The Best States to Start a Business in 2020 – A Complete Rundown

‘All glory comes from daring to begin.’ While its origin remains undetermined, this quote carries a strong message, especially for future business owners. Starting your own company takes determination, hard work, and thorough planning. Even if luck is on your side, you can easily make the wrong decision. Where you base your company is undoubtedly one of the things you mustn’t overlook. Below, we’ll go over the best states to start a business in the United States. So, scroll down and discover what makes Utah a top choice and Hawaii a terrible option.

 

How We Identified the Best States to Start a Business 

Listing the states from best to worst requires lots of research. Multiple factors affect each destination in different ways. Starting a business needs office space, employees, and capital. Moreover, each state has its tax rates, some of which affect fresh business owners.

To get the whole picture, we analyzed each state against specific criteria. Then, we considered all the results as a whole to get an impartial list of the best states for business. If you wonder what those factors are, read on.

  • Economy – Here, we focused on the GDP by state and its annual percent change. The gross domestic product of each state reveals how healthy the state’s economy is. A positive percent change in the GDP, therefore, shows growth and a favorable climate for starting a business.
  • Taxes – Taxes are another essential aspect of running a company. Some states have local charges for businesses, and others don’t. So, we considered the business taxes per employee you must pay, as well as the total effective business tax rate (TEBTR). The best states to open a business have low taxes that boost growth potential rather than being a burden to your budget.
  • Capital – Access to capital is vital for startups. That’s why we analyzed the value of venture capital investment in every US state. Those with the most significant investment size got better rankings than the rest.
  • Workforce – Your employees make your business. Without a high-quality workforce, it’s impossible to successfully run a company, unless it’s a one-person show. College completion rates, for example, reveal access to educated workers. Population change is another thing we consider as the best states for startups must have a growing number of residents. The average weekly wage alongside the average commute time is also an essential factor. You don’t want to spend all your capital on paychecks in states with soaring average wages. The average commute time affects both you and your employees, so we included that factor too.
  • Business climate – The startup early survival rate, rate of new employer business actualization, and rate of new employer business determine the overall business climate. These criteria help us establish the best states for entrepreneurs who want to start their own company. The survival rate is especially important here. If over 90% of startups in a state survive, it’s likely that you also stand a chance. A high survival rate signals that the state has favorable conditions, meaning companies there are more likely to expand than close down.

 

The Best States to Start a Business 

Now that you know all the factors that make a state a right or wrong choice let’s see how each state ranks. Below, we will list and analyze the top states to own a business, from best to worst.

 

1. Utah

Utah is a true leader in various aspects and the best destination for starting a business in the US. Utah also tops the list of the best places to invest in real estate in the country. The state has low business taxes per employee and among the lowest TEBTR. Utah saw positive changes in both its GDP and population. Its adult residents boast high college completion rates, and the state has access to significant venture capital.

All these advantages established Utah as the best state to own a business. Top industries in the state are aerospace, health technology, IT, sporting goods, travel and tourism, and natural products.

  • Business taxes per employee – 2 ($42,000)
  • TEBTR – 3 (3.7%)
  • Value of venture capital – 11 ($1.39 billion)
  • GDP per capita – 30 ($51,407)
  • GDP change – 2 (3.8%)
  • Population change – 4 (1.66%)
  • College completion rate – 14 (33.3%)
  • Average weekly wage – 18 ($1,022)
  • Average commute time – 10 (22 minutes)
  • Startup early survival rate – 40 (77.88%)
  • New employer business actualization – 31 (0.17)
  • Rate of new employer businesses – 4 (10.68%)

 

2. Washington

Washington is the 2nd best state to open a business in the US. The main strengths of this destination are the positive GDP and population changes. Meaning, the economy is growing, just like the number of residents living there. Washington businesses have easy access to venture capital. Plus, the state notes the 5th highest rate of new employer businesses.

Are you interested in joining the leading industries in the Evergreen State? Then, focus on energy, media, construction, hospitality, finance, and real estate.

  • Business taxes per employee – 27 ($7,800)
  • TEBTR – 15 (5%)
  • Value of venture capital – 11 ($3.88 million)
  • GDP per capita – 8 ($69,761)
  • GDP change – 3 (3.8%)
  • Population change – 4 (1.21%)
  • College completion rate – 12 (35.3%)
  • Average weekly wage – 42 ($1,370)
  • Average commute time – 37 (28.4 minutes)
  • Startup early survival rate – 21 (79.74%)
  • New employer business actualization – 31 (0.16)
  • Rate of new employer businesses – 5 (17.4%)

 

3. Massachusetts

Massachusetts is one of the states with the best business incentives, thanks to its low TEBTR and massive venture capital. This state also has the 2nd highest GDP per capita and college completion rate. That’s why the initial survival rate of new businesses in Massachusetts is an impressive 84.05%.

Major industries in the state include finance, IT, tourism, engineering, and higher education. Massachusetts is also one of the best places to flip houses and make a profit in the US.

  • Business taxes per employee – 16 ($5,900)
  • TEBTR – 6 (4%)
  • Value of venture capital – 4 ($10.83 billion)
  • GDP per capita – 2 ($75,258)
  • GDP change – 15 (2.50%)
  • Population change – 31 (0.14%)
  • College completion rate – 2 (42.9%)
  • Average weekly wage – 46 ($1,511)
  • Average commute time – 42 (30.5 minutes)
  • Startup early survival rate – 2 (84.05%)
  • New employer business actualization – 11 (0.12)
  • Rate of new employer businesses – 8 (13.54%)

 

4. Oregon

Oregon scooped the 4th place on our list of best states for business. Its low taxes and high new employer business actualization rate are the state’s two main strengths. Oregon also has a steady rate of new employer businesses alongside positive changes in its GDP and population.

This is an excellent destination for those hoping to enter the high-tech market but also resource sectors like fishing and agriculture. Electronic markets and brokerages also have high success rates here.

