When you start an online business, there are thousands of questions that need answering. How much money do you really need to start a business? How do you register it with the government? How do you build a website? Who’s your target customer, and what tactics and messaging should you use to reach them?
You’ll quickly find that coming up with the idea for a new business is the easy part. Actually executing on that idea is where it gets interesting.
Execution is what differentiates a great thinker from an entrepreneur.
Everyone wants more visitors, more qualified leads, and more revenue. But starting a business isn’t one of those "if you build it, they will come" situations. In order to build a successful company, you’ll need to create and fine-tune a business plan, assess your finances, complete all the legal paperwork, pick your partners, choose the best tools and systems to help you get your marketing and sales off the ground … and a whole lot more.
We’re here to guide you through that process. In this post, you’ll find a library of the best free tools and resources to help you start selling and marketing your business. Keep scrolling, and you’ll find a guide on how to start a business, from the paperwork and finances to defining your business goals to building and growing your business online.
Free Tools & Resources for Startups
Before we dive into our list, we want to make sure you know about our scholarship program HubSpot for Startups. It's a 90% scholarship for seed-stage startups that includes all of HubSpot's software and tools to help you acquire customers and grow, as well as unlimited technical support and access to HubSpot's community of thousands of founders worldwide, You can learn more and apply to the HubSpot for Startups program here.
Now, let's get into HubSpot's best free marketing and sales tools and resources, followed by a complete guide for how to set up and finance your business.
The Best Free Marketing Resources
A 20-page guide that covers how to build a sales and marketing machine, which demand generation activities with the biggest return on investment, and more.
Our free marketing tool that gives you insight into what every lead does before and after they fill out a form. It includes built-in analytics that make it easy to learn which pages, offers, and traffic sources are driving the most conversions for you.
Enter your website URL and email address, and we'll send you a detailed grade on your website's performance, mobile, SEO, and security, along with detailed tips and resources for making impactful improvements on your website.
Downloadable press release templates you can customize, along with a corresponding guide to building a press release and promotion plan.
Downloadable case study templates that show you a sample case study structure from top to bottom, along with business case study examples, tips on finding the right candidates, advice on how to reach out to them, and sample interview questions to inform your case study content.
Free templates for all your visual content creation needs when you're first starting a business. The kit includes 100 social media image templates, 8 PowerPoint presentation templates, 50 call-to-action templates, 15 infographic templates, 5 ebook templates, 5 blog post templates, and more.
The Best Free Sales Resources
A free tool that creates a professional email signature you can easily add to your Gmail, Outlook, Apple Mail, Yahoo Mail, or any other email provider.
A list of 21 email templates that have been used with great success by real companies like us here at HubSpot, as well as folks at Troops, Chet Holmes International, FEED Agency, and Groove. These email templates have closed a $100,000 deal, seen an 80% response rate within 24 hours after a phone call, and received a 33% response rate after the prospect went dark.
An easy-to-follow sales call checklist that can help you build rapport and develop trust, understand the prospect’s pain points, identify key decision-makers, and secure a follow-up meeting.
A monthly video series where Sales Expert Daniel Pink and special guests will solve your biggest sales challenges in under 30 minutes.
A simple, easy-to-follow sales process template to help managers coach their inside sales reps into following a proven, standardized process from discovery to close. It also includes which key activities sales reps must follow to keep deals moving forward, and important sales strategies for increasing productivity, efficiency, and data visibility.
Compare your sales close rate against your industry competitors using data from over 8,900 companies segmented by 28 industries.
The Best CRM
HubSpot CRM is the only free CRM that lets you manage your pipeline, automate the most tedious sales tasks, and make it easier to close deals quickly. You'll end up doing more deals and less data entry. Plus, you can manage up to 1,000,000 contacts, users, and storage without any expiration date.
Now that we've covered the best tools and resources for starting a business, let's get into how to actually start one.
How to Start a Business: A Complete Guide
Starting a business involves a whole lot of moving pieces, some more exciting than others. Brainstorming business names? Fun! Filing taxes? ... Not so fun. The trick to successfully getting your business off the ground is to meticulously plan and organize your materials, prioritize properly, and stay on top of the status and performance of each and every one of these moving parts.
