How to start a service business, from idea to first paid jobs

Starting a service company is mostly a sequence problem. People stall because they buy a truck before they have a price list, or print business cards before they own the domain on them. This guide lays out the order we would follow if we were starting again tomorrow, from the first decision to the first paid invoice. It is general information for owners in any US state. Laws and fees differ by state and city, so treat the legal and tax parts as a map and confirm the details with your state, an accountant or an attorney.

What is the right order to start a service business?

Here is the whole sequence on one screen. Each step is covered below.

1. Choose one service you can sell this month and describe it in a sentence.
2. Pick a structure: sole proprietor or LLC (or something else on an accountant's advice).
3. Register with your state if you form an LLC, and file a DBA if you use a trade name.
4. Get an EIN from the IRS, free and online.
5. Open a business bank account and run every dollar through it.
6. Check licenses and permits at the state, county and city level.
7. Buy insurance before the first job, not after the first claim.
8. Set prices from your costs, then compare against the market.
9. Buy equipment for the work you have booked, plus a little headroom.
10. Build the back end: domain, email, phone number, website, Google Business Profile, CRM and online payments.
11. Get the first jobs from people who can see you, then ask every happy customer for a review.

Steps 2 through 7 are paperwork, and you can work on several at once while you wait on state processing. Step 10 is where most new companies cut corners, and it is the part that decides whether the phone rings next spring.

Pick one service you can sell this month

A new company that offers "cleaning, painting, handyman, lawn care and junk hauling" reads like a person between jobs. A company that offers "house washing and driveway cleaning in three towns" reads like a specialist. Specialists are easier to hire, easier to price and easier to find in search.

Good first services share a few traits. You can do the work well today, with skills you already have. The equipment fits your budget and your vehicle. Customers search for it by name. And ideally it repeats: weekly, monthly or every season, so each customer you win is worth more than one invoice. Recurring routes (lawn care, pet waste, cleaning, pool service) build a base faster than one-off work, while one-off work (painting, junk removal, pressure washing) often pays more per ticket. Many owners start with one and add the other later.

Write the sentence before anything else: what you do, for whom, and where. "Weekly yard cleanup for homeowners in the north suburbs." That sentence becomes your website headline, your Business Profile description and your answer when a neighbor asks what you do. Our start a company hub has trade-by-trade guides if you are still choosing.

How do you set up the business legally?

Structure. Most owner-operators choose between a sole proprietorship and a limited liability company. A sole proprietor is simply you doing business; the SBA notes that a sole proprietor can be held personally liable for the business's debts and obligations. An LLC is a separate entity registered with your state, and the SBA describes its shield for personal assets as working "in most instances." For federal income tax, the IRS treats a single-member LLC as a "disregarded entity" by default, so the profit still lands on your personal return. Our LLC vs sole proprietor guide walks through the tradeoffs. An accountant can tell you whether an S corporation election makes sense once profit grows.

State registration and names. An LLC is formed by filing with your secretary of state (or the equivalent office). If you operate under a name other than your legal name or your LLC's exact name, the SBA says you might need to register that DBA, also called a trade name or assumed name, with the state, county or city. Search your state's business database and the domain you want before you fall in love with a name.

EIN. The IRS issues Employer Identification Numbers for free, online, usually in one sitting. The IRS says to form your LLC with the state first, or the EIN application may be delayed. It also cautions applicants against outside websites that charge a fee for something the IRS gives away. Our EIN guide has the step-by-step.

Bank account. Open a business checking account as soon as you have the EIN and formation papers. The SBA points out that keeping business money separate from personal money supports the liability protection you formed the LLC for. It also makes taxes far less painful.

Licenses and permits. The SBA's guidance is that the licenses you need "will depend on your business activities and business location," and that states regulate a broader range of work than the federal government. Some trades need a state contractor license; cities and counties may require a general business license; some work (pesticides, lead paint, hauling) has its own federal or state rules. Check your state licensing board, county and city before your first job. We cover the trade-specific rules in each trade guide.

A note on BOI reports. In March 2025, FinCEN exempted companies created in the United States from beneficial ownership reporting, and it made that exemption permanent in a final rule that took effect in August 2026. FinCEN also warns about BOI-related scams and says there is no fee to file BOI directly with it. If a letter or email demands a fee to file a "BOI report" for your new LLC, check FinCEN's own site before paying anyone.

Money: separate it, track it, set tax aside

Self-employment changes how you pay tax. Per the IRS, the self-employment tax rate is 15.3%: 12.4% for Social Security, which applies only up to a yearly earnings cap, and 2.9% for Medicare, which has no cap. You usually owe it once net earnings from self-employment reach $400, and you can deduct half of it when figuring adjusted gross income. That is on top of income tax. Because no employer is withholding, the IRS says sole proprietors and other individuals generally must pay estimated tax during the year, using Form 1040-ES, if they expect to owe $1,000 or more when they file, and it can charge a penalty if you underpay, even when you end up due a refund. This is general information, not tax advice; an accountant can apply it to your numbers.

The practical habits:

• Every customer payment goes into the business account. Every business expense comes out of it.
• Move a fixed slice of each deposit into a separate tax savings account the day it arrives. Ask your accountant what slice fits your situation.
• Keep receipts digitally the day you buy something. A photo in the right folder beats a shoebox in April.
• Pick bookkeeping software or a bookkeeper in month one, not at tax time.

