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Small business setup checklist

Starting a business is an exciting step, and we're here to help make it a smooth one. This small business setup checklist walks you through what to do in a simple, manageable way so you can stay organized and confident from day one. From registration and compliance to finances, operations, and insurance, we've got you covered.

Consider this checklist as a go-to guide as you get up and running. It can help you set things up the right way and prepare for growth.

1. Validate your business idea

Turning your idea into a real business takes focus, resources, and a clear plan. Start by evaluating your business model, including opportunities and challenges.

The first items on your small business startup list focus on getting to know your idea and the market around it:

Learn as much as you can about your target customers
Become an expert on the market you're entering
Assess competitors thoroughly
Write a formal business plan that includes financial projections

Write your business plan

A business plan is a roadmap for getting where you want to go. It can support conversations with lenders, investors, and other partners. Creating one may feel like a big task, but it's often easier than it sounds. You can find templates online, along with free planning resources from the Small Business Administration (SBA).

Finance your business

Every small business startup checklist should balance the excitement of launching with the realities of paying for it. Before you register your business, think about how you'll cover your first 12 months of operations. Some owners start with their own savings, while others look for outside funding. There's no single right approach, but it's important to know how much you need and where it'll come from.

2. Register your business

Now that you have a plan and a clear direction, it's time to bring your idea to life. The next step is to decide how you'll register your business.

Choose a business structure

You have several options for how to structure your business. Each type can have different tax, reporting, and liability implications. They can also have unique insurance requirements. Common business structures include:

Choosing a business structure can be complex, so it may be worth consulting an accountant or attorney to get it right.

File your registration paperwork

Once you choose a structure, you'll need to register your business with the appropriate agencies. You'll also have to apply for an Employer Identification Number (EIN). You could do this yourself or work with a professional. After your business is official, you can open bank accounts, sign contracts, and operate legally as you complete the rest of your small business startup checklist.

Check for other licenses and permits

You may need more than federal and state registration. Some businesses require professional licenses, permits, or zoning approvals. These can depend on your location and industry. Do your research early so you can secure what you need and avoid delays.

Build your brand

Think about your brand identity and what you want the relationship with your customers to be. Choose a unique name, logo, and color palette. Define your voice and style. Be sure to secure your website domain, social media handles, and other assets prior to launch.

3. Manage your small business finances

As soon as you start a business, cash flow matters. You'll need a way to track your income and expenses so you can understand your financial position. A spreadsheet may be a good starting place, but free accounting applications and other paid options can offer helpful features like reporting, payroll, and expense tracking.

Business banking

Opening a business bank account helps separate your personal and company funds. This makes it easier to track expenses, manage cash flow, and prepare for taxes. Look for banks that understand startup needs and have the products and resources to help you grow.

Plan for taxes and compliance

Most companies pay federal, state, and local taxes, but the specifics depend on your location and setup. You may have taxes on sales, payroll, and property. A tax professional can help you understand what applies to you. They'll also walk you through what to collect and what to pay.

4. Get the right business insurance coverage

Business insurance can help you prepare for a variety of unexpected events. The coverage you need depends on your profession, team, and the risks you face each day. Use this quick business insurance checklist to see how each type works, then start a quote when you're ready.

General liability (GL)

General liability insurance is the most common type of business insurance. It helps protect you if you're responsible for bodily injury, property damage, or personal and advertising injury to others. Some clients and partners may contractually require this coverage before you start work. Learn more about the benefits of GL and general liability insurance cost.

Business owners policy (BOP)

A business owners policy combines liability coverage with commercial property insurance. It covers the space you own or rent, as well as business personal property, like supplies and equipment. Explore additional BOP coverages to understand how this policy can be customized for your needs.

Workers' compensation

Workers' compensation insurance covers medical bills and lost wages for employees who become injured or sick because of their job. Most states require businesses with employees to carry this coverage. The cost of workers' comp depends on factors like the number of employees and the risks involved in their work.

Professional liability

Professional liability insurance protects businesses that provide advice and services from claims related to negligence and other mistakes. It's also called errors and omissions insurance. This coverage can be a good fit for consultants, advertising agencies, accountants, and more.

Cyber

Businesses that store credit card information or other sensitive data should consider cyber insurance. This coverage can help pay for services like data recovery and customer notification after a breach or cyber attack. The cost of cyber insurance depends on factors like data access, network security, and profession.

Commercial auto

Commercial auto insurance covers vehicles that are used for business purposes. Liability is the basic auto insurance coverage required in most states. It helps cover injuries and property damage you cause others. You can add additional commercial auto coverages to protect your own vehicles, drivers, and passengers.

Intellectual property (IP)

Specialized intellectual property insurance may cover certain legal costs related to trademark or copyright disputes. It may apply if your business is accused of infringement or needs to defend its own IP.

Insurance needs vary by profession

Each industry has its own insurance recommendations and requirements. For instance, a cleaning business that services commercial offices will have different needs than a business consultant who works from home. Explore insurance by profession to see what coverages can help your new business.

5. Common startup insurance mistakes to avoid

Common insurance mistakes can lead to gaps in coverage and unexpected costs. You'll probably want to avoid:

Waiting too long to get coverage
Focusing only on cost instead of protection
Overlooking potential liability risks that could lead to costly claims
Mixing personal and business finances
Assuming that small businesses don't need insurance protection

Why choose Progressive Commercial for small business insurance

At Progressive Commercial, we have more than 50 years of experience helping small business owners get the right coverage. Start a personalized quote today to review coverages and find a policy that works for you.

Frequently asked questions

What's the first step in starting a small business?

The first step is testing your idea. That means learning about potential customers, understanding the market, and reviewing the competition. Taking time here can help you make more informed decisions as you write your business plan.

What insurance does a new small business need?

It depends on your setup, and it's normal to get more than one type of insurance. Most small businesses start with a general liability or business owners policy (BOP). If you provide advice and services for a living, you may want to consider professional liability insurance. Startups with employees typically need workers' compensation, and it may even be a good choice for sole proprietors and self-employed individuals.

Is insurance required to start a business?

No, insurance isn't usually required by law, but there are some exceptions. Companies that rely on vehicles to get the job done typically need commercial auto insurance. Also, businesses with employees may have to get workers' comp.

Some client and partner contracts call for specific types of insurance before you start work, too. Having coverage can help open professional doors and develop key relationships.

How much does small business insurance cost?

In 2025, the national median monthly cost of a business insurance policy for new Progressive Commercial customers ranged from $50 for professional liability to $80 for a BOP. Your specific cost will depend on the coverages you choose and your industry, location, and coverage needs. The best way to learn what you'll pay is to get a quote.

Small business setup checklist final takeaway

As you start your business, you may notice that things change quickly. Staying flexible helps you adjust as the market shifts. Working through this business startup list and getting the right insurance can help create a strong foundation and protect what you've built. Call us or start an online quote to complete your small business startup checklist.