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Best State to Own a Business 2024
Starting a business can be both exciting and stressful. One of the first decisions that needs to be made is the location of the business. Some states are much easier than others to start a business. Factors that influence this include the average survival rate of business in the state, the tax rates imposed on business owners, the costs of running a business, and the state's economy, among others.
With these factors in mind, these are the top five states for starting a business.
Indiana
Compared to all states, Indiana has a relatively large business workforce and a good business economy. The unemployment rate in the state is below the national average, showing that citizens generally want to and are able to work. This provides a new business with a strong workforce and the comfort that more employees will be available if needed. In addition, the cost of living is much lower in the state than in many others.
With an 83.6% survival rate, new business owners in Indiana can be fairly secure in the idea that their business will not go under quickly. The state has a flat income tax rate of 3.23% which makes it very attractive to new entrepreneurs.
Colorado
Colorado has one of the largest workforces in the country. New businesses have access to many more workers in Colorado than in its neighboring states. The state ranks fifth for financial access for new business owners. Securing funding is usually one of the more difficult aspects of starting a business and is often what deters new business owners. Having the ability to easily secure this funding makes Colorado a great option for a business location.
Once started, businesses are obviously successful in the state, which has an 81.9% business survival rate. Along with a very low LLC formation fee of $50, Colorado has an income tax rate of 4.55% and a corporate tax rate of 24%. While the tax rates are slightly high, the costs to operate a business in Colorado are low compared to the rest of the nation. These financial incentives are the reason so many startups build their home bases in Colorado.
North Dakota
When people think of centers of business, they may not think of North Dakota, but the state is quite business-friendly. The state has one of the lowest personal income tax rates of 2.9%. If low taxes are a main priority for a business, the state is a strong contender. An additional financial benefit is the funding opportunities. Businesses in North Dakota receive an average of $34,894 in startup funds. This is almost 50% higher than the national average.
Pennsylvania
Pennsylvania has a relatively large workforce, a strong business economy, and fairly low business costs. Funding opportunities are plentiful, and the business survival rate is about 83.3% Some businesses may shy away from Pennsylvania because of its relatively high cost of living compared to the other states in the top five, but its income tax rate of 3.07% and large potential workforce may outweigh this negative.
South Dakota
South Dakota is one of the states without a personal income tax. As a result, this may be a location to check out when looking to start a business. The state also has a fairly low cost of living. It also has many opportunities for funding. Businesses in South Dakota receive an average of $31,000 in financial assistance. This contributes to the state’s strong business economy and business survival rate of 81%.
State | Score (out of 100) | Total Rank | Business Costs | Business Climate | Financial Accessibility | Economy | Workforce | Total Weighted Score |
|---|---|---|---|---|---|---|---|---|
| Indiana | 100 | 1 | 9 | 7 | 9 | 4 | 3 | 32 |
| Colorado | 98 | 2 | 8 | 7 | 6 | 5 | 5 | 31 |
| North Dakota | 96 | 3 | 7 | 3 | 10 | 5 | 5 | 30 |
| Pennsylvania | 94 | 4 | 6 | 7 | 9 | 4 | 3 | 30 |
| South Dakota | 92 | 5 | 6 | 6 | 10 | 4 | 4 | 29 |
| North Carolina | 90 | 6 | 7 | 8 | 6 | 3 | 4 | 29 |
| Montana | 88 | 7 | 8 | 6 | 7 | 4 | 4 | 29 |
| Illinois | 86 | 8 | 4 | 8 | 8 | 5 | 4 | 29 |
| Ohio | 84 | 9 | 8 | 6 | 7 | 4 | 3 | 29 |
| Delaware | 82 | 10 | 8 | 6 | 8 | 5 | 1 | 28 |
| Connecticut | 80 | 11 | 4 | 6 | 10 | 5 | 4 | 28 |
| California | 78 | 12 | 5 | 7 | 7 | 4 | 4 | 27 |
| Massachusetts | 76 | 13 | 3 | 6 | 8 | 5 | 5 | 27 |
| New Hampshire | 74 | 14 | 8 | 4 | 4 | 5 | 6 | 27 |
| Missouri | 71 | 15 | 6 | 4 | 7 | 5 | 5 | 26 |
| Mississippi | 69 | 16 | 10 | 6 | 3 | 3 | 3 | 25 |
| Hawaii | 67 | 17 | 8 | 2 | 9 | 3 | 2 | 25 |
| Virginia | 65 | 18 | 6 | 4 | 5 | 4 | 5 | 25 |
| South Carolina | 63 | 19 | 9 | 7 | 3 | 3 | 3 | 25 |
| Wisconsin | 61 | 20 | 5 | 7 | 5 | 4 | 4 | 24 |
| Utah | 59 | 21 | 10 | 7 | 1 | 3 | 4 | 24 |
| Idaho | 57 | 22 | 8 | 6 | 6 | 2 | 2 | 24 |
| Rhode Island | 55 | 23 | 5 | 3 | 9 | 3 | 5 | 24 |
| West Virginia | 53 | 24 | 8 | 5 | 6 | 3 | 3 | 24 |
| Washington | 51 | 25 | 3 | 5 | 7 | 5 | 4 | 24 |
| Alabama | 49 | 26 | 7 | 2 | 8 | 3 | 3 | 24 |
| New Jersey | 47 | 27 | 3 | 4 | 9 | 5 | 3 | 23 |
| Arizona | 45 | 28 | 8 | 7 | 3 | 3 | 2 | 23 |
| Arkansas | 43 | 29 | 5 | 4 | 8 | 3 | 3 | 23 |
| Georgia | 41 | 30 | 8 | 5 | 2 | 4 | 4 | 23 |
| Alaska | 39 | 31 | 5 | 4 | 6 | 5 | 3 | 23 |
| Nebraska | 37 | 32 | 6 | 2 | 4 | 5 | 4 | 22 |
| Minnesota | 35 | 33 | 4 | 5 | 2 | 4 | 6 | 22 |
| Texas | 33 | 34 | 5 | 7 | 3 | 5 | 3 | 22 |
| Iowa | 31 | 35 | 8 | 6 | 4 | 4 | 22 | |
| Wyoming | 29 | 36 | 9 | 3 | 1 | 5 | 4 | 22 |
| Louisiana | 27 | 37 | 8 | 3 | 5 | 3 | 3 | 22 |
| Maine | 25 | 38 | 4 | 8 | 4 | 3 | 4 | 22 |
| Maryland | 22 | 39 | 6 | 4 | 5 | 4 | 3 | 21 |
| Tennessee | 20 | 40 | 5 | 5 | 4 | 4 | 3 | 21 |
| Kansas | 18 | 41 | 5 | 3 | 3 | 5 | 5 | 21 |
| Oklahoma | 16 | 42 | 7 | 5 | 2 | 4 | 3 | 21 |
| Kentucky | 14 | 43 | 10 | 4 | 2 | 3 | 3 | 21 |
| Nevada | 12 | 44 | 9 | 6 | 2 | 3 | 1 | 21 |
| Florida | 10 | 45 | 7 | 6 | 1 | 4 | 3 | 21 |
| Oregon | 8 | 46 | 4 | 4 | 5 | 3 | 3 | 19 |
| Michigan | 6 | 47 | 9 | 3 | 4 | 2 | 19 | |
| Vermont | 4 | 48 | 4 | 3 | 1 | 3 | 5 | 17 |
| New Mexico | 2 | 49 | 7 | 2 | 1 | 3 | 2 | 16 |
| New York | 50 | 2 | 2 | 4 | 4 | 4 | 16 |