Sales tax on services is a state-by-state question. Some states tax certain services, others do not. Check your state revenue department before you send the first invoice, because adding it later means awkward calls to customers.

Insurance before the first job

General liability insurance is the baseline for almost every service company. The NAIC describes commercial general liability as covering bodily injury, damage to others' property, personal injury including slander and libel, and false or misleading advertising. One cracked window, one slip on a wet driveway or one stained carpet can turn into a claim. Property managers and commercial clients will often ask for a certificate of insurance before you start, and some homeowners will too.

If you drive to jobs, read your auto policy. The NAIC warns that if you rely on personal auto insurance for a vehicle used in business, "business-related liability may be excluded." Talk to your agent about commercial auto. Once you hire, workers' compensation comes into play. It is governed by state law; per the NAIC, nearly every state makes employers buy a policy. Texas is one exception: the Texas Department of Insurance says private employers there can choose to carry it, but it is not required in most cases. Our insurance guide covers each policy and what a certificate of insurance is.

Set prices from your costs, then check the market

New owners usually price too low, because they count their own labor as free and forget overhead. Your price has to cover four things: direct costs for the job (materials, fuel, dump fees), labor at a real hourly wage including your own, overhead spread across every job (insurance, phone, software, vehicle payment, website), and profit. Profit is what pays for the next machine and the slow month.

Once you know your cost floor, look at what established local companies charge. If the market is well above your floor, price near the market and use the margin. If the market is below your floor, either your costs are off or the service is not worth doing in that area. Set a minimum charge so a ten-minute job does not lose money once drive time is counted. Our pricing guide works through a full example in a table.

Buy equipment for the first ten jobs

The fastest way to drain a new company is buying the setup you will need in year three. Rent or borrow for the occasional job. Buy the tools you will use every single day, and buy them good enough that they do not fail on a customer's driveway. Upgrade when the schedule proves you need to, which usually means when you are turning work away or losing hours to slow equipment.

Keep a simple equipment list with purchase date, cost and serial number. Your insurer, your accountant (for depreciation) and the police (if anything is stolen from the trailer) will all ask for it.

Build the back end that gets you hired

This is the part we do for a living, and the part most new companies get wrong because each piece looks optional on day one. Before a customer hires a company they have never met, they check it. They search the name, look at the website, read reviews, and notice whether the quote came from a Gmail address. Each piece below is small. Together they decide whether a stranger trusts you with their house.

A few specifics worth getting right. Register the domain in the company's name, with your own login. Set up business email on that domain before you send a single quote. Get a dedicated business phone number and put it on everything; it is the number customers will save for years. Google's guidelines say a service-area business should hide its business address from customers, that P.O. boxes or mailboxes at remote locations are not acceptable, and that a virtual office is not eligible for a Business Profile. Off-the-shelf field software is a reasonable start. As listed on their pricing pages in October 2026, Jobber's single-user plans ran from $29 to $149 a month and Housecall Pro's plans from $59 a month (one user) to $299 a month (eight users), both on annual billing. Our own service companies kept bending around those tools, so we wrote a custom CRM for them, and that is what we now build for clients.

How do you get the first paid jobs?

The first ten customers usually come from people who can see you working. Tell everyone you know, in person, with a specific offer. Post in local neighborhood groups once, with a photo of real work and a way to book. Knock on the doors next to every job you finish; the neighbors just watched you work. Talk to property managers, realtors and other trades who see the problem you fix before the homeowner does.

Every one of those customers goes into your CRM, and every happy one gets a review request the day the job ends. Reviews on your own Google Business Profile keep working after the job is done, and they belong to your business.

Lead marketplaces are the other option, and some owners use them early to fill a calendar. Know what you are buying. Angi's annual report for 2025, filed with the SEC, states that match fees are charged to pros whether or not the pro ends up providing the service. Thumbtack's published policy caps a shopper at five pros only for the first four hours, then lifts the cap. Google Local Services Ads charge per lead, and Google decides which leads get credited back. These can produce jobs. They also produce a customer who found you through someone else's platform, and the leads stop when the spending stops. If you use them, treat them as a bridge while your own website, profile and reviews take hold. For the alternatives, read how to get leads without Angi.

What to do after the first ten jobs

Once a few jobs are done, the work shifts from starting to repeating. Look at where each customer came from, which jobs paid best per hour, and which ones you never want again. Raise prices on the work that books itself. Drop or reprice the work that drags.

Then put the boring systems in place while the company is small enough to change easily:

• A standard quote template with clear scope, price and what is not included.
• A follow-up on every quote that has not been answered in a few days.
• An automatic review request after each finished job.
• A reminder to past customers before their season comes around again.
• A missed-call text back, so the call you could not take on a ladder becomes a conversation instead of a lost job.

None of this is glamorous. All of it compounds. A company with a working website, a steady phone number, a few dozen reviews and a clean customer list starts every season ahead of the one that relies on whoever calls.

Where Dillard's Digital fits

You do the jobs. We build the back end that gets you hired: the domain and email, the phone number and AI receptionist, the website and Google presence, and the CRM that runs quotes, jobs and payments. We run our own service companies on the same stack, so we build it the way an owner actually uses it. If you are starting from zero or cleaning up a setup that grew by accident, our free system quote shows you what to fix first.

Frequently asked questions