  • Business taxes per employee – 6 ($4,800)
  • TEBTR – 6 (4%)
  • Value of venture capital – 17 ($952 million)
  • GDP per capita – 25 ($52,726)
  • GDP change – 12 (2.7%)
  • Population change – 13 (0.86%)
  • College completion rate – 15 (32.9%)
  • Average weekly wage – 29 ($1,100)
  • Average commute time – 16 (23.8 minutes)
  • Startup early survival rate – 43 (77.21%)
  • New employer business actualization – 3 (0.15)
  • Rate of new employer businesses – 6 (15.68%)

 

5. Minnesota

Minnesota rounds up the top 5 of the best states to open a business in America. Most of the factors have positive figures in the state. Minnesota ranks exceptionally well in tax-related categories and college completion rates. Its value of venture capital was $1.21 billion, so that’s another positive thing for future company owners here.

Water technology, solar tech, biofuels, mining, manufacturing, and agriculture are the major industries. These are, consequently, your smartest choice for a business venture.

  • Business taxes per employee – 11 ($5,400)
  • TEBTR – 10 (4.4%)
  • Value of venture capital – 14 ($1.21 billion)
  • GDP per capita – 16 ($60,066)
  • GDP change – 26 (1.40%)
  • Population change – 17 (0.60%)
  • College completion rate – 11 (35.4%)
  • Average weekly wage – 34 ($1,177)
  • Average commute time – 15 (23.8 minutes)
  • Startup early survival rate – 9 (80.44%)
  • New employer business actualization – 18 (0.1)
  • Rate of new employer businesses – 10 (12.325)

 

6. Colorado

Colorado is among the best states for small business owners with a reasonable tax burden and economy that grows. The state ranked 3rd in access to an educated workforce, plus noted a significant amount of venture capital. Colorado further has a growing population which is another positive.

Bioscience, food and agriculture, infrastructure, tourism, and energy are the state’s leading industries.

  • Business taxes per employee – 15 ($5,800)
  • TEBTR – 11 (4.5%)
  • Value of venture capital – 8 ($2,50 billion)
  • GDP per capita – 15 ($61,311)
  • GDP change – 5 (3.5%)
  • Population change – 8 (1.19%)
  • College completion rate – 3 (40.1%)
  • Average weekly wage – 39 ($1,227)
  • Average commute time – 28 (25.9 minutes)
  • Startup early survival rate – 31 (78.745)
  • New employer business actualization – 28 (0.17)
  • Rate of new employer businesses – 4 (11.07%)

 

7. Idaho

Food processing, chemicals, mining, tourism, science, and technology are significant sectors in Idaho. So, this is the best state to start an LLC in one of these industries. Idaho is mostly tax-friendly and noted the highest population change of 2.09% in 2019. The state also has a good job market that provides employers easy access to an affordable workforce.

  • Business taxes per employee – 4 ($4,600)
  • TEBTR – 11 (4.5%)
  • Value of venture capital – 37 ($86 million)
  • GDP per capita – 48 ($40,566)
  • GDP change – 11 (2.8%)
  • Population change – 1 (2.09%)
  • College completion rate – 34 (26.9%)
  • Average weekly wage – 5 ($918)
  • Average commute time – 8 (21 minutes)
  • Startup early survival rate – 29 (78.81%)
  • New employer business actualization – 8 (0.18)
  • Rate of new employer businesses – 3 (14.48%)

 

8. California

Being the home of the startup heaven Silicon Valley, California is arguably the best state to start a tech company. The state boasts good infrastructure, talented workforce, and growing markets. Moreover, California attracts the most in venture capital and has a high early survival rate of over 80%.

  • Business taxes per employee – 22 ($7,000)
  • TEBTR – 10 (4.4%)
  • Value of venture capital – 1 ($65.60 billion)
  • GDP per capita – 6 ($70,662)
  • GDP change – 13 (2.6%)
  • Population change – 32 (0.13%)
  • College completion rate – 14 (33.3%)
  • Average weekly wage – 44 ($1,457)
  • Average commute time – 41 (30.2 minutes)
  • Startup early survival rate – 6 (81.33%)
  • New employer business actualization – 4 (0.14)
  • Rate of new employer businesses – 7 (15.61%)

 

9. North Carolina

As a national leader in financial services, manufacturing, and agriculture, North Carolina offers strong potential for starting a business. Its low taxes per employee and TEBTR placed North Carolina among the best states to do business. North Carolina has the lowest corporate taxes by state, aside from those without corporate taxes at all. The population has been growing, and future employers have good access to educated workers too.

  • Business taxes per employee – 3 ($4,300)
  • TEBTR – 2 (3.6%)
  • Value of venture capital – 13 ($1.21 billion)
  • GDP per capita – 36 ($48,496)
  • GDP change – 17 (2.30%)
  • Population change – 10 (1.03%)
  • College completion rate – 23 (30.5%)
  • Average weekly wage – 20 ($1,036)
  • Average commute time – 21 (24.8 minutes)
  • Startup early survival rate – 24 (79.66%)
  • New employer business actualization – 25 (0.11)
  • Rate of new employer businesses – 9 (11.26%)

 

10. Montana

Montana is the US state with the highest level of financial literacy, according to the latest US financial literacy statistics. So, it’s not that surprising that the Big Sky State is one of the best states to own a business. This state has a reasonable business tax burden, a fair average weekly wage, and a low average commute time. That’s why it attracts educated individuals and offers access to a rich talent pool.

Montana is famous for its developed forestry, mining, energy production, and agriculture. The service sector is also established, employing about one-third of the workforce.

  • Business taxes per employee – 13 ($5,600)
  • TEBTR – 18 (5.5%)
  • Value of venture capital – 35 ($119 million)
  • GDP per capita – 43 ($44,145)
  • GDP change – 19 (2.1%)
  • Population change – 15 (0.76%)
  • College completion rate – 19 (31.2%)
  • Average weekly wage – 5 ($918)
  • Average commute time – 3 (18.6 minutes)
  • Startup early survival rate – 22 (79.7%)
  • New employer business actualization – 14 (0.19)
  • Rate of new employer businesses – 2 (13.01%)

 

11. Texas

Did you know that Texas is the second state with the most construction workers, right after California? That’s why the Lone Star State is one of the best states to start a construction business in the US. This economy is growing faster than any other, and that attracts new residents. Texas also has reasonable college completion rates and high venture capital.

Other significant industries in the state include banking, tourism, IT, oil and gas, transportation, and agriculture.

