from different levels of government. A general contractor needs a state license AND a local business license AND sometimes county-level permits. A restaurant needs health department approval, a food handler's permit, possibly a liquor license, and a local business license.

The SBA's license finder tool is free and will tell you what you need based on your state and industry. Start there.

Getting paid

If customers owe you money, you need a way to collect it. The specifics depend on your business model.

Selling online, or online and in person? Shopify handles the whole thing: storefront, checkout, payments, inventory. If you also have a physical location, their POS system keeps online and in-store sales synced. It's the default for e-commerce for a reason.

Purely brick-and-mortar with no online sales? Square is the move. Card readers, POS terminals, inventory management, all in one box. Setup takes an afternoon.

If you're a consulting or services business that invoices clients, your bank account might be all you need to start. Mercury and Rho both support ACH transfers and wire payments.

If you have employees, payroll is not something you DIY

Payroll taxes are the one area where the IRS has no sense of humor. Withholding the wrong amount, filing late, or miscalculating state taxes can result in personal liability for you, even if you have an LLC or Corp. This is not a spreadsheet job.

Gusto handles payroll, tax withholding, benefits, and compliance for about $40/month plus $6 per employee. Rippling does the same but bundles in IT management and device provisioning if you're handing out laptops.

Even if you're not hiring yet, set this up before you make your first offer. Onboarding someone without payroll in place means scrambling on day one.

Team communication (once you're not solo)

If it's just you, skip this. Text yourself reminders. Use notes apps. Whatever works.

Once you bring on a second person, Slack is the default for a reason. Channels keep conversations organized by topic, it integrates with everything (Google Drive, your bank, your project management tool), and the free tier is generous enough for small teams. You can be up and running in 15 minutes.

Insurance: the thing you hope you never need

Your LLC or C-Corp protects your personal assets. Insurance protects the business itself. A client sues because they slipped in your office. A customer claims your product caused damage. A competitor says you stole their idea. Without general liability insurance, you're paying legal fees out of your business account, and if those fees exceed what's in the account, things get ugly.

If you have a physical location, add property insurance. If you have employees, your state probably requires workers' comp. If you're a consultant or professional services firm, errors and omissions (E&O) coverage is worth having.

Next Insurance and Hiscox both let you get a quote in minutes. Expect to pay $50-150/month depending on your industry and coverage.

Why the order matters

Each step depends on the one before it. You can't open a bank account without an EIN. You can't get an EIN without incorporating. You can't incorporate without an address. You can't set up professional email without a domain.

People who try to do these out of order end up stuck. They sign up for Stripe but can't verify their business because they don't have a bank account yet. They try to open a bank account but don't have their incorporation docs. They try to incorporate but realize they need an address first.

The checklist we built handles this for you. Answer a few questions and it spits out the right steps in the right order, with links to the services that make each step easy.