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- The overall best state to start a business is Florida \u2014 it levies no personal income tax and its banks approved the 3rd highest sum on loans to small businesses in the last year.<\/li>\n\n\n\n
- The worst state to start a business is Louisiana \u2014 it has a negative net change in establishments, some of the lowest venture capital investment per $1m GDP, the second worst poverty rate, the 4th worst percentage of working-age population with higher degrees, and Internet access that leaves a lot to be desired.<\/li>\n\n\n\n
- The state with the best 5-year survival rate for new businesses is West Virginia, although it drops to second place when looking at the average 1-year survival rate, just behind California. That being said, California ranks 9th with regards to 5-year survival rates, so West Virginia is statistically the safer choice in the medium-to-long term.<\/li>\n\n\n\n
- The best state for startups may well be Massachusetts, seeing as it has the most highly-educated workforce (not counting the District of Columbia), with 47.78% of the workforce having at least a bachelor\u2019s degree, and by far the highest amount of venture capital investment per $1m GDP.<\/li>\n<\/ul>\n<\/div><\/div>\n\n\n\n<\/div>\n\n\n\n
#1 Florida<\/h2>\n\n\n\n
Florida is the best state to start a business in the US. <\/p>\n\n\n\n
Not only does it levy no personal income taxes whatsoever, but it also ranks 16th among all US states for corporate taxes and 21st for property taxes \u2014 and lower taxes means higher profits.<\/p>\n\n\n\n
The overall business climate in Florida is flourishing, with a net increase in establishments of 16,602 according to the most recent data. More importantly, the amount of Venture Capital in Florida per $1m GDP is a respectable $2,400.17. <\/p>\n\n\n\n
At the same time, Florida ranks 3rd among all states when it comes to loans to businesses with revenues of $1m or less, with reporting banks loaning $7.2b. That\u2019s just behind California and Texas and ahead of New York!<\/p>\n\n\n\n
The economy is also faring decently, with a GDP per capita of $73,784 and personal consumption per capita of $60,204. Couple this with its fairly high minimum wage of $13 and you\u2019ve got a population that\u2019s willing to spend \u2014 and capable of it.<\/p>\n\n\n\n
The workforce is also sizable, with 80.7% of its population being 18 or older \u2014 the 7th highest ratio in all the states \u2014 and 34.92% of the working age population having at least a Bachelor\u2019s, graduate, or professional degree. So the workforce is there, no matter what kind of business you want to start.<\/p>\n\n\n\n
#2 Colorado<\/h2>\n\n\n\n
The number 2 spot goes to Colorado \u2014 a state that ranks in the low teens or lower in quite a few of the categories used to derive these rankings.<\/p>\n\n\n\n
Although the tax situation isn\u2019t stellar \u2014 with it ranking 18th for personal income tax and 36th for property tax \u2014 it\u2019s the 10th best state with regards to corporate tax.<\/p>\n\n\n\n
It\u2019s also the 5th ranked state in the amount of venture capital investment per $1m GDP ($7,365.87) and 14th in bank loans to small businesses ($1.6b). The GDP per capita is rather high ($93,026), as is the personal consumption expenditure per capita ($64,781) \u2014 the 7th highest in the USA. <\/p>\n\n\n\n
The cost of living is on the higher end, ranking 35th among all the states, but it has a minimum wage of $14.81 and the 5th lowest rate of poverty (5.9%). <\/p>\n\n\n\n
Not only that, Colorado also boasts the 15th highest percentage of working age population (79.6%) and has the 3rd most well-educated workforce \u2014 2nd if we don\u2019t count the District of Columbia \u2014 with 46.43% having at least a Bachelor\u2019s degree. <\/p>\n\n\n\n
#3 North Dakota<\/h2>\n\n\n\n
The bronze medal goes to North Dakota.<\/p>\n\n\n\n
While it ranks 17th for individual income tax \u2014 which isn\u2019t a horrible rating \u2014 it ranks 7th for corporate tax and 4th for property tax, generally making it one of the best states to start a business in for tax purposes.<\/p>\n\n\n\n
While the most recent reports show a net increase in establishments of only 412, it\u2019s worth noting that businesses in North Dakota have a higher than average chance of surviving for 5 years (52.91%).<\/p>\n\n\n\n
Granted, the state is a bit more bootstrappy when it comes to funding \u2014 North Dakota ranks 35th by venture capital per $1m GDP ($1,271.58) and 40th with regards to the amount of bank loans to small businesses ($407.8m). <\/p>\n\n\n\n
