Selecting the ideal state to start a business is a decision influenced by various factors, including demographic trends, tax environments, labor costs, survival rates of new businesses, and availability of financial resources.
Our analysis sifts through these critical elements, offering a guide to the best states to start a business this year.
Overview of the Best States to Start a Business
- North Carolina – Best overall
- Texas – Best tax climate
- Utah – Best economic momentum
- South Dakota – Best for cost of labor
- Florida – Best business environment
- Montana – Best for long-term business success
- Georgia – Best for supporting business ventures
- Idaho – Best growth potential
- New York – Best high-earnings potential
- North Dakota – Best overall alternative
North Carolina – Best Overall
Demographics, Labor, and Income
| State | Working age (16 to 65) population | Percentage of total population | Unemployment rate | Average annual salary | Minimum hourly wage |
| North Carolina | 6,805,325 | 63.61% | 3.50% | $56,220 | $7.25 |
Taxation and Cost of Living
| State | Personal Income tax rate | Sales Tax Rate | Corporate tax rate | Corporate tax rate brackets | Region price parities (cost of living) |
| North Carolina | 4.50% | 4.75% | 2.50% | $0 | 94.2 |
Business and Economic Growth
| State | 1-year business survival rate | 5-year business survival rate | Average approved loan for small businesses | Business applications in 2023 | Real GDP growth Q3 2023 |
| North Carolina | 76.70% | 53.00% | $780,000 | 14,376 | 4.60% |
North Carolina stands out as a top choice to start a business, highlighted by its low corporate tax rate of 2.50% and strong business survival rates—76.7% after one year and 53.0% after five years—showcasing a stable and supportive environment for enterprises.
The state’s attractiveness is confirmed by the 14,376 business applications received in 2023, signaling a thriving entrepreneurial spirit. North Carolina’s low corporate tax rate and supportive regulatory framework mark it as a particularly business-friendly state, conducive to growth and innovation.
Additionally, an average yearly wage of $56,220 paired with a cost of living index at 94.2 makes North Carolina an appealing location for both business owners and employees, balancing affordability with a vibrant economy.
Texas – Best Tax Climate
Demographics, Labor, and Income
| State | Working age (16 to 65) population | Percentage of total population | Unemployment rate | Average annual salary | Minimum hourly wage |
| Texas | 19,434,356