From registering with the government to getting the word out about your business to making key financial decisions, here’s an overview of what you'll need to do to start a successful business.
The Legal Paperwork
Business Structure, Government Registration, Taxes & More
The not-so-romantic part of a starting a new business is all the paperwork and legal activities. This includes things like determining the legal structure of your business, nailing down your business name, registering with the government, and -- depending on your business structure and industry -- getting a tax code, a business license, and/or a seller’s permit.
Furthermore, businesses are regulated on the federal, the state, and sometimes even local level. It’s important to check what’s required on all three of those levels. When you register your business with the government, be sure you’re covering registration on all the levels required for your business’ location. Your business won’t be a legal entity without checking these boxes, so stay on top of it.
Clearly, it can be overwhelming to figure out what legal steps you need to take for your particular case, so let’s break it down. Below, you’ll find a brief explanation of what goes into each one of these steps, along with links to helpful resources where you can dig in to the details. (Note: These steps are for starting a business in the U.S. only.)
Legal Structure: The 4 Common Business Types
The legal structure of your business will determine what you need to do to register with the government, how you’re taxed, what risks you need to take on, and so on. Many people starting a business will choose to register either as a corporation or a Limited Liability Company (LLC) because those two structures will give owners limited liability protection. But, on the other hand, there’s a lot more paperwork and expense associated with a corporation or LLC.
Here’s a list of four common business structures, along with the pros and cons of each and how taxes work for each one.
1) Sole Proprietorship
Example: Freelance graphic design.
What it is: A sole proprietorship is a business that’s owned and run by one person, where the government makes no legal distinction between the person who owns the business and the business itself. It’s the simplest and most common way to operate the business, and the business can even have its own distinctive name if you register what’s called a Doing Business Name (DBA). We’ll get back to that in the “Naming Businesses” section.
Pros: It’s easy and inexpensive to create a sole proprietorship because there’s only one owner, and that owner has complete control over all business decisions. Tax preparation is also pretty simple since a sole proprietorship is not taxed separately from its owner
Cons: It can be dramatically more difficult to raise money and get investors or loans because there’s no legal structure that promises repayment if the business fails. Also, since the owner and the business are legally the same, the owner is personally liable for all the debts and obligations of the business.
How taxes work: The individual proprietor owns and manages the business and is responsible for all transactions, including debts and liabilities. Income and losses are taxed on the individual’s personal income tax return at ordinary rates. In addition, you are also subject to payroll taxes, or self-employment taxes, on the money you earn. (More on self-employment taxes later.) Find IRS tax forms here.
Example: Multiple doctors maintaining separate practices in the same building.
What it is: A partnership is a single business where two or more people share ownership, and each owner contributes to all aspects of the business as well as shares in the profits and losses of the business.
Pros: It’s generally pretty easy to form a business partnership, and it doesn’t tend to be super expensive, either. Having two or more people equally invested in the business’ success allows you to pool resources. It also means you have access to more than one person’s skill set and expertise.
Cons: Just like a sole proprietor, partners have full, shared liability if the business goes south. That also means that partners aren’t just liable for their own actions, but also the actions of their partner(s). There is a variant on partnerships called a limited liability partnership, or LLP, that protects against that -- which is how most law firms are organized, for example.
Finally, when more than one person is involved in decisions, there’s room for disagreement -- which means it’s important to have an explicit agreement over how the obligations and earnings will be split, especially if/when things go wrong.
How taxes work: To form a partnership, you have to register your business with your state, a process generally done through your Secretary of State’s office. Find IRS tax forms here.
3) Limited Liability Company (LLC)
Example: A small design firm.
What it is: LLCs are a type of business structure that's more complex than sole proprietorships and partnerships, but less complex than corporations. They are called “pass-through entities” because they’re not subject to a separate level of tax. Most states don’t restrict ownership on LLCs, and so members can include individuals, corporations, and even other LLCs and foreign entities. Most states also permit “single-member” LLCs, those having only one owner.
Pros: Founders have a lot of flexibility when it comes to governance issues.
Cons: LLCs are often more complex than sole proprietorships or partnerships, which means higher initial costs, and certain venture capital funds are hesitant to invest in LLCs because of tax considerations and the aforementioned complexity. That being said, they’re simpler to operate than a corporation because they aren’t subject to as many formalities.
