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The Easiest versus Most Challenging States to Start a Business

News & Blog

What are the best and worst US state to start a business? According to U.S. Bureau of Labor Statistics data, about a fifth of all startup businesses don’t survive past year one of operation, and nearly half never make it to their fifth anniversary.

There are a number of reasons why a business might fail, including: bad management, bad location, access to resources, and cost of doing business. A state that provides great conditions for business creation — access to cash, skilled workers, affordable office space, etc — can help new business ventures become more successful faster.

Key Indicators to Start a Business

Key indicators were reviewed to help determine which were the best and worst states to operate a business. Some of these indicators are:

Business Environment
Length of Work Week
Share of Committed Workers
Growth in Number of Small Businesses
Business Startups per Capita
Growth of Business Revenues
Five-Year Business Survival Rate
Entrepreneurship Index
Job Growth

Access to Resources
Financing Accessibility
Venture Investment Amount per Capita
Human-Capital Availability
Share of College-Educated Population
Working-Age Population Growth

Business Costs
Office-Space Affordability
Labor Costs
Cost of Employer-Based Health Insurance
Cost of Living

Best and Worst Business Environment by State

1 Texas
2 California
3 Utah
4 North Dakota
5 Florida
6 Colorado
7 Georgia
8 Montana
9 Nevada
10 Arizona

41 Kansas
42 Connecticut
43 New Mexico
44 Mississippi
45 New Hampshire
46 Vermont
47 Pennsylvania
48 Alabama
49 Rhode Island
50 West Virginia

Best and Worst Access to Resources by State

1 Utah
2 Washington
3 New York
4 Connecticut
5 Massachusetts
6 California
7 Illinois
8 Maryland
9 New Jersey
10 Minnesota

41 Alabama
42 Kentucky
43 Ohio
44 Wisconsin
45 Tennessee
46 Idaho
47 Indiana
48 New Hampshire
49 Vermont
50 Hawaii

Best and Worst Business Costs by State

1 Oklahoma
2 Mississippi
3 Michigan
4 West Virginia
5 Kentucky
6 South Dakota
7 Idaho
8 Montana
9 Alabama
10 Nebraska

41 Washington
42 Delaware
43 Hawaii
44 Massachusetts
45 Maryland
46 Connecticut
47 California
48 Alaska
49 New York
50 New Jersey

Business is not a one-size fits all approach. The needs to operate a fast food chain are different than those for an advertising agency. Also, certain technologies have somewhat equalized things a bit, such as Internet, social media, global shipping, telecommuting, and free Wi-Fi. These rankings are just guidelines to help you make business decisions related to location.

1040TaxBiz can help you find the best location for your business and assist you with completing returns. Complete a contact form here for a sales associate to speak with you about how our resources can help you build a tax business.

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