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How to Start a Business According to State

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More than 20% of new businesses fail within their first year. It’s more important now than ever to pay special attention to every step when learning how to start a business.  

Every state has different requirements for starting a business, and depending on the type of business you’re getting into, you may have unique requirements to follow. 

It’s critical that you do your research and understand what you need to do to get your business off the ground in your state. 


How to Start a Business: Factors to Consider

Before diving into the individual requirements of each state, let’s take a second to talk about some of the startup steps you’ll take no matter what state you’re in. 


Develop a Business Plan

Now you need to build out a blueprint that will take your business from an idea to an actual running business. There are many different types of business plans. If you plan on getting funding or any financial support, you’ll need to have an elaborate business plan. 


Secure Financing

Next, you want to figure out how you’ll pay for your startup. Not every business requires a ton of capital so you might be able to bypass this step. Put together a spreadsheet covering all the startup costs for your new business, including permits, insurance, branding, marketing, inventory, property, etc. If you’re seeking financing from banks or investors, this will be an essential step. 


Structuring Your Business

Depending on your state, you’ll have a few different options. In most situations, you can choose from a sole proprietorship, partnership, LLC, or a corporation. Which one you choose determines how liable you are, how you’ll separate your personal and business finances, and how you’ll file your taxes. 


Related: Should You Hire a Business Startup Consultant?


How to Start a Business: State to State

The steps you take following these first four will vary depending on the state. The types of permits and licenses will change, and the individual requirements will differ. Let’s break down how to start a business in some of the following states. 


How to Start a Business in California

As with the previous instructions, you’ll want to develop a business plan in order to start a business in California. The U.S Small Business Administration has instructions on how to do this. 

Next, you’ll want to choose a location for your business using this link here. 

The third step is to structure your business as one of the following options:

  • Corporation
  • Limited Liability Company
  • Limited Partnership
  • General Partnership
  • Limited Liability Partnership
  • Sole Proprietorship

After you’ve structured your business, you’ll want to file your tax and employer identification documents. This step will allow you to open a business bank account, file your taxes, get insurance for employees, and hire. 

Lastly, you’ll need to apply for any required licenses or permits depending on your industry. California provides a variety of resources to help with this step. 


How to Start a Business in North Carolina

To start a business in North Carolina, it starts with you choosing a name for your business, structuring the entity, and then registering your business with the state. They have resources and information available for people seeking more information on licenses, environmental permits, and zoning requirements for specific business types. 


How to Start a Business in Texas

Texas provides a thoroughly detailed summary of how to start a business in this state

  • Step 1: Write a business plan

To start your business, they want you to have a plan written out with a description of your business, a market analysis, organizational structure, and applications of funding. They also recommend using the Small Business Administration template as an example. 

  • Step 2: Choose a location

Next, they want you to choose a location with precise planning and research. Look a the demographics and supply chain and stay within your budget. 

  • Step 3: Financing

Texas also wants you to think about financing your business and the options available. Consider one of several ways, including bank loans, credit, personal financing, crowdfunding, or investors.

  • Step 4: Structure of your business

We’ve talked about this quite a bit already, but in Texas, you need to file the business name with the state. Sole proprietorships and partnerships need to register with the county clerk’s office. Corporations use the Secretary of State

  • Step 5: Business tax

Determine your potential tax responsibilities based on your local tax authorities. For questions in Texas, you can locate your local appraisal district and tax office here

  • Step 6: Determine licensing and permits

The next step is to look at the Business Permit Office to determine if you have any licenses required to conduct business in Texas.

  • Step 7: Employer requirements

The last step is to look at the Texas Workforce website to determine what your requirements are if you plan on employing anyone. You’ll need to look into insurance, development programs, and employment laws. 


How to Start a Business in Ohio

Ohio provides an easy to follow a checklist with everything you’ll need to start your business in the state. You’ll have to:

  • Decide on a business structure
  • Pick a name
  • Register the business (file articles of organization for an LLC and articles of incorporation for a corporation) 
  • Obtain a Federal Employer Identification Number for tax and banking purposes
  • Open company accounts
  • Obtain licenses or permits


Related: How to Obtain Private Investors for Startups


Best States to Start a Business

If your current state isn’t cutting it and you think relocating might be the best option for your business; here are some of the best states to start a business. 

New Hampshire

New Hampshire has the lowest startup cost and some of the best quality of life. The taxes are ranked seventh in the country, and people generally enjoy living in this state. While the amount of businesses starting up is low, this might leave some room for an opportunity for you to step in. (hopefully, you don’t mind cold weather) 


This state has the lowest taxes in the country, and the third-lowest cost to start up a business in the US. You’ll reap the benefits as well with the 11th best cost of living. If you plan on moving to this state, consider choosing the capital, Cheyenne. 

North Dakota

We’ve seen this state rank in the top 10 for quality of life, labor market, and the cost of living for a long time now. North Dakota also boasts great healthcare options, education, and safety. The cost of starting a business here is also incredibly cheap, so it’s a great all-around option. (once again, if you don’t mind cold weather).


Final Thoughts

There’s never a good or bad time to start a business when it boils down. If you prepare yourself accordingly and follow the necessary requirements in your state, you should be able to focus less on the startup and more on the come up. 

Overall, the requirements don’t vary too much from state to state. Be sure to check out your department of state website and run through the list, so you don’t miss anything! If you’re looking to fund your startup in your state, Mata is here to help!


Related: Understanding Series A, B, C, D, and E Funding


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