How taxes work: LLCs have the benefit of a “flow-through” tax treatment, meaning that the owners -- not the LLC -- are the ones who are taxed. Having only one level of tax imposed makes taxes easier. Find IRS tax forms here.
Example: Microsoft, Coca-Cola, Toyota Motor, and almost all well known businesses.
What it is: A legal entity that is separate and distinct from its owners, and has most of the rights and responsibilities that an individual possesses (to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes.) It’s more complex than the other business structures, and it’s generally suggested for larger, established companies with multiple employees.
Pros: They make seeking venture financing easy.
Cons: Because they’re complex than other business structures, they can have costly administrative fees, and more complicated tax and legal requirements.
How taxes work: Corporations are required to pay federal, state, and in some cases, local taxes. Any profit a corporation makes is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends, which creates a double tax. The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation, but they are also not responsible directly for taxes on their earnings -- just on the dividends they give to shareholders. Find IRS tax forms here.
Choosing & Registering Your Business Name
Establishing a business name is a little more complicated than making a list and picking your favorite. You’ll use the legal name of your business on all your government forms and applications, including your application for employer tax IDs, licenses, and permits.
If you’re using a name other than your personal name, then you need to register it with your state government so they know you’re doing business with a name other than your given name.
First thing’s first: Before you register, you need to make sure the name you want is available in your state. Business names are registered on a state-by-state basis, so it’s possible that a company in another state could have the same name as yours. This is only concerning if there’s a trademark on the name. Do a Trademark search of your desired name to avoid expensive issues down the road.
Speaking of who’s using which names online, see if your desired domain names are available by doing an online domain search. Do the same with your desired social media handles. If the domain name and/or social media handles you want aren’t available, then some of you might consider changing your business name.
For new corporations and LLCs: Your business name is automatically registered with your state when you register your business -- so you don’t have to go through a separate process. There are rules for naming a corporation and LLC, which you can read about here.
For sole proprietorships, partnerships, and existing corporations and LLCs (if you want to do business with a name other than their registered name), you’ll need to register what’s called a “Doing Business As” (DBA) name. You can do so either by going to your county clerk’s office or with your state government, depending which state you’re in. Learn how to do that here.
Want to trademark your business name? A trademark protects words, names, symbols, and logos that distinguish goods and services. Filing for a trademark costs less than $300, and you can learn how to do it here.
All About Business Taxes
Business owners are obligated to pay specific federal taxes, and the amount of those taxes is determined by the form of business entity that you establish. All businesses except for partnerships need to file an annual income tax return. Partnerships file what’s called an information return.
Any business that’s owned and operated in the United States needs an Employer Identification Number (EIN), which you can apply for on the IRS’ website here.
Once you’re registered, it’s time to figure out which taxes you’ll be responsible for.
Self-employment tax (SE tax) is a Social Security and Medicare tax for people who work for themselves, i.e. business owners. SE taxes require filing Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. (Note: There are special rules and exceptions for fishing crew members, notary public, and more, which you can read about on the IRS’ website here.)
When you have employees, you (as the employer) have certain employment tax responsibilities that you need to pay, as well as forms you need to file. Employment taxes include Social Security and Medicare taxes, federal income tax withholding, and federal unemployment (FUTA) tax. Learn more about employment taxes for small businesses on the IRS’ website here.
Excise taxes are also something you need to consider, depending what you sell, where you operate, and so on. For example, in the U.S., there’s a federal excise tax on certain trucks, truck tractors, and buses used on public highways. See which excise taxes you might be responsible for on the IRS’ website here.
If your business sells tangible property to the public either as a wholesaler or retailer, then in most states, you need to apply for a seller’s permit. “Tangible property” simply means physical items, like clothing, vehicles, toys, construction materials, and so on. In some states, a seller’s permit is required for service-oriented business, too, such as accountants, lawyers, and therapists.
The seller’s permit allows you to collect sales tax from buyers. You’ll then pay that sales tax to the state each quarter by putting the sales tax permit number on the state’s tax payment form.
You can register for a seller's permit through your state's Board of Equalization, Sales Tax Commission, or Franchise Tax Board. To help you find the appropriate offices, find your state on this IRS website.
