If you are thinking about setting up a business, it pays to be thorough in your preparations. Before you invest as little as a single dollar, it would be advisable to compile a business plan to verify the feasibility and sustainability of the business you have in mind.

In other words, the very first step to take when setting up a business is building a comprehensive business plan. Inside this plan, you will need to specify the product or service you intend to sell, which market segment you intend selling to and what the potential market size for your product is. The plan needs to contain information on the source of the goods or services you intend selling and note any potential risks in terms of supply. Infrastructure, human- and other resource requirements also need attention, should it be relevant to your proposed business.

A critical aspect in setting up a business is the financial element. Do not forget to include possible financial sources, and to prepare realistic assumption-based financial projections on potential revenue, expenses and profits of the proposed operation. In developing the business plan, you should do some research about the industry in which you intend operating and study all government regulations that may be applicable to the proposed business. This time devoted to preparing for setting up a business, is a valuable investment.

If you decide, based on the outcome of the business plan, to proceed with setting up a business, the next decision will center on the structure the new business will assume. Incorporation, when compared to proprietorship, is in most instances a more favorable option. If you do decide to incorporate, there are effectively three ways you can go about: you can do your own paperwork with the state (which can be tedious), you can use an attorney (which can be expensive) or you can use an incorporation service provider (which will still cost you, albeit somewhat less).

Preparing your own documents when setting up a business, and filing these with the appropriate agency in your state (normally, it is the secretary of state), is a very time consuming process. Even though it is the most affordable alternative, it certainly is not the easiest. There are many hidden steps involved, ranging from researching the requirements up to interacting with the regulatory body regarding your filing. You should carefully weigh up the time you will spend on the process against paying someone to do this on your behalf. The latter may well turn out to be the better option.

Assuming that you have already decided on what to call your business, you will then need to check the name for availability with the secretary of state. This process will take at least a week. Once you get clearance to use this name, articles of incorporation forms may be completed. Fortunately most states have a template which you can download from the official web site.

Once your articles are approved, you will need to obtain an employer identification number (EIN) from the IRS for taxation purposes. There will also be sundry little details requiring attention when setting up a business, such as choosing which financial institution to bank with, opening a bank account, and obtaining local business licenses or permits. Meeting all the formal compliance criteria such as conducting a meeting of directors and shareholders, taking minutes etc. is of paramount importance.

If you decide to incorporate the business yourself, you will have to take responsibility for all of these steps.

Incorporation service providers can take that burden from you both in terms of the incorporation documents, as well as many of the other services needed during the process of setting up a business. Because these providers don't provide legal advice, you will still need to consult a lawyer for legal opinions, for customizing information in your articles of incorporation and for preparing the wording on provisions for the kinds of shares that may be issued.