Starting a small business startup in Winston-Salem, NC, or anywhere else requires more than just a great idea and determination. The foundation you build during those initial first steps will determine whether your venture thrives or becomes another statistic. Over 90 percent of small businesses fail within five to ten years, often due to preventable mistakes made during the initial business setup process.

At Lighthouse Small Business Solutions, we’ve guided countless entrepreneurs through these early stages with our 40+ years of combined entrepreneurial experience. Getting your business setup right from day one saves you time, money, and countless headaches down the road. Here are the five essential steps every small business startup needs to take.

Step 1: Choose the Right Business Structure

Your business structure affects everything from your personal liability to how much you pay in taxes. The four main options each serve different purposes:

Limited Liability Company (LLC) offers flexibility and protection from personal liability while allowing profits and losses to pass through to your personal tax return. This structure works well for most small businesses.

S-Corporation provides similar liability protection but has stricter requirements. You can potentially save on self-employment taxes, but you’ll need to run payroll for yourself as an owner-employee.

C-Corporation creates a separate tax entity, which means double taxation on profits. However, it offers the strongest liability protection and makes it easier to bring in investors or go public later.

Nonprofit (501c3) applies when your business serves a charitable, educational, or religious purpose. This structure offers tax exemptions but comes with strict operational requirements.

Each structure has different implications for liability protection, tax obligations, and operational complexity. The wrong choice can cost you thousands in taxes or leave you vulnerable to personal liability. Consider consulting with business setup experts who understand North Carolina requirements to make the right decision for your specific situation.

Step 2: Register Your Business and Obtain an EIN

Once you’ve chosen your structure, you’ll need to make it official. In North Carolina, most businesses register with the NC Secretary of State. This process establishes your business as a legal entity and reserves your chosen business name.

Next, obtain an Employer Identification Number (EIN) from the IRS. Think of this as your business’s Social Security number. You’ll need this nine-digit number to open business bank accounts, file tax returns, and hire employees. Even if you’re starting as a sole proprietor with no employees, getting an EIN protects your personal Social Security number and makes future growth easier.

The registration process varies by business type and location, so make sure you’re following the correct procedures for your specific structure and industry.

Step 3: Open a Business Bank Account and Set Up Finances

Keeping personal and business finances separate isn’t just good practice—it’s essential for legal protection and tax purposes. Mixing funds can pierce the corporate veil and eliminate the liability protection your business structure provides.

Open a dedicated business checking account using your EIN and registration documents. Many banks require these documents along with your Articles of Incorporation or Operating Agreement.

Start tracking your expenses from day one. Every business purchase, from office supplies to marketing costs, becomes a potential tax deduction. Basic bookkeeping involves recording income, tracking expenses, and maintaining receipts.

Professional bookkeeping services can handle these tasks while ensuring accuracy and compliance. This allows you to focus on growing your business rather than wrestling with spreadsheets and tax codes.

Step 4: Obtain Necessary Licenses and Permits

Operating without proper licenses and permits can result in fines, legal trouble, or being shut down entirely. Requirements vary significantly based on your business type, location, and industry.

Local licenses might include business licenses from your city or county. Winston-Salem, for example, has specific requirements depending on your business location and activities.

State licenses apply to regulated professions like healthcare, real estate, or food service. North Carolina maintains specific licensing requirements for dozens of industries.

Federal licenses are needed for businesses in heavily regulated industries like aviation, broadcasting, or firearms.

Don’t guess about requirements—check with local authorities, your state’s business licensing office, or consult with business setup professionals who understand the regulatory landscape.

Step 5: Develop a Business Plan and Budget

A solid business plan serves as your roadmap for growth and sustainability. It should include market research showing demand for your product or service, analysis of your competition, and realistic financial projections.

Your budget should cover startup costs, monthly operating expenses, and cash flow projections for at least the first year. Include everything from rent and equipment to marketing and insurance costs.

Most importantly, plan for the unexpected. New businesses often take longer to generate revenue than anticipated, so build a cushion into your financial planning.

Professional financial planning and analysis services can help you create realistic projections and identify potential challenges before they become problems.

Bonus Tips for New Small Business Owners

Consider insurance coverage early. General liability insurance protects against customer injuries or property damage. Professional liability insurance covers mistakes in your services. Key person insurance protects against the loss of essential team members.

Start building your professional network immediately. Join local business organizations, attend networking events, and connect with other entrepreneurs. These relationships often lead to partnerships, referrals, and valuable advice.

Stay on top of compliance and taxes from day one. Set up systems for tracking income and expenses, paying quarterly taxes, and meeting regulatory requirements. It’s much easier to maintain good habits than to fix problems later.

How Lighthouse Small Business Solutions Can Help

Starting a business involves countless decisions, and making the wrong choices early can have lasting consequences. At Lighthouse Small Business Solutions, we specialize in helping small business startups navigate these fundamental first steps.

Our services include business structure consultation, registration assistance, EIN acquisition, bookkeeping setup, and ongoing financial support. With over 40 years of combined entrepreneurial experience, we understand the challenges you’re facing because we’ve been there ourselves.

We can help you choose the right business structure, ensure proper registration and compliance, set up efficient bookkeeping systems, and provide ongoing support as your business grows. Our goal is to be your lighthouse, guiding you safely through the challenges of entrepreneurship.

First 5 Steps to Setting Up a Small Business the Right Way

Taking these five steps carefully sets your business up for long-term success. Every successful entrepreneur started with proper planning and professional guidance. Don’t let preventable mistakes derail your business dreams.

The team at Lighthouse Small Business Solutions has helped countless entrepreneurs in Winston-Salem and beyond build strong foundations for their businesses. We’re here to be your trusted guide through the often-confusing world of business setup and ongoing operations.

Start your small business startup the right way—contact Lighthouse Small Business Solutions today for your free consultation and discover how our expertise can illuminate your path to success.