How to Start a Financial Company

Written by Dave Lavinsky

how to start a finance company

Finance is an integral part of the economy. The companies and people that make up this sector perform a variety of functions, from investing and saving to lending and borrowing. Given their far reaching effects on society, there is a high demand for starting a finance company.

On This Page:


Starting Your Own Financial Company

One of the most important factors in starting a finance business is to know how your company will stand out from the competition. This means having unique products and/or services, an innovative business model, and offering outstanding customer service. Being able to offer something that your competitors cannot is essential for long term success. If you meet this requirement, there are various ways to start a finance business.

Starting a finance company is different from starting an investment bank, which typically serves as the middleman between companies and individual investors. A financial institution can offer products or services that are related to financing or credit, but are also unique enough to make them stand out. These include equipment leasing, private mortgages, factoring, and offering merchant services.

Speaking to professionals in your area who are already in finance is very important before starting your own finance company. For example, if you are considering offering leasing services, it would be helpful to speak with businesses who are already using equipment leasing or factoring because they will have insights into the challenges other finance companies face.

    Finish Your Business Plan Today!

              If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your plan and financial model in hours.


15 Steps To Start a Financial Company:

Starting a financial company can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful financial company.

1. Choose the Name for Your Financial Company

The first step to starting a financial company is to choose your business’ name.

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your financial company:

  1. Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available.
  2. Keep it simple. The best names are usually ones that are easy to remember, pronounce, and spell.
  3. Think about marketing. Come up with a name that reflects the desired brand and/or focus of your financial company.


2. Determine the Type of Financial Company You Will Launch

The type of financial company you decide to launch should align with your expertise, interests, and market demand.

Here are some common types of financial companies to consider:

  1. Investment Advisory Firm: Offer investment advice and portfolio management services to individual or institutional clients, helping them achieve their financial goals.
  2. Insurance Agency: Sell and provide insurance products, including life, health, auto, and property insurance, to individuals and businesses.
  3. Accounting and Tax Consulting Firm: Provide accounting, bookkeeping, and tax preparation services for individuals and small businesses.
  4. Credit Union: Establish a member-owned financial institution that offers banking services, loans, and savings accounts with a focus on community involvement.
  5. Mortgage Brokerage: Assist clients in securing mortgage loans and refinancing options from various lenders.
  6. Financial Planning Firm: Help clients create comprehensive financial plans, covering areas such as retirement planning, investment strategies, and estate planning.


3. Develop Your Financial Company Plan

One of the most important steps in starting a financial company is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

  1. Executive Summary: This section should summarize your entire business plan so readers can quickly understand the key details of your financial company.
  2. Company Overview: This section tells the reader about the history of your financial company and what type of financial company you operate. For example, are you an investment advisory firm, insurance agency, or accounting or tax consulting financial company.
  3. Industry Analysis: Here you will document key information about the financial industry. Conduct market research and document how big the industry is and what trends are affecting it.
  4. Customer Analysis: In this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing services like the ones you will offer?
  5. Competitive Analysis: Here you will document the key direct and indirect competitors you will face and how you will build a competitive advantage.
  6. Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
    • Product: Determine and document what products/services you will offer
    • Prices: Document the prices of your products/services
    • Place: Where will your business be located and how will that location help you increase sales?
    • Promotions: What promotional methods will you use to attract customers to your financial company? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization, and/or social media marketing.
  7. Operations Plan: Here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
  8. Management Team: This section details the background of your company’s management team.
  9. Financial Plan – finally, the financial plan answers questions including the following:
    • What startup costs will you incur?
    • How will your financial company make money?
    • What are your projected sales and expenses for the next five years?
    • Do you need to raise funding to launch your business?


Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your plan and financial model in hours.

4. Choose the Legal Structure for Your Financial Company

Next you need to choose a legal structure for your financial company and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole Proprietorship

A sole proprietorship is a business entity in which the owner of the financial company and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a financial company together. The partners share in the profits and losses of the business.

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a financial company include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a financial company is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your financial company, your state will send you your official “Articles of Incorporation.” You will need this, among other documentation, when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

Incorporate Your Business at the Guaranteed Lowest Price

We are proud to have partnered with Business Rocket to help you incorporate your business at the lowest price, guaranteed.

Not only does BusinessRocket have a 4.9 out of 5 rating on TrustPilot (with over 1,000 reviews) because of their amazing quality…but they also guarantee the most affordable incorporation packages and the fastest processing time in the industry.

Incorporate with BusinessRocket at the guaranteed lowest price now.

5. Secure Startup Funding for Your Financial Company (If Needed)

In developing your financial company plan, you might have determined that you need to raise funding to launch your business.

If so, the main sources of funding for a financial company to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a financial company that they believe has high potential for growth.

6. Secure a Location for Your Business

Having the right space can be important for your financial company, particularly if you’d like to meet clients there.

To find the right space, consider:

  • Driving around to find the right areas while looking for “for lease” signs
  • Contacting a commercial real estate agent
  • Doing commercial real estate searches online
  • Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space


7. Register Your Financial Company with the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

8. Open a Business Bank Account

It is important to establish a bank account in your financial company’ name. This process is fairly simple and involves the following steps:

  1. Identify and contact the bank you want to use
  2. Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
  3. Complete the bank’s application form and provide all relevant information
  4. Meet with a banker to discuss your business needs and establish a relationship with them


If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your business plan and financial model in hours.

9. Get a Business Credit Card

You should get a business credit card for your financial company to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.

10. Get the Required Business Licenses and Permits

Starting a financial company involves navigating a complex regulatory landscape to ensure compliance with local, state, and federal laws. The specific licenses and permits required can vary depending on the type of financial services you plan to offer and your location.