Nevertheless, thanks to its high GDP per capita of $95,982 \u2014 the 7th highest if you exclude the District of Columbia \u2014 and its low cost of living, this is less of an issue than it would be in other states. The personal expenditure per capita is also fairly solid at $55,780, despite the state having a minimum wage of only $7.25. <\/p>\n\n\n\n
North Dakota also has the 6th lowest rate of poverty (6.2%) and the second lowest unemployment rate in all of the USA, behind only South Dakota. <\/p>\n\n\n\n
Considering the fact that 76.7% of the population is aged 18 or older, and that the workforce is well-educated \u2014 with 33.55% having at least a bachelor\u2019s degree \u2014 North Dakota is an excellent environment for starting any kind of small business.<\/p>\n\n\n\n
#4 Utah<\/h2>\n\n\n\n
The 4th spot goes to Utah.<\/p>\n\n\n\n
Utah ranks 9th with regards to personal income tax \u2014 and keep in mind that the 6 states tied for 1st place don\u2019t levy any<\/em> personal income tax, so among the states that do, it\u2019s the 3rd most lenient. It also ranks 17th regarding corporate tax and 12th for property tax, overall making it one of the less taxing states to live in \u2014 both for small businesses and their owners.<\/p>\n\n\n\n
In terms of business growth, Utah saw an increase in the number of establishments of 2,677 \u2014 the 12th highest among all the states. It also ranks 9th in the amount of venture capital investment per $1m GDP with $4,681.08. <\/p>\n\n\n\n
That being said, the bank loan situation isn\u2019t as impressive, with reporting banks having only loaned $753.8m. That\u2019s not a horrible rate given Utah\u2019s population, but it is worth noting.<\/p>\n\n\n\n
The economy in Utah is also strong, with a GDP per capita of $86,506, despite the low personal consumption expenditure per capita of $51,027. This suggests the people there are sitting on a lot of savings. The other explanation would be that there is a large income inequality, but having the 3rd lowest poverty rate and the 9th lowest unemployment rate makes this less likely. <\/p>\n\n\n\n
What\u2019s more, Utah ranks dead last in terms of the percentage of working-age population (73.4%), but it has one of the more highly-educated workforces, with 38.39% of it holding at least a Bachelor\u2019s degree.<\/p>\n\n\n\n
#5 North Carolina<\/h2>\n\n\n\n
Coming in at number 5 is North Carolina.<\/p>\n\n\n\n
While this state does levy personal income taxes \u2014 ranking 21st among all the states in this category \u2014 it makes up for this with the 3rd best corporate tax policy. It also ranks 20th with regards to property tax, making it one of the business-friendly states.<\/p>\n\n\n\n
In terms of establishment growth, North Carolina saw a net increase of 8,068. What\u2019s even more impressive is that its 5-year business survival rate is 54.44%. <\/p>\n\n\n\n
The amount of Venture Capital per $1m GDP in North Carolina is $2,523.83, and reporting banks have loaned $2.9b to businesses with revenues of $1 million or less, meaning that getting your small business off the ground shouldn\u2019t be too hard.<\/p>\n\n\n\n
The state is ranked 31st in terms of GDP per capita ($75,876) and 33rd in personal consumption expenditure per capita ($51,081). North Carolina has the lowest minimum wage ($7.25), making it tied for 32nd place with 19 other states, but it also has relatively low unemployment, sharing the 21st spot with Arkansas, Florida, Iowa, and West Virginia. <\/p>\n\n\n\n
Regarding its workforce, 78.6% of its population constitutes people aged 18 or more, and 36.79% of this workforce boasts at least a Bachelor\u2019s degree. <\/p>\n\n\n \n
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\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n\n \n\n\n\n\n\nFurther reading<\/strong><\/p>\n\n\n\n
Why do people start small businesses in the first place? According to the latest statistics, the number one motivation is to be one\u2019s own boss! You can check out the other reasons \u2014 as well as loads of other small business statistics \u2014 on this page:<\/p>\n\n\n\n
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- Essential Small Business Statistics to Know in 2025<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n<\/div><\/div>\n\n\n\n
Ranking the best and worst states to start a business in 2025<\/h2>\n\n\n\n
Curious to see how the other states fare?<\/p>\n\n\n\n
Here\u2019s the full list of all 50 US states plus the District of Columbia.<\/p>\n\n\n\n
The weighted average rank shows the weighted arithmetic mean rank of each state based on the 16 ranking tables we used \u2014 you can learn more about it below.<\/p>\n\n\n\n
- Essential Small Business Statistics to Know in 2025<\/a><\/li>\n<\/ul>\n<\/div><\/div>\n<\/div><\/div>\n\n\n\n