Setting up your business is the first step to getting your record label off the ground. Come up with a catchy name for your record label and have a logo designed. Once you've done this, trademark your company name and logo. You can do this by visiting the United States Patent and Trademark website (see "Resources"). Set up a record label website and determine where you will have a home office where you can meet with the musicians you want to sign. In theory, you could run a label strictly with a website, but unless you're setting up a label strictly to promote your music, have at least a brick and mortar office. You'll also either need to have a recording studio that belongs to your company or be prepared to buy studio time. If you're limited financially, you may need to rent studio time until you can afford to build your own.
Hire a lawyer that specializes in the entertainment industry. There will be plenty of contracts signed and money changing hands. An entertainment lawyer can draw up contracts for you. This will ensure everything is legal and that your company is protected. Besides a lawyer, have an account on board, or several, depending upon the size of your company and the money you have available.
Look for bands and musicians you believe you can market. Visit nightclubs or festivals that feature live bands and scout out possibilities. Once you've found a prospect, approach them with an offer and sign them. There may be several meetings to iron out the details. It won't be necessary to involve your lawyer until you've got the band on board and both parties agree to the terms. This is when you have the contract drawn up so the band can have its own lawyers look at it. Once the contract is signed and you have your first act, it's time to begin promoting. The money you make from this artist can go back into the business so you can add artists.