  • Business taxes per employee – 25 ($7,600)
  • TEBTR – 19 (5.6%)
  • Value of venture capital – 5 ($3.69 billion)
  • GDP per capita – 14 ($61,682)
  • GDP change – 1 (4.4%)
  • Population change – 5 (1.28%)
  • College completion rate – 25 (29.3%)
  • Average weekly wage – 35 ($1,187)
  • Average commute time – 32 (26.7 minutes)
  • Startup early survival rate – 19 (79.8%)
  • New employer business actualization – 21 (0.12)
  • Rate of new employer businesses – 8 (11.97%)

 

12. South Dakota

South Dakota is the state with the lowest average commute time. It’s also a destination with considerable new employer business actualization and new employer business rates. Those are the factors that earned South Dakota the 12th place on our list of the best states to run a business.

Agriculture, manufacturing, mining, tourism, and casino gaming are the major industries in the state.

  • Business taxes per employee – 17 ($6,100)
  • TEBTR – 16 (5.1%)
  • Value of venture capital – 48 ($9 million)
  • GDP per capita – 24 ($52,913)
  • GDP change – 33 (0.70%)
  • Population change – 16 (0.68%)
  • College completion rate – 29 (28.55)
  • Average weekly wage – 4 ($916)
  • Average commute time – 1 (17.3 minutes)
  • Startup early survival rate – 10 (80.23%)
  • New employer business actualization – 6 (0.15)
  • Rate of new employer businesses – 6 (14.66%)

 

13. Nebraska

Even with a low GDP change and venture capital, Nebraska ranks excellent as a business destination. This is arguably the best state for small business owners as it has reasonable taxes, educated workforce, and growing population. The average weekly wage in Nebraska isn’t too high either, which is excellent for startups without massive capital.

Nebraska is a top destination for financial services, agriculture, transportation, insurance, and education.

  • Business taxes per employee – 15 ($5,800)
  • TEBTR – 14 (4.8%)
  • Value of venture capital – 39 ($69 million)
  • GDP per capita – 17 ($59,386)
  • GDP change – 34 (0.60%)
  • Population change – 21 (0.46%)
  • College completion rate – 18 (31.3%)
  • Average weekly wage – 11 ($969)
  • Average commute time – 4 (18.8 minutes)
  • Startup early survival rate – 27 (78.94%)
  • New employer business actualization – 7 (0.12)
  • Rate of new employer businesses – 8 (14.64%)

 

14. Virginia

Agriculture has always been the strongest industry in Virginia, and no other sector comes even close. Manufacturing, mining, fishing, and services are other significant industries here. Still, the state has the best startup survival rate of 90.54%, making Virginia the 14th best state to register a business. Virginia also has a high college completion rate of 38.2%, and its economy is growing.

  • Business taxes per employee – 9 ($5,100)
  • TEBTR – 7 (4.1%)
  • Value of venture capital – 15 ($1.17 billion)
  • GDP per capita – 20 ($56,938)
  • GDP change – 21 (1.90%)
  • Population change – 23 (0.40%)
  • College completion rate – 7 (38.2%)
  • Average weekly wage – 37 ($1,204)
  • Average commute time – 38 (28.7 minutes)
  • Startup early survival rate – 1 (90.54%)
  • New employer business actualization – 33 (0.1)
  • Rate of new employer businesses – 10 (10.11%)

 

15. Iowa

If you’re looking for the best states to start a business, consider moving to Iowa. The state’s high startup survival rate of 81.5% promises success to new business owners. Iowa has a low business tax burden for companies and the right working conditions.

This state has various developed industries. Still, agriculture, information and communications technology, advanced manufacturing, services, and renewable energy remain the major ones.

  • Business taxes per employee – 11 ($5,400)
  • TEBTR – 11 (4.5%)
  • Value of venture capital – 44 ($41 million)
  • GDP per capita – 22 ($55,051)
  • GDP change – 31 (0.90%)
  • Population change – 28 (0.20%)
  • College completion rate – 30 (28.2%)
  • Average weekly wage – 12 ($984)
  • Average commute time – 6 (19.5 minutes)
  • Startup early survival rate – 5 (81.4%)
  • New employer business actualization – 12 (0.1)
  • Rate of new employer businesses – 10 (13.47%)

 

16. Indiana

Cybersecurity, energy, technology, life sciences, manufacturing, and aerospace are among the leading sectors in Indiana. With a low tax burden, Indiana is the best state to start a business for tax purposes. There’s more to this business market, however. Indiana ranks good in other categories too, including population change, average weekly wage, and startup survival rate.

  • Business taxes per employee – 2 ($4,200)
  • TEBTR – 3 (3.7%)
  • Value of venture capital – 25 ($380 million)
  • GDP per capita – 34 ($49,321)
  • GDP change – 32 (0.80%)
  • Population change – 18 (0.55%)
  • College completion rate – 36 (25.9%)
  • Average weekly wage – 11 ($969)
  • Average commute time – 17 (23.9 minutes)
  • Startup early survival rate – 15 (79.9%)
  • New employer business actualization – 32 (0.08)
  • Rate of new employer businesses – 12 (10.56%)

 

17. Rhode Island

Rhode Island has several developed industries. Tourism, manufacturing, healthcare, education, and financial services, however, lead the way. Warwick, Hopkinton, Coventry, and North Kingstown have emerged as the best cities to start a business in Rhode Island.

The state’s best rankings are in the new employer business actualization and rate of new employer businesses categories. Rhode Island also has reasonable business taxes and a positive GDP change.

  • Business taxes per employee – 14 ($5,700)
  • TEBTR – 14 (4.8%)
  • Value of venture capital – 40 ($61 million)
  • GDP per capita – 28 ($51,963)
  • GDP change – 12 (2.70%)
  • Population change – 34 (0.10%)
  • College completion rate – 14 (33.3%)
  • Average weekly wage – 28 ($1,099)
  • Average commute time – 23 (25 minutes)
  • Startup early survival rate – 17 (79.85%)
  • New employer business actualization – 8 (0.14)
  • Rate of new employer businesses – 7 (14.48%)

 

18. Oklahoma

Oklahoma is another destination that belongs among the best states to start a small business. With an average wage of $945, this state offers affordable labor for owners without a substantial starting investment. Oklahoma has a hopeful business survival rate of 80% and an economy that expands.