Here are some common licenses and permits you may need to start a financial company:

  • Business License: Most businesses, including financial companies, require a general business license from your local city or county government.
  • State Licensing: Many financial services, such as lending, insurance, and investment advisory services, are regulated at the state level. You may need to obtain specific licenses or registrations from your state’s financial regulatory authority.
  • Federal Licensing: Some financial services providers, particularly those engaged in banking, lending, and securities, may require federal licenses or registrations from agencies like the Federal Reserve, the Office of the Comptroller of the Currency (OCC), or the Securities and Exchange Commission (SEC).
  • Money Transmitter License: If you plan to offer money transmission or remittance services, you’ll likely need a money transmitter license, which is regulated at both the state and federal levels.
  • Insurance License: If your financial company offers insurance products, insurance agents and agencies typically need licenses from the state insurance department.

Depending on the type of financial company you launch, you will have to obtain the necessary state, county and/or city licenses.

11. Get Business Insurance for Your Financial Company

Other business insurance policies that you should consider for your financial company include:

  • General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
  • Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
  • Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
  • Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
  • Professional liability insurance: This protects your business against claims of professional negligence.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.

12. Buy or Lease the Right Financial Company Equipment

Running a financial company typically requires a range of equipment and technology to facilitate various aspects of your business operations.

Here is a list of essential equipment and tools you may need:

  • Computers and Laptops: High-performance computers and laptops are essential for financial professionals to analyze data, run financial models, and perform research.
  • Servers: Depending on the scale of your operations, you may need dedicated servers for data storage, security, and client management.
  • Printers and Scanners: Printers and scanners are necessary for producing physical documents, such as contracts, reports, and client forms.
  • Telecommunication Systems: Reliable phone systems, including landlines and VoIP solutions, are crucial for client communication and internal collaboration.
  • Data Security Hardware: Invest in data security hardware like firewalls, intrusion detection systems, and encryption tools to protect sensitive financial data.
  • Backup and Recovery Systems: Implement backup and recovery systems to ensure data resilience in case of hardware failures or data breaches.

The specific equipment and technology requirements for your financial company may vary based on the nature of your services and the scale of your operations.

13. Develop Your Financial Company Marketing Materials

Marketing materials will be required to attract and retain customers to your financial company.

The key marketing materials you will need are as follows:

  1. Logo: Spend some time developing a good logo for your financial company. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
  2. Website: Likewise, a professional financial company website provides potential customers with information about the services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
  3. Social Media Accounts: Establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your financial company.


14. Purchase and Setup the Software Needed to Run Your Financial Company

Running a financial company requires a suite of software applications to manage various aspects of your business efficiently and effectively.

Here are essential software types you may need to operate a financial company:

  • Accounting Software: Accounting software, such as QuickBooks or Xero, helps manage financial transactions, track expenses, and generate financial statements.
  • Financial Analysis and Modeling Tools: Tools like Microsoft Excel or specialized financial modeling software are essential for performing financial analysis, modeling, and forecasting.
  • Portfolio Management Software: Portfolio management software allows you to monitor and manage client investments, track performance, and rebalance portfolios.
  • Trading Platforms: If your company engages in securities trading, you’ll need access to trading platforms provided by brokers or financial institutions.
  • Customer Relationship Management (CRM) Software: CRM software helps manage client relationships, track communications, and automate client outreach.

Research the software that best suits your needs, purchase it, and set it up.

15. Open for Business

You are now ready to open your financial company. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.

Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your plan and financial model in hours.

How Much Does It Cost To Start a Finance Company?

While the costs of starting a finance company will vary based on size, services and legal structure, there are some common start-up expenses to consider.

Tangible costs include things like equipment leases for your office space or renovations to make it look more professional. An in depth business plan with a marketing strategy is also necessary when you start a new company, which will require expenses for professional services.

Intangible costs include employee salaries, training and marketing your business. You also need to consider fees associated with filing paperwork with the government or paying licensing fees.

The total amount you spend will depend on how much of the work you are able to do yourself. For example, if you are willing to be an independent sales person, you can lower the costs associated with hiring employees.

Regardless of what type of finance company you plan to start, it’s important to find financing that will fit your company budget. You should consider how much money you have saved or can borrow from family and friends before looking into other options like getting a business loan.

Additional Resources

Bank Mavericks


How to Finish Your Ultimate Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your financial company business plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Click here to finish your financial company business plan today.


How to Start a Finance Company FAQs

The financial services industry includes companies that offer a number of different types of services.

For example, banks are lending institutions who give out money for mortgages, car loans and personal loans. Investment banks help companies or individuals find investors for starting new businesses or funding other projects. Wealth management companies and financial planners help people invest their savings and create financial plans to meet long-term goals. Insurance companies offer policies for protecting people businesses and their property, whether it's health care coverage, business insurance or homeowner's insurance.

The cost of starting a business in the finance industry will vary depending on how much you are willing to invest. Costs can include equipment leases, renovations to your office space, legal fees and marketing expenses.

Finance companies can operate based on one of three business models.

The fee-for-service model describes companies that charge customers for specific services. This type of business requires the most up front costs because it requires equipment and employees, but can also be very profitable.

The commission model is based on earning a percentage of every sale or transaction your company completes for its clients. This model typically does not require much equipment or employees, so it can be a good option for new businesses.

The fee-based model is similar to the commission model because you earn a percentage of every transaction. However, this type of business also charges customers fees for its services as well as larger account balances. This means you will need less up front costs than the other models, but you will need to have a larger pool of customers.

The finance company business model you choose will depend on your own interests and expertise, as well as how much money you are willing to invest.


Other Helpful Business Plan Articles & Templates