Strike Right
Decide, fund and plan

Guides

Business structures compared, a realistic funding ladder with questions to ask any program, and plain answers to common questions.

Decide before you file

Business structures compared

You can start simple and change later. Ask a free adviser which fits before paying any filing fee.

StructureGood forPersonal liabilityFiling & upkeepTaxes (default)
Sole proprietorshipTesting an idea alone, low-risk workYou're personally responsible for business debts and claimsNo state formation filing. A DBA if you use a business nameProfit goes on your personal return (Schedule C) plus self-employment tax
General partnershipTwo or more owners starting informallyEach partner is personally responsible, including for other partners' business actsUsually no formation filing. A written partnership agreement is strongly advisedPartnership files an information return; profit passes to each partner
LLCMost small businesses wanting liability protectionGenerally limited to what you put in, if you keep business and personal money separateState filing, registered agent, usually an annual or biennial reportPasses through by default. Can elect S-corp treatment once profits justify payroll
CorporationRaising investor money or issuing sharesGenerally limitedMost paperwork: bylaws, board, minutes, state reportsC-corp is taxed separately; S-corp election passes through

Raising venture capital for an app? Investors usually expect a Delaware C-corporation. If you start as an LLC, you can convert later. SBA guide to structures ↗

Starting with little or no money

A realistic funding ladder

Climb in order. Each step costs less and risks less than the one after it.

  1. Spend nothing you don't have to

    Validate with real customers first: conversations, a simple landing page, pre-orders or a paid pilot. Use free advising, free software tiers and library research before paying for anything.

  2. Earn your first revenue

    A small first sale is the strongest proof you can show a lender or program, and it funds the next step without debt. Signed letters of intent help too.

  3. Microloans and community lenders

    SBA microloans go up to $50,000 through nonprofit intermediaries. Community Development Financial Institutions (CDFIs) often lend to people banks turn down. These are loans and must be repaid. SBA microloans ↗ · CDFI Fund ↗

  4. Grants, where you genuinely qualify

    Grants for ordinary for-profit startups are rare and competitive. Real ones tend to be local (city, county, foundations), sector-specific, or for research-based technology through SBIR/STTR. SBIR.gov ↗ · Grants.gov ↗

  5. Investors and accelerators

    Fits businesses built to grow fast. Expect to give up equity, and read terms carefully before accepting.

Questions to ask any program

  • Are applications open now, and when is the next deadline?
  • Can I apply before registering the business or earning revenue?
  • Is this a grant, a loan, an investment or a reimbursement?
  • Is it free? If not, are fee waivers or scholarships available?
  • Do I need collateral, a credit history or matching funds?
  • Which documents do I need to apply?
Avoid grant scams.Real grant programs never ask you to pay a fee to receive money, and no one can guarantee you a grant. Be wary of calls, texts or ads promising "free government money." FTC: government grant scams ↗
Plain answers

Common questions

Do I need an LLC to start?
No. You can legally operate as a sole proprietor in every state, though you may need a DBA, licenses or permits. An LLC adds liability protection and some paperwork. Many people test an idea first, then form an LLC once money or risk is involved.
Which state should I form my LLC in?
Usually the state where you live and work. Forming elsewhere (Delaware, Wyoming, Nevada) doesn't avoid your home state: if you operate at home you'll likely have to register there too and pay both states' fees. The main exception is a startup raising venture capital, which often forms a Delaware corporation.
Does getting an EIN cost anything?
No. An Employer Identification Number is free from the IRS, and you can apply online in minutes. Sites that charge for one are third parties. You need an EIN if you have employees or form a multi-member LLC or corporation, and banks often ask for one.
Is filing an LLC the same as getting a business license?
No. Forming an LLC creates the legal entity. Licenses and permits are separate, come from your city, county or state, and depend on what you do and where you do it.
What's a registered agent?
A person or company with a physical street address in your state who accepts legal papers for your LLC or corporation. You can usually be your own agent. The address becomes public record, so some owners use a paid agent service for privacy.
What's a DBA?
"Doing business as," also called an assumed or fictitious name. You file one when you operate under a name that isn't your legal name or your LLC's exact registered name. Depending on the state, it's filed with the state or the county.
Should I open a separate bank account?
Yes. Keeping business money separate makes taxes far easier, and for an LLC or corporation it helps protect the liability shield.
How do I protect my business name?
Registering with your state stops another company from registering the identical name there, but it isn't a trademark. Search the federal trademark database before you invest in a name, logo or domain. USPTO trademark search ↗
Who owns the code, designs or content someone builds for me?
Without a written agreement assigning the rights to your business, a freelancer or contractor usually keeps the copyright to what they create. Use a written contract with an IP assignment clause for anyone who builds your product, logo or content.
Strike Right is general information, not legal, tax or financial advice. Programs, fees and rules change, so confirm details with the official office or a qualified adviser before you rely on them.