Established industries include biotechnology, energy, logistics, business services, hospitality, and entertainment. Oklahoma also has strong aviation, transportation, and healthcare sectors.

  • Business taxes per employee – 13 ($5,600)
  • TEBTR – 14 (4.8%)
  • Value of venture capital – 45 ($36 million)
  • GDP per capita – 31 ($50,876)
  • GDP change – 16 (2.4%)
  • Population change – 22 (0.42%)
  • College completion rate – 37 (25.2%)
  • Average weekly wage – 8 ($945)
  • Average commute time –11 (22.1 minutes)
  • Startup early survival rate – 12 (80%)
  • New employer business actualization – 22 (0.12)
  • Rate of new employer businesses – 8 (11.7%)

 

19. Kansas

Kansas is in the top 20 of the best states to start a business in the United States. A relatively tax-friendly destination, it boasts a reasonable rate of new employer business and new employer business actualization.

Leading sectors in Kansas are agriculture, wholesale, retail, transportation, construction, and manufacturing. Of course, the state has developed oil, gas, and mining industries too.

  • Business taxes per employee – 11 ($5,400)
  • TEBTR – 13 (4.7%)
  • Value of venture capital – 27 ($276 million)
  • GDP per capita – 23 ($53,528)
  • GDP change – 31 (0.90%)
  • Population change – 35 (0.07%)
  • College completion rate – 15 (32.9%)
  • Average weekly wage – 10 ($959)
  • Average commute time – 7 (19.7 minutes)
  • Startup early survival rate – 47 (76.33%)
  • New employer business actualization – 13 (0.11)
  • Rate of new employer businesses – 9 (13.23%)

 

20. Wisconsin

Monona, Waukesha, Hudson, and Ashwaubenon are among the best cities for business in Wisconsin. The state’s main strengths include low business taxes per employee and good working conditions. Plus, both the GDP and the population of Wisconsin are growing, albeit not too fast.

Besides being recognized as America’s Dairyland, Wisconsin is also known for its advanced manufacturing, IT, and tourism sectors.

  • Business taxes per employee – 4 ($11,500)
  • TEBTR – 8 (4.2%)
  • Value of venture capital – 29 ($248 million)
  • GDP per capita – 27 ($52,534)
  • GDP change – 26 (1.40%)
  • Population change – 27 (0.26%)
  • College completion rate – 24 (29.5%)
  • Average weekly wage – 18 ($1,022)
  • Average commute time – 10 (22 minutes)
  • Startup early survival rate – 33 (78.6%)
  • New employer business actualization – 24 (0.09)
  • Rate of new employer businesses – 11 (11.29%)

 

21. Alaska

Many people are surprised to find Alaska in the better half of the best states for business. This makes sense, however, as the state has many favorable circumstances. Its GDP per capita is significant, and Alaska is a growing economy. Moreover, it has the 3rd best new business survival rate of 81.78%. The only issue here is the decreasing population, which should worry business owners who plan to expand.

Tourism has been a growing sector, while oil and gas, construction, and healthcare remain the top industries.

  • Business taxes per employee – 30 ($9,700)
  • TEBTR – 22 (6.2%)
  • Value of venture capital – 46 ($25 million)
  • GDP per capita – 4 ($74,422)
  • GDP change – 14 (2.5%)
  • Population change – 46 (-0.49%)
  • College completion rate – 26 (29.2%)
  • Average weekly wage – 32 ($1,139)
  • Average commute time – 5 (19.1 minutes)
  • Startup early survival rate – 3 (81.78%)
  • New employer business actualization – 10 (0.17)
  • Rate of new employer businesses – 4 (13.56%)

 

22. North Dakota

The new employer business actualization alongside the rate of new employer business is the most promising aspect of starting a company in North Dakota. The short average commute time is another reason for North Dakota’s good ranking on our best states to start a business rundown. This state is an economy that grows and has the 5th highest GDP per capita in the US.

Agriculture, energy, tourism, and transport remain the most important industries.

  • Business taxes per employee – 32 ($11,500)
  • TEBTR – 28 (9%)
  • Value of venture capital – 47 ($21 million)
  • GDP per capita – 5 ($70,991)
  • GDP change – 17 (2.30%)
  • Population change – 19 (0.53%)
  • College completion rate – 24 (29.5%)
  • Average weekly wage – 26 ($1,085)
  • Average commute time – 2 (17.7 minutes)
  • Startup early survival rate – 35 (78.81%)
  • New employer business actualization – 5 (0.18)
  • Rate of new employer businesses – 5 (14.48%)

 

23. Missouri

Are you interested in starting a company in the aerospace, food processing, printing, electrical equipment, or chemicals sector? If so, Missouri is a place to consider. Let’s not overlook that this is also the best state to start a business for tax purposes. Missouri has the lowest business taxes per employee, as well as the lowest TEBTR. The rest of its rankings are better than the average, too.

  • Business taxes per employee – 1 ($3,700)
  • TEBTR – 1 (3.4%)
  • Value of venture capital – 24 ($440 million)
  • GDP per capita – 39 ($47,407)
  • GDP change – 19 (2.10%)
  • Population change – 27 (0.26%)
  • College completion rate – 28 (28.6%)
  • Average weekly wage – 17 ($1,010)
  • Average commute time – 18 (24 minutes)
  • Startup early survival rate – 49 (75.29%)
  • New employer business actualization – 15 (0.12)
  • Rate of new employer businesses – 8 (12.68%)

 

24. Ohio

Ohio is good because it offers variety. Aerospace, bioscience, healthcare, education, energy, agriculture, research, and insurance are some of the many developed sectors in the state. Ohio is, consequently, one of the best states for startups, regardless of their primary service.

  • Business taxes per employee – 4 ($4,600)
  • TEBTR – 5 (3.9%)
  • Value of venture capital – 16 ($960 million)
  • GDP per capita – 26 ($52,664)
  • GDP change – 23 (1.70%)
  • Population change – 33 (0.11%)
  • College completion rate – 31 (27.8%)
  • Average weekly wage – 21 ($1,037)
  • Average commute time – 14 (23.6 minutes)
  • Startup early survival rate – 23 (79.69%)
  • New employer business actualization – 37 (0.07)
  • Rate of new employer businesses – 13 (9.57%)

 

25. Pennsylvania

Pennsylvania ranked 25th in our search for the best state to start a business, thanks to its favorable corporate climate. This is the 5th most populous US state and a developed economy. Pennsylvania also has a healthy startup survival rate and a considerable GDP change.

