Best State to Start a Business: Everything You Need to Know
The best state to start a business is one where conditions are conducive for the inception of a new business with office space available at affordable rates4 min read
What Is the Best State to Start a Business?
The best state to start a business is one where conditions are conducive for the inception of a new business with office space available at affordable rates, cash accessibility, and human capital. Before starting a business venture, knowing the circumstances that are present, like the potential pool of work-ready employees, the tax-friendliness of the region, and having preparedness for conditions that could occur during the company's operation is vital.
Some jurisdictions require that businesses, particularly in specific industries, have a business license to operate. It goes without saying that it takes more than passion and motivation to obtain one. Although, much can be said about burning ambition, having clear notions about the expectations, responsibilities, procedures, and risks going into a startup is more critical to success and sustainability.
According to recent economic reviews, the U.S. economy is currently in a state that is welcoming to entrepreneurs and people who want to build a foundation for a new business. After all, it is the American dream. It is just extremely important that you have your steps ordered according to the specific requirements of your state. The U.S. Bureau of Labor Statistics reports that approximately a fifth of all new businesses fail to make it as a company past 12 months.
Seven Critical Factors That Influence a State's Business Climate
Starting a business means adapting to changes and remaining flexible in relationships, which are constantly evolving and affecting one another throughout various dimensions. The business climate and the business ecosystem are basically comprised of elements that when active and conjoined, can either fortify a startup or wear one out if it does not have a firm foundation. Below are the components of a state's business climate.
- Startup activity
- Small business employees
- Survival rate
- Potential employees' education level
- Business tax climate
- Cost of living
Startup activity - This includes the following:
- The number of startups for every 1,000 firm populace or what is also known as “the startup density.”
- Fresh businesses that form due to foreseeable opportunities in the market or what gets referred to as the state's “opportunity share.”
- The degree to which small businessmen and women open up a firm in each state.
Small business employees - The present amount of small business employees there are in proportion to the regional community and the number of little businesses currently in operation determine how pronounced small businesses are in the state.
Survival rate - This represents the ratio of how many firms terminate against the number of them that get started.
Productivity - Every sovereignty in this nation has its own per capita level of total native product, gross domestic product, or GDP.
Level of education completed by potential employees - This refers to the segment of society finishing a degree in higher education.
Business tax climate - The state's tax structure can more or less be business-friendly.
Cost of living - This refers to the affordability of maintaining residency in a state.
Five of the Best States To Start a Business in 2017
- South Dakota notably has the most exceptional business survival rate, second best tax climate in the nation, and fourth best opportunity share and small business employee percentage.
- Wyoming has the country's best rate of startup activity and business tax climate, less than the average cost of living, and elevated percentage of small business employees.
- Nevada has an incredibly high startup density, ranks second in the U.S. for opportunity share, but presents the lowest number of small business employees.
- Florida has the second-highest startup density nationwide, with fair business taxation, but its GDP is sub-par.
- Montana delivers favorably in the areas of business tax climate, cost of living, and sits in the top tier of new entrepreneurs in startup activity.
The Four Worst States to Have a Startup Business for 2017
- Maryland has one of the top 10 highest GDP in the U.S., but the business climate for the state is dismal, with low ranking for opportunity rate and business tax climate.
- Rhode Island has a little number of small business employees, also a minimal amount of new entrepreneurs and cellar-dwelling overall startup activity.
- Hawaii is on record as being the state with the highest cost of living and nearly the lowest percentage of availability to college graduates to make for highly educated employees.
- In Wisconsin, the rate of residents here becoming entrepreneurs averages monthly at barely above two-tenths of a percent, and the state has the absolute lowest opportunity share.
If you need help with finding the best state to start a business, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.