Starting your own business requires a high level of planning, according to the U.S. Small Business Administration. The business owner will need to develop a detailed business plan, select a business structure and apply for the necessary licenses. If the business needs outside financing, the business owner will need to partner with financial institutions to secure the funds required to get the business off the ground.

Developing a Business Plan

The first step in starting a business is developing a business plan. A business plan is divided into four sections, according to the Small Business Administration: a description of your business, management, finances and marketing. The SBA offers sample plans on its website (see Resources). Find a business plan that is similar to your business and use it as a template. Rewrite the plan to be specific to your circumstances.

Selecting a Business Structure

For tax and liability purposes, you'll need to select a business structure. Many businesses start as a sole proprietorship, according to the SBA. Such businesses are owned by one person, who takes all of the financial and legal responsibility. A partnership is shared by multiple people and provides an opportunity to share tax responsibility and risk among several people. A corporation must be chartered through the state and operates as its own entity, which means the business doesn't dissolve if ownership is changed. An S corporation allows shareholders to pass earnings directly through their personal IRS tax return. It operates as a corporation (a separate entity) but has added tax advantages. A limited liability company is a hybrid between a corporation and a partnership. It provides the tax benefits of a corporation and more flexibility, like a partnership. Before choosing a business structure, talk with a tax adviser about your situation.

Financing your Business

After you create a business plan, your start-up needs financing. Financial institutions offer small-business loans guaranteed by the SBA. Eligibility for these loans will depend on your geographic area, industry type and personal information (such as income and credit score). Another option for financing your business is approaching investors in your community. They might invest funds in your start-up, in return for a generous interest rate.

Licensing Requirements

After you've solidified the details of your business, it's important to secure the necessary licenses and permits. At a minimum, you'll need to secure a business license. This can be obtained at your city hall. If you plan on serving liquor, your company will need to obtain a state liquor license. Additional permits and licenses may be required, based on the type of business you plan on operating. Contact your state's licensing board for details specific to your business.

Source:

U.S. Small Business Administration: Write a Business Plan

CNN: Starting a Business in a Recession