Starting a business: the money checklist.

Choose the entity with taxes in mind

Sole proprietorship is free but offers no liability shield; an LLC or S corporation changes both protection and how self-employment tax works. Formation is cheap next to unwinding the wrong choice later.

Set aside money for quarterly estimated taxes

No employer withholds for you now. Reserving 25–30% of profit and paying quarterly estimates avoids underpayment penalties and the classic first-year April shock.

Build a personal runway before you leap

Most new businesses take longer than expected to pay their founder a salary. Count the months of personal expenses you hold in cash. That number is how long the business has to work.

Solve your own health coverage

Leaving employer coverage is a qualifying event: price the ACA marketplace, a spouse's plan, and COBRA. Self-employed owners can often deduct their premiums.

Get the licenses and insurance the work requires

General liability, professional liability, and any state or local licenses your trade demands. One uninsured incident can cost more than a year of revenue.

Set up bookkeeping before the first invoice

Software or a disciplined spreadsheet: either works if it starts on day one. Deductions require records, and reconstructing a year of receipts in April costs far more than tracking as you go.

Open a retirement plan for yourself

A solo 401(k) or SEP IRA lets a self-employed owner shelter far more than a personal IRA allows. Losing the employer match hurts less when the replacement is already running.