The 15-Step Checklist to Make Your Business Legit

To make your business legit in the US, complete 15 core steps: pick and register a legal structure, get an EIN from the IRS, secure state and local licenses, open a dedicated business bank account, set up bookkeeping, register for sales tax, and keep your filings current. In practice, "legit" means two things at once — you are compliant with the government (registered entity, tax IDs, licenses) and you are fundable with lenders (clean bank statements, real revenue, separated finances). This checklist walks through both, in the order an operator should actually tackle them, and flags the handful of steps that most directly decide whether a funder will approve you later.

Why "legit" means two things: compliant and fundable

Most checklists stop at the government paperwork. That is only half the job. There is a second scorecard — the one a lender or revenue-based funder runs when you apply for capital — and it rewards very different things.

Compliant means the state and the IRS recognize your business: you have an entity, an EIN, the right licenses, and your annual filings are current. This keeps you out of trouble.

Fundable means an underwriter can look at your business and see a clean, provable operation: consistent deposits in a dedicated business bank account, revenue that covers obligations, no chronic negative days, and finances that are not tangled up with your personal accounts. This is what gets you approved.

The two overlap but are not identical. You can be perfectly compliant and still un-fundable because you run everything through a personal Venmo and have no business bank statements to show. The checklist below is sequenced so that the compliance steps naturally build the fundability record at the same time. If your near-term goal is working capital, pay special attention to steps 4, 5, and 12 — those are the ones underwriters read first.

Steps 1-5: The legal foundation

These five steps are the non-negotiable base. Skip any of them and you are either operating illegally or you are commingling money in a way that will cost you at tax time and at funding time.

1. Choose a legal structure. Sole proprietorship, LLC, S-corp, or C-corp. For most owner-operated small businesses, an LLC is the practical default: liability separation without corporate overhead. Talk to a CPA before you pick — the choice drives your taxes and your paperwork for years.
2. Register your entity with the state. File Articles of Organization (LLC) or Incorporation (corp) with your Secretary of State, pay the filing fee, and appoint a registered agent. This is the moment your business legally exists.
3. Get an EIN from the IRS. Free, online, takes minutes. Your Employer Identification Number is the business equivalent of an SSN — you need it to open a bank account, hire, and file business taxes. Do not pay a third party for this.
4. Open a dedicated business bank account. This is the single most underrated step for fundability. Run 100% of business revenue and expenses through it. Underwriters approve or decline largely on what these statements show, so the sooner you start building clean deposit history, the better positioned you are later.
5. Set up bookkeeping from day one. Whether it is QuickBooks, Xero, or a bookkeeper, start now. Clean books make tax season painless and give you the profit-and-loss and balance sheet that lenders and larger funders may ask for.

Steps 6-10: Licenses, tax, and protection

With the foundation in place, this block makes you legal to actually operate and shields you from the common ways small businesses get hurt.

6. Secure state and local licenses and permits. Requirements vary wildly by industry and city — general business license, professional licenses, health permits, zoning, home-occupation permits. Check your state, county, and city; do not assume one covers the others.
7. Register for state sales tax (if you sell taxable goods/services). Get your sales tax permit before you make your first sale, collect at the correct rate, and remit on schedule. Sales tax you collect is not your money — treat it as a liability.
8. Get business insurance. General liability at minimum; add professional liability, commercial property, or a BOP as your risk profile requires. Some contracts and leases require proof of coverage before you can start work.
9. Register your business name / DBA and check trademarks. File a DBA ("doing business as") if you operate under a name different from your legal entity. Run a trademark search so you are not building a brand you will be forced to abandon.
10. Understand your tax obligations and deadlines. Federal income tax, self-employment tax, quarterly estimated payments, payroll tax if you have employees, and state filings. Put every deadline on a calendar — penalties for missing them compound fast.

Steps 11-15: Systems that keep you legit and make you fundable

The final block is about staying legit over time and building the track record that turns "a business" into "an approvable business."

11. Set up payroll properly (if you have employees or pay yourself as an S-corp). Use a payroll service to handle withholding, filings, and W-2/1099 issuance. Misclassifying workers as contractors is a common and expensive mistake.
12. Build clean, consistent financial records. Reconcile monthly, keep receipts, and keep personal and business spending fully separate. Twelve months of clean business bank statements is the asset revenue-based funders lean on most — it is worth more to your fundability than almost anything else on this list.
13. Keep your entity in good standing. File annual reports, pay franchise taxes or annual fees, and maintain your registered agent. An entity that lapses into "not in good standing" can be rejected in underwriting and can lose its liability protection.
14. Establish business credit. Get a D-U-N-S number, open a business credit card or a net-30 trade line in the business's name, and pay on time. Over time this builds a credit profile separate from your personal FICO.
15. Create a funding-ready file. Keep a folder with your EIN letter, formation documents, most recent business bank statements, a voided check, driver's license, and (if available) recent tax returns and a P&L. When an opportunity or a cash-flow gap appears, you can apply the same day instead of scrambling. See our business funding guide for how funders read each of these.

Realistic example: what a legit, fundable business file looks like

Here is an illustrative snapshot of a business that has worked through the checklist and is positioned to qualify for revenue-based funding. Figures are for example only.

Notice that the credit score is modest. On a revenue-based or MCA-style product sourced through a marketplace, approval is driven by bank deposits and revenue over credit — a 560 FICO with strong, consistent deposits is a very different (and often approvable) profile than the score alone suggests.

Decision framework: when "get legit fast for funding" is the right play

Working through 15 steps takes time, but if a cash-flow need is driving you, the practical question is which steps to prioritize and whether revenue-based funding fits. Here is an operator's read.

Works best when:

• You already have real, provable revenue flowing through a business bank account (or can start routing it there today).
• You need working capital in a short window — inventory, payroll, a time-sensitive opportunity — and a bank timeline is too slow.
• Your credit is imperfect (FICO in the 500s) but your deposits are consistent.
• You can meet a minimum funding amount around $10,000 and want a decision in roughly 24-48 hours.

Avoid / wait when:

• Your revenue still runs through personal accounts — fix step 4 first; without business statements there is little for a funder to underwrite.
• Your entity has lapsed out of good standing or you lack an EIN — clear the compliance gaps before applying.
• Your margins are thin and the payments would strain daily cash flow — protect the operation first.
• You are pre-revenue — revenue-based products underwrite on deposits, so this is the wrong tool at this stage.

If you fall in the first group, prioritize steps 2, 3, 4, and 12, assemble the funding-ready file from step 15, and you can move quickly. A revenue-based marketplace matches your bank-statement profile to funders rather than gating on credit alone. No legitimate funder can promise approval — anyone using the word "guaranteed" is a red flag — but a clean revenue picture is what actually moves an application forward. Our funding guide covers how to compare offers once they come in.

The mistakes that quietly make a business un-legit

These are the recurring problems underwriters and CPAs see, all avoidable if you follow the checklist in order.

• Commingling funds. Running business income through a personal account undermines liability protection, muddies your books, and leaves you with no clean statements to show a funder.
• Letting the entity lapse. Missing an annual report or franchise fee can drop you to "not in good standing" — a common decline reason in underwriting.
• Ignoring sales tax. Collecting and not remitting, or not collecting when you should, creates a liability that grows silently.
• Paying for free things. The EIN is free from the IRS; be wary of services charging for it.
• No paper trail. Cash-heavy operations with no deposit history are hard to underwrite regardless of how well the business is actually doing. Deposit revenue into the business account so it is provable.