The state’s most prominent industries are agriculture, manufacturing, mining, tourism, and service. 

  • Business taxes per employee – 15 ($5,800)
  • TEBTR – 13 (4.7%)
  • Value of venture capital – 7 ($2.65 billion)
  • GDP per capita – 21 ($56,868)
  • GDP change – 17 (2.30%)
  • Population change – 37 (0.01%)
  • College completion rate – 21 (30.8%)
  • Average weekly wage – 33 ($1,143)
  • Average commute time – 34 (27.2 minutes)
  • Startup early survival rate – 16 (79.9%)
  • New employer business actualization – 23 (0.09)
  • Rate of new employer businesses – 11 (11.63%)

 

26. Tennessee

Tennessee is another diverse economy, earning it the 26th position in the race for the best state to open a business. This destination is excellent tax-wise because it doesn’t burden companies too heavily. It also offers access to venture capital and has a population that grows.

Automotive manufacturing, energy, film production, healthcare, and manufacturing are major sectors in Tennessee.

  • Business taxes per employee – 7 ($4,900)
  • TEBTR – 9 (4.3%)
  • Value of venture capital – 18 ($928 million)
  • GDP per capita – 37 ($48,440)
  • GDP change – 18 (2.20%)
  • Population change – 14 (0.85%)
  • College completion rate – 35 (26.6%)
  • Average weekly wage – 23 ($1,047)
  • Average commute time – 26 (25.4 minutes)
  • Startup early survival rate – 26 (79.42%)
  • New employer business actualization – 24 (0.09)
  • Rate of new employer businesses – 11 (11.29%)

 

27. South Carolina

South Carolina is an expanding economy. Both its GDP and population are increasing, which is an excellent sign for any future business owner. The state has an affordable workforce and reasonable taxes. These, alongside its versatile industry, make South Carolina one of the best states to open a business in. 

  • Business taxes per employee – 8 ($5,00)
  • TEBTR – 14 (4.8%)
  • Value of venture capital – 33 ($132 million)
  • GDP per capita – 46 ($41,457)
  • GDP change – 8 (3.00%)
  • Population change – 6 (1.27%)
  • College completion rate – 32 (27.4%)
  • Average weekly wage – 6 ($931)
  • Average commute time – 24 (25.1 minutes)
  • Startup early survival rate – 34 (78.52%)
  • New employer business actualization – 29 (0.11)
  • Rate of new employer businesses – 9 (11.05%)

 

28. Arizona

Manufacturing, mining, and tourism are the top three industries in Arizona. Still, the destination is among the best states to start a small business. Beverage shops, cleaning services, daycare services, and event management businesses do exceptionally well. Arizona has reasonable taxes and ever-growing GDP as well as population. It’s a state of opportunities, especially for small business owners.

  • Business taxes per employee – 10 ($5,200)
  • TEBTR – 12 (4.6%)
  • Value of venture capital – 21 ($834 million)
  • GDP per capita – 42 ($44,161)
  • GDP change – 7 (3.1%)
  • Population change – 3 (1.69%)
  • College completion rate – 27 (28.9%)
  • Average weekly wage – 25 ($1,059)
  • Average commute time – 27 (25.7 minutes)
  • Startup early survival rate – 41 (77.85%)
  • New employer business actualization – 34 (0.1)
  • Rate of new employer businesses – 10 (10.03%)

 

29. Maine

Convenience stores, electronics repair shops, and consignment stores are all successful business ideas in Maine. Leading industries in the state are accommodation and food services, educational services, IT, and wholesale trade. Maine is, therefore, the best state to open a small business in one of these sectors.

  • Business taxes per employee – 21 ($6,900)
  • TEBTR – 25 (6.9%)
  • Value of venture capital – 42 ($46 million)
  • GDP per capita – 44 ($43,541)
  • GDP change – 21 (1.90%)
  • Population change – 24 (0.38%)
  • College completion rate – 20 (30.9%)
  • Average weekly wage – 9 ($955)
  • Average commute time – 19 (24.1 minutes)
  • Startup early survival rate – 27 (78.94%)
  • New employer business actualization – 2 (0.14)
  • Rate of new employer businesses – 7 (17.14%)

 

30. New Hampshire

Although it doesn’t rank as good as other states on this list, New Hampshire is a strong contender for the best state to start a tech company and make a name for yourself in the US. Electronics manufacturing, software, computer-related services, and telecommunications are all developed sectors in the state. New Hampshire also has a growing population and improving GDP. This makes it a promising destination for entrepreneurs.

  • Business taxes per employee – 15 ($5,800)
  • TEBTR – 14 (4.8%)
  • Value of venture capital – 32 ($135 million)
  • GDP per capita – 19 ($57,272)
  • GDP change – 12 (2.70%)
  • Population change – 20 (0.46%)
  • College completion rate – 9 (36.5%)
  • Average weekly wage – 36 ($1,192)
  • Average commute time – 35 (27.6 minutes)
  • Startup early survival rate – 44 (77.00%)
  • New employer business actualization – 19 (0.12)
  • Rate of new employer businesses – 8 (12.27%)

 

31. Vermont

Agriculture, forestry, tourism, manufacturing, and mining are the top industries in Vermont. The state has a great job market and a growing GDP. Its population, however, is slowly declining. Venture capital isn’t the state’s strongest suit, and neither are the business taxes. That’s why Vermont ended up on the 31st place in our rundown of the best states to start a business.

  • Business taxes per employee – 26 ($7.800)
  • TEBTR – 26 (7.6%)
  • Value of venture capital – 36 ($94 million)
  • GDP per capita – 35 ($48,855)
  • GDP change – 15 (2.50%)
  • Population change – 39 (-0.06%)
  • College completion rate – 8 (37.3%)
  • Average weekly wage – 14 ($987)
  • Average commute time – 14 (23.6 minutes)
  • Startup early survival rate – 36 (78.20%)
  • New employer business actualization – 9 (0.14)
  • Rate of new employer businesses – 7 (13.61%)

 

32. Florida

Tourism is the primary sector in Florida, but the state has other developed industries like agriculture, trade, life sciences, and financial services. Florida doesn’t have a high business survival rate, and its GDP per capita is low. Still, the state noted a good ranking in the categories of GDP change, population change, and venture capital. That’s why it scooped the 32nd position in this analysis of the best states for entrepreneurs.

