From idea to launch: A business startup checklist for small businesses and startup founders

You’ve dreamt about it. You’ve talked about it. And now the day has come for you to launch your business. What an exciting, albeit overwhelming day for you to determine how to set up a business and fulfill your entrepreneurial dreams.

For business owners, day one is the first of what will hopefully be many milestones in their entrepreneurial journey. With everything that goes into a business, from understanding entity structure to tax considerations and cash flow, running a business isn’t something you do casually; it requires a lot of discipline and dedication.

It also requires a lot of thought into how your company’s processes and systems will help support your growing brand. One of the great entrepreneurial tools is checklists, which ensure that nothing important falls through the cracks amidst your busy and hectic life as an SMB or startup founder.

At Pilot, we’re big on clarity and getting the details right early. This checklist covers the steps that matter: formation, finances, compliance, and first-year planning.

Use it now to stay on track, and download the full version to keep on hand as you build. It’s the same setup guidance we’ve given thousands of founders.

How to setup a business (step-by-step)

Step 1: Validate your business idea

Before you start filing paperwork, make sure your idea holds up. Validation doesn’t mean getting everyone to love it. It means confirming there's a real problem, a real customer, and a reason you’re the one to solve it.

• Conduct market research to understand your target audience, industry trends, and competitors.
• Define your unique value proposition by identifying what sets your business apart and why customers should choose you.
• Outline your first product or offer with precise details on features, pricing, and how it solves a specific problem.

Step 2: Choose a business structure and validate your company

Your legal setup affects everything from how you’re taxed to how protected you are if something goes wrong. Before you can move forward, you need to pick the right structure and make it official. Here’s what to cover early:

• Decide between an LLC, S-corp, or sole proprietorship based on liability, taxes, and long-term goals. More on these below*
• Register your business by applying for an EIN (entity identification number) and completing registration with the appropriate state agencies.
• Register any trademarks like company names, product taglines, and more. It’s very important to secure any and all intellectual property.
• Secure your domain name and digital infrastructure. Check national and state databases to ensure your dream name is available.
• Review local requirements like business licenses or zoning laws that may apply in your area.

To make that first step of choosing your structure you’ll need to understand how each one works. This isn’t just paperwork. The right choice can protect you, reduce your tax burden, and make your business easier to grow.

Sole proprietorship

• What it is: Default business structure for individuals with no formal registration.
• Taxes: Income is reported on your personal tax return. No separate business tax filing.
• Liability: No legal separation—you’re personally liable for debts and lawsuits.

LLC (Limited Liability Company)

• What it is: A legal entity that separates your personal assets from your business.
• Taxes: Can be taxed as a sole proprietorship, partnership, or S-corp.
• Liability: Offers personal liability protection for owners (called members).
• Additional documentation: Articles of incorporation are required for LLCs.

S-corp (S Corporation)

• What it is: A tax election (not a legal structure) available to LLCs and corporations.
• Taxes: Allows income to be passed through to owners while potentially reducing self-employment tax.
• Liability: Must already be an LLC or corporation to elect S-corp status; retains liability protections.
• Additional documentation: Articles of incorporation are required for S-Corps.

Step 3: Set up your finances the right way

• Open a business bank account to separate personal and business finances and streamline cash flow tracking.
• Choose the right accounting software based on your business size and complexity.
• Decide how to manage your books: whether you’ll handle it yourself, hire internally, or use a service like Pilot’s bookkeeping.

Pilot’s upcoming COO-in-a-box service will give founders operational support from day one, helping them build smart systems as they scale.

Need help managing finances after setup? Learn the difference between bookkeeping and accounting.

Step 4: Build your back office infrastructure

Once you're set up, your next job is to make operations run smoothly. That means creating systems that handle money movement, compliance, and team support, without constant oversight.

• Set up payroll, contractor onboarding, and invoicing to ensure smooth payments and compliance from the start.
• Track key financial metrics to make informed decisions and spot issues early.
• Depending on the state of your LLC or S-Corp, you may need a physical location with a mailbox available to state and federal agencies. This is how they communicate critical components like registration and licensing.
• Make sure you’ve secured business insurance. Depending on your line of business, you may need a specific or elevated insurance policy.
• Sync your tools like Gusto, Stripe, QuickBooks, and others to keep everything running efficiently:
  
  • Gusto: A payroll and HR platform for small businesses. It handles employee and contractor payments, tax filings, benefits, and onboarding.
  • Stripe: A payment processing platform. It enables businesses to accept credit card payments, manage subscriptions, and handle online transactions.
  • QuickBooks: An accounting software by Intuit. It manages bookkeeping, tracks expenses and income, generates financial reports, and simplifies tax prep.