Almost every business needs some form of license or permit to operate legally -- but the requirements vary, which can get confusing. Which specific licenses or permits does your business need? To figure that out, go to this SBA.gov website and select the state from which you’re operating your business. It’ll tell you the specific license and permit requirements in that state.
Financing your Business
From the day you start building your business until the point where you can make a consistent profit, you need to finance your operation and growth with start-up capital.
Some founders can finance their business entirely on their own dime or through friends and family, which is called “bootstrapping.” This obviously gives the business owners a ton of flexibility for running the business, although it means taking on a larger financial risk -- and when family’s involved, can lead to awkward holiday dinner conversations if things go wrong.
Many founders need external start-up capital to get their business off the ground. If that sounds like you, keep on reading to learn about six of the most common kinds of external capital you can raise.
1) Seed Financing
If you’re looking for a relatively small amount of money, say, the investigation of a market opportunity or the development of the initial version of a product or service, then seed financing might be for you. Oftentimes, this money will come from the founders themselves, from friends and family, from angel investors, and even from potential customers.
There are many different kinds of seed financing, but the one you’ve probably heard of most is called seed round financing. In this case, someone will invest in your company in exchange for preferred stock. If your company gets sold or liquidated, then investors who hold preferred stock often have the right to get their investment back -- and, in most cases, an additional return, called “preferred dividends” or “liquidation preferences” -- before holders of common stock are paid.
Accelerators are highly competitive programs that typically involve applying and then competing against other startups in a public pitch event or demo day. In addition to winning funding and seed capital, winners of these programs are also rewarded with mentorship and educational programs.
Although accelerators were originally mostly tech companies and centered around Silicon Valley, you can now find them all over the country and in all different industries. If this sounds like something you’d be interested in, here’s a list of the top accelerators in the United States to get you started.
3) Small Business Loan
If you have a really rock-solid plan for how you’ll spend the money in place, then you might be able to convince a bank, a lender, a community development organization, or a micro-lending institution to grant you a loan.
There are many different types of loans, including loans with the bank, real estate loans, equipment loans, and more. To successfully get one, you’re going to need to articulate exactly how you’ll spend every single penny -- so make sure you have a solid business plan in place before you apply. You can learn more about SBA.gov’s loan programs here.
You might ask yourself, what about companies that get funding through platforms like Kickstarter and Indiegogo? That’s called crowdfunding, which is a newer way of funding a business.
More importantly, it typically doesn’t entail giving partial ownership of the business away. Instead, it’s a way of getting funding not from potential co-owners, but from potential fans and customers who want to support the idea, but not necessarily own it. What you give donors in exchange is entirely up to you -- and typically, people will come away with early access to a product, or a special version of a product, or a meet-and-greet with the founders.
When you crowdfund your business, you open an account on those platforms and publish a detailed description of your business, your goals, and how much money you need and why. From there, anyone with an internet connection can contribute money toward helping your business via an online donation. The better story you tell in your crowdfunding campaign website, the more likely you’ll be to get donations.
5) Venture Capital Financing
Only a very small percentage of businesses are either fit for venture capital or have access to it. All the other methods described earlier are available to the vast majority of new businesses.
If you’re looking for a significant amount of money to start your company and can prove you can quickly grow its value, then venture capital financing is probably the right move for you. However, even though venture capital financing is fashionable, it’s rarely available to startups. In fact, many people believe it should be avoided altogether unless you’ve got a billion dollar idea.
Venture capital financing usually means one or more venture capital firms make large investments in your company in exchange for preferred stock of the company -- but, in addition to getting that preferred return like they would in series seed financing, venture capital investors also usually get governance rights, like a seat on the Board of Directors or approval rights on certain transactions. VC financing typically occurs when a company can demonstrate a significant business opportunity to quickly grow the value of the company but requires significant capital to do so.
Well, there you have it. We hope this post has helped give you a better idea of what it takes to start your own business -- from setting up all the legal and tax paperwork, all the way to actually marketing and selling your product or service. The execution is up to you. Good luck out there!
Originally published Feb 28, 2017 10:05:34 PM, updated July 28 2017
I’m often fascinated by how little time small business owners spend thinking about a name for their company. Assuming you are going to be successful and survive for a while, your company name is going to be with you for many years. It’s a...