  • Business taxes per employee – 16 ($5,900)
  • TEBTR – 17 (5.3%)
  • Value of venture capital – 6 ($2.91 billion)
  • GDP per capita – 41 ($44,267)
  • GDP change – 10 (2.80%)
  • Population change – 9 (1.10%)
  • College completion rate – 26 (29.2%)
  • Average weekly wage – 22 ($1,044)
  • Average commute time – 36 (28 minutes)
  • Startup early survival rate – 39 (77.94%)
  • New employer business actualization – 41 (0.16)
  • Rate of new employer businesses – 5 (8.68%)

 

33. Delaware

Delaware is the best state to start an online business. It shares this title with Wyoming and a few others. While agriculture, fishing, manufacturing, finance, and tourism remain significant industries, the state offers many opportunities to online entrepreneurs too. Delaware has low TEBTR and college-educated youth. These two make the first steps for any company owner easier.

  • Business taxes per employee – 23 ($7,300)
  • TEBTR – 10 (4.4%)
  • Value of venture capital – 23 ($464 million)
  • GDP per capita – 10 ($64,985)
  • GDP change – 32 (0.80%)
  • Population change – 12 (0.86%)
  • College completion rate – 17 (31.4%)
  • Average weekly wage – 31 ($1,136)
  • Average commute time – 30 (26.4 minutes)
  • Startup early survival rate – 30 (78.77%)
  • New employer business actualization – 48 (0.18)
  • Rate of new employer businesses – 3 (6.6%)

 

34. Illinois

Illinois is one of the best states to start a business when taxes are considered. The state’s tax burden is reasonable, and the state offers access to venture capital. The rest of the rankings aren’t that good, with the declining population being the most serious drawback.

Business service, manufacturing, education, biotechnology, energy, and agriculture are the state’s leading industries.

  • Business taxes per employee – 18 ($6,300)
  • TEBTR – 12 (4.6%)
  • Value of venture capital – 9 ($2.21 billion)
  • GDP per capita – 13 ($61,713)
  • GDP change – 24 (1.60%)
  • Population change – 45 (-0.40%)
  • College completion rate – 13 (34.1%)
  • Average weekly wage – 38 ($1,221)
  • Average commute time – 40 (29.4 minutes)
  • Startup early survival rate – 28 (78.9%)
  • New employer business actualization – 20 (0.11)
  • Rate of new employer businesses – 9 (12.15%)

 

35. New Mexico

Energy, aerospace, tourism, food, distribution, logistics, digital media, and film production are some of the many developed sectors in New Mexico. Despite offering a versatile market of opportunities, New Mexico is hardly the best state for small business ventures given its low college completion and startup survival rates. New Mexico also has among the worst GDP per capita of only $46,304.

  • Business taxes per employee – 24 ($7,500)
  • TEBTR – 25 (6.9%)
  • Value of venture capital – 26 ($302 million)
  • GDP per capita – 40 ($46,304)
  • GDP change – 4 (3.7%)
  • Population change – 28 (0.20%)
  • College completion rate – 33 (27.1%)
  • Average weekly wage – 7 ($942)
  • Average commute time – 12 (23 minutes)
  • Startup early survival rate – 32 (78.63%)
  • New employer business actualization – 27 (0.09)
  • Rate of new employer businesses – 11 (11.13%)

 

36. New York

New York is a vast US economy and has the 3rd highest GDP by state. It is also one of the states with the best job market. Still, New York ranked 36th on our list of the best states to open a business. The taxes here are high, the population is decreasing, and the average wage is soaring. New York, however, delivers access to venture capital and an educated workforce.

  • Business taxes per employee – 31 ($9,900)
  • TEBTR – 20 (5.7%)
  • Value of venture capital – 2 ($20.90 billion)
  • GDP per capita – 3 ($75,131)
  • GDP change – 22 (1.80%)
  • Population change – 44 (-0.39%)
  • College completion rate – 10 (35.9%)
  • Average weekly wage – 45 ($1,499)
  • Average commute time – 45 (34 minutes)
  • Startup early survival rate – 25 (79.5%)
  • New employer business actualization – 17 (0.15)
  • Rate of new employer businesses – 6 (12.47%)

 

37. Georgia

Are you looking for the best states for business in terms of taxes? If so, Georgia is an excellent option with its low tax burden for companies and corporations. Other than that, the state doesn’t offer much. It has a low startup survival rate and low new employer business actualization. Georgia is, however, one of the top 10 states in terms of venture capital.

  • Business taxes per employee – 4 ($4,600)
  • TEBTR – 3 (3.7%)
  • Value of venture capital – 10 ($1.67 billion)
  • GDP per capita – 32 ($50,816)
  • GDP change – 20 (2.00%)
  • Population change – 11 (1.01%)
  • College completion rate – 22 (30.7%)
  • Average weekly wage – 27 ($1,090)
  • Average commute time – 39 (29 minutes)
  • Startup early survival rate – 48 (75.58%)
  • New employer business actualization – 46 (0.12)
  • Rate of new employer businesses – 8 (7.82%)

 

38. Arkansas

Transport, logistics, economy, agriculture, and forestry are all developed industries in Arkansas. This state ranks well in a few categories, including business taxes per employee, average weekly wage, and average commute time. Still, that wasn’t enough for it to end up higher on this list of the best states to own a business in the US. Arkansas has low college completion rates and an unpromising startup survival rate.

  • Business taxes per employee – 5 ($4,700)
  • TEBTR – 12 (4.6%)
  • Value of venture capital – 38 ($71 million)
  • GDP per capita – 50 ($39,580)
  • GDP change – 22 (1.80%)
  • Population change – 26 (0.27%)
  • College completion rate – 42 (22.6%)
  • Average weekly wage – 2 ($898)
  • Average commute time – 9 (21.7 minutes)
  • Startup early survival rate – 38 (78.02%)
  • New employer business actualization – 16 (0.1)
  • Rate of new employer businesses – 10 (12.51%)

 

39. Alabama

Alabama has reasonable business taxes per employee of $4,700 and a high company survival rate of 81.5%. These, however, weren’t anywhere near enough to make this the best state to register a business.