Want to dig in more? Learn how to structure your startup’s financial organization.

Step 5: Understand ongoing compliance and reporting

Once you're up and running, staying compliant isn't optional - it's the cost of doing business. These are the financial tasks that keep your company in good standing and off the IRS’s radar.

• Plan for quarterly tax estimates to avoid surprises and stay in good standing with the IRS.
• Prepare 1099s and contractor documentation to meet annual reporting requirements and deadlines.
• Stay on top of year-end reporting for taxes, financial reviews, and investor updates.

Need expert help managing these tasks? Explore fractional CFO services to get strategic financial oversight without hiring full-time.

Step 6: Plan for the first year

Your first year sets the tone for how you operate and how well you adapt. Put a basic plan in place so you’re not just reacting as things happen.

• To manage your first year with clarity and control, create a budget, forecast revenue, and manage cash flow.
• Decide when to hire, scale operations, or bring fractional support based on business growth and workload.

Need help building your plan? Check out our budgeting guide for startups.

12 month business setup checklist

If you are the type of linear thinker who likes things broken down by month, we’ve reconfigured the steps above to provide an ideal timeline for year one of these tasks. Don’t take these too literally, as nothing absolutely has to happen in month 1 vs. month 2 (for example). Instead, if you’re serious about starting and growing a business, this would be an aspirational timeline for you to follow.

Month 1: Validate your idea

• Conduct market research to understand your audience, industry, and competitors.
• Define your unique value proposition.
• Outline your first product or offer with pricing, features, and the problem it solves.

Month 2: Choose your business structure

• Decide on your business structure: sole proprietorship, LLC, or S-corp.
• Understand liability, tax implications, and required documentation for each.
• Review long-term goals to pick the proper setup.

Month 3: Register and protect your business

• Apply for an EIN and register with your state.
• Register trademarks: company name, product names, and taglines.
• Secure a domain name and ensure availability via national/state databases.
• Review local licensing or zoning requirements.
  

Month 4: Open financial accounts and choose tools

• Open a business bank account to separate personal and business funds
• Choose accounting software that fits your business needs.
• Decide how you’ll manage the books: DIY, internal hire, or Pilot’s bookkeeping.

Month 5: Start building infrastructure

• Set up payroll and contractor onboarding.
• Establish an invoicing system.
• Sync tools like Gusto, Stripe, QuickBooks, and others.
• Ensure you have a business mailing address for legal and agency communication.

Month 6: Secure operations

• Purchase business insurance based on your risk profile and industry.
• Start tracking key financial metrics (e.g., revenue, expenses, runway).
• Consider COO-in-a-box services to support systems and scaling.
  

Month 7: Stay ahead on compliance

• Plan for quarterly tax estimates.
• Set up contractor tracking for 1099s.
• Begin documenting year-end financial and tax requirements.
  
  

Month 8: Build your first budget

• Draft a 12-month budget with clear expense categories.
• Forecast revenue based on your go-to-market strategy.
• Build a cash flow plan to maintain visibility into a runway.

Month 9: Define growth triggers

• Set KPIs that guide when to hire, outsource, or scale operations.
• Outline your hiring plan based on workload and projected revenue.
• Consider fractional support for roles you don’t need full-time.

Month 10: Review and optimize

• Analyze spend vs. budget and adjust as needed.
• Identify inefficiencies in tools, vendors, or workflows.
• Prepare operational documentation and SOPs.

Month 11: Prep for year-end

• Finalize 1099s and contractor documents.
• Review bookkeeping records for completeness.
• Begin compiling reports for tax filings and investor updates.
  

Month 12: Set the stage for year two

• Review performance against your initial plan.
• Adjust budget, forecast, and hiring plan for Year 2.
• Use our budgeting guide for startups to build your next-year roadmap.

Founding a startup? This guide goes deeper.

You’ve seen the big-picture checklist—now download So You’ve Founded a Tech Startup for deeper guidance. It’s geared toward early-stage tech founders, but the lessons apply to anyone getting a new company off the ground: budgeting, taxes, financial tools, and clean books from day one. No fluff, just what works.

Final thoughts: Launch smart, scale smoothly

Every founder needs a start-up launch roadmap—this is your starting line. From formation to finances, the structure you build in your first year sets the tone for everything that follows. Don’t leave it to chance. 

Pilot helps entrepreneurs answer the question of how to set up a business by assisting them in keeping clean books. Let us be your financial ACE while you focus on the stuff that matters, like growing and scaling your company.

Talk to an expert.