Those who want to base their company here should consider joining one of the major industries in the state — automotive, chemicals, technology, aeronautics, and forestry.

  • Business taxes per employee – 5 ($4,700)
  • TEBTR – 12 (4.6%)
  • Value of venture capital – 41 ($58 million)
  • GDP per capita – 47 ($41,389)
  • GDP change – 17 (2.30%)
  • Population change – 25 (0.32%)
  • College completion rate – 38 (24.9%)
  • Average weekly wage – 13 ($985)
  • Average commute time – 25 (25.2 minutes)
  • Startup early survival rate – 4 (81.5%)
  • New employer business actualization – 35 (0.09)
  • Rate of new employer businesses – 11 (9.94%)

 

40. Michigan

Michigan can be the best state to start a business for those looking for low taxes. Other than that, the state’s GDP and population growth have been too slow. The college completion rates aren’t impressive either, while the new employer business actualization is just too low.

As for the most prominent sectors, those would be agriculture, tourism, and manufacturing. 

  • Business taxes per employee – 2 ($4,200)
  • TEBTR – 2 (3.6%)
  • Value of venture capital – 22 ($803 million)
  • GDP per capita – 38 ($47,448)
  • GDP change – 33 (0.70%)
  • Population change – 36 (0.02%)
  • College completion rate – 28 (28.6%)
  • Average weekly wage – 30 ($1,115)
  • Average commute time – 20 (24.7 minutes)
  • Startup early survival rate – 11 (80.21%)
  • New employer business actualization – 40 (0.09)
  • Rate of new employer businesses – 11 (9.08%)

 

41. Kentucky

Agriculture and mining have always been the cornerstones of Kentucky’s economy. Manufacturing and logistics, however, have also gained prominence in the past decade. On the flip side, the state has low college completion rates, not enough venture capital, and slow population growth. That’s why Kentucky isn’t one of the best states to run a business.

  • Business taxes per employee – 5 ($4,700)
  • TEBTR – 12 (4.6%)
  • Value of venture capital – 30 ($248 million)
  • GDP per capita – 45 ($42,386)
  • GDP change – 28 (1.10%)
  • Population change – 30 (0.15%)
  • College completion rate – 41 (23.6%)
  • Average weekly wage – 9 ($955)
  • Average commute time – 13 (23.5 minutes)
  • Startup early survival rate – 18 (79.82%)
  • New employer business actualization – 30 (0.08)
  • Rate of new employer businesses – 12 (10.93%)

 

42. Nevada

Nevada is the first destination of the 10 worst states for business in the US. The state has a growing GDP and population. These pros weren’t enough to overpower the numerous drawbacks, including venture capital of only $141 million, low college completion rates, and worrisome startup survival rates.

Nevada’s top five industries are tourism and gaming, logistics, manufacturing, mining, and aerospace.

  • Business taxes per employee – 20 ($6,800)
  • TEBTR – 21 (5.9%)
  • Value of venture capital – 31 ($141 million)
  • GDP per capita – 33 ($50,043)
  • GDP change – 9 (2.9%)
  • Population change – 2 (1.74%)
  • College completion rate – 39 (24.2%)
  • Average weekly wage – 19 ($1,030)
  • Average commute time – 22 (24.9 minutes)
  • Startup early survival rate – 42 (77.46%)
  • New employer business actualization – 37 (0.14)
  • Rate of new employer businesses – 7 (9.57%)

 

43. Maryland

Maryland is not one of the best states to do business despite its low TEBTR and a great variety of developed industries. IT, life sciences, manufacturing, financial services, energy, and agribusiness are some of them. So, you may wonder why Maryland ranks so badly. The state’s low business survival rate, low new employer business actualization, and high average weekly wage are the main reasons.

  • Business taxes per employee – 12 ($5,500)
  • TEBTR – 6 (4%)
  • Value of venture capital – 19 ($921 million)
  • GDP per capita – 12 ($61,926)
  • GDP change – 25 (1.50%)
  • Population change – 29 (0.16%)
  • College completion rate – 4 (39.6%)
  • Average weekly wage – 40 ($1,271)
  • Average commute time – 44 (33.3 minutes)
  • Startup early survival rate – 37 (78.19%)
  • New employer business actualization – 45 (0.1)
  • Rate of new employer businesses – 10 (7.87%)

 

44. New Jersey

New Jersey is another strong US economy and should be one of the best states to start a business with its access to venture capital and educated workers. Those factors, however, are outweighed by a high average salary, declining population, and bad new employer business actualization.

New Jersey is a diverse economy with many branches, including pharmaceuticals, life sciences, manufacturing, IT, logistics, and financial services.

  • Business taxes per employee – 28 ($7,900)
  • TEBTR – 17 (5.3%)
  • Value of venture capital – 12 ($1.27 billion)
  • GDP per capita – 11 ($63,492)
  • GDP change – 25 (1.50%)
  • Population change – 38 (-0.04%)
  • College completion rate – 6 (38.9%)
  • Average weekly wage – 41 ($1,332)
  • Average commute time – 43 (32.4 minutes)
  • Startup early survival rate – 20 (79.75%)
  • New employer business actualization – 36 (0.12)
  • Rate of new employer businesses – 8 (9.9%)

 

45. Connecticut

With low TEBTR and developed insurance, finance, and real estate sectors, Connecticut is the best state to open a small business in these markets. The job market here, however, isn’t great given the declining population and the high average wage. There’s access to educated employees, but the business survival rate is low at 75.1%.

  • Business taxes per employee – 17 ($6,100)
  • TEBTR – 4 (3.8%)
  • Value of venture capital – 20 ($867 million)
  • GDP per capita – 7 ($69,789)
  • GDP change – 24 (1.60%)
  • Population change – 41 (-0.17%)
  • College completion rate – 5 (38.9%)
  • Average weekly wage – 43 ($1,383)
  • Average commute time – 33 (26.8 minutes)
  • Startup early survival rate – 50 (75.1%)
  • New employer business actualization – 38 (0.09)
  • Rate of new employer businesses – 11 (9.47%)

 

46. Wyoming

Despite ranking so low on the overall list, Wyoming is arguably the best state to start an online business alongside Delaware. Wyoming is a growing US economy with a reasonable startup survival rate of nearly 80%.

Mining, tourism, agriculture, and manufacturing are major industries in the state. 

  • Business taxes per employee – 32 ($11,500)
  • TEBTR – 27 (7.9%)
  • Value of venture capital – 49 ($8.3 million)
  • GDP per capita – 9 ($67,915)
  • GDP change – 6 (3.3%)
  • Population change – 28 (0.20%)
  • College completion rate – 34 (26.9%)
  • Average weekly wage – 16 ($1,007)
  • Average commute time – 46 (40.3 minutes)
  • Startup early survival rate – 14 (79.91%)
  • New employer business actualization – 39 (0.31)
  • Rate of new employer businesses – 1 (9.39%)

 

47. D.C.

D.C. is the jurisdiction with the highest GDP per capita in the US as well as an established commercial center. Still, with sectors like the federal government, education, and healthcare, it isn’t quite the best state to start an LLC. Not unless you have a significant starting investment, that is. The average weekly wage in D.C. is $1,992, meaning you need lots of money to hire people here. That’s one of the reasons D.C. has a low business survival rate of 76.87%.

  • Business taxes per employee – 29 ($8,400)
  • TEBTR – 17 (5.2%)
  • Value of venture capital – 28 ($249 million)
  • GDP per capita – 1 ($178,442)
  • GDP change – 24 (1.60%)
  • Population change – 17 (0.60%)
  • College completion rate – 1 (57.6%)
  • Average weekly wage – 47 ($1,992)
  • Average commute time – 47 (56.4 minutes)
  • Startup early survival rate – 45 (76.87%)
  • New employer business actualization – 47 (0.12)
  • Rate of new employer businesses – 8 (6.88%)

 

48. Louisiana

Thanks to its strategic location, Louisiana is the country’s primary source of natural resources and agriculture. In these sectors lies your chance of success in the state. Broussard, Stonewall, Maurice, and Duson are among the best cities to start a business in Louisiana. The business survival rate in the state is the 7th best. The other rankings, however, aren’t impressive and placed Louisiana low on this list.

  • Business taxes per employee – 19 ($6,400)
  • TEBTR – 17 (5.2%)
  • Value of venture capital – 34 ($130 million)
  • GDP per capita – 29 ($51,729)
  • GDP change – 27 (1.30%)
  • Population change – 42 (-0.23%)
  • College completion rate – 40 (23.7%)
  • Average weekly wage – 15 ($993)
  • Average commute time –29 (26.3 minutes)
  • Startup early survival rate – 7 (80.54%)
  • New employer business actualization – 42 (0.1)
  • Rate of new employer businesses – 10 (8.25%)

 

49. Mississippi

Mississippi is one of the worst states for business in the US. This is the state with the lowest GDP per capita and a decreasing population. Mississippi’s college completion rate is low, too, while the TEBTR isn’t fantastic either. At least the workforce is cheap, and the startup survival rate is reasonable.

Major industries include manufacturing, mining, transportation, agriculture, tourism, and entertainment.

  • Business taxes per employee – 17 ($6,100)
  • TEBTR – 23 (6.3%)
  • Value of venture capital – 50 ($7.9 million)
  • GDP per capita – 51 ($35,015)
  • GDP change – 27 (1.30%)
  • Population change – 40 (-0.16%)
  • College completion rate – 43 (21.8%)
  • Average weekly wage – 1 ($818)
  • Average commute time – 23 (25 minutes)
  • Startup early survival rate – 8 (80.47%)
  • New employer business actualization – 43 (0.08)
  • Rate of new employer businesses – 12 (8.23%)

 

50. Hawaii

Hawaii is definitely not one of the best states for small business owners. The jurisdiction has one of the smallest sizes of venture capital, and its population is declining. The Aloha State further has a low business survival rate and bad new employer business actualization. The only positive aspects of running a company here are the educated workforce and the reasonable rate of new employer businesses.

Hawaii’s leading sectors are services, agriculture, manufacturing, fishing, and, naturally, tourism.

  • Business taxes per employee – 23 ($7,300)
  • TEBTR – 19 (5.6%)
  • Value of venture capital – 43 ($41.8 million)
  • GDP per capita – 18 ($58,981)
  • GDP change – 29 (1%)
  • Population change – 43 (-0.33%)
  • College completion rate – 16 (32.5%)
  • Average weekly wage – 24 ($1,053)
  • Average commute time – 35 (27.6 minutes)
  • Startup early survival rate – 46 (76.62%)
  • New employer business actualization – 44 (0.09)
  • Rate of new employer businesses – 11 (8.05%)

 

51. West Virginia

When all the rankings are considered, West Virginia stands out as the leader of the worst states for business. West Virginia ranks last when it comes to venture capital and also has one of the worst GDPs per capita. The state underperforms in most categories, really.

West Virginia, at least, has a diverse economy with several developed industries. Some of the major ones are telecommunications, automotive, education, biotech, tourism, hospitality, and manufacturing.

  • Business taxes per employee – 21 (6,900)
  • TEBTR – 24 (6.5%)
  • Value of venture capital – 51 ($0.2 million)
  • GDP per capita – 49 ($40,265)
  • GDP change – 30 (1.00%)
  • Population change – 47 (-0.67%)
  • College completion rate – 44 (20.3%)
  • Average weekly wage – 3 ($904)
  • Average commute time – 31 (26.5 minutes)
  • Startup early survival rate – 13 (79.92%)
  • New employer business actualization – 26 (0.07)
  • Rate of new employer businesses – 13 (11.16%)

 

The Bottom Line

Knowing the best states to start a business gets you one step closer to achieving the profits you dream of. It’s important to know what to expect in terms of the available workforce, tax burden, and general business climate. So, before you settle on a destination for your startup, make sure to consult the data in this guide. After all, it’s essential to set your expectations straight because one minor miscalculation can significantly lower your chances of success.

 

References: Kauffman, Statista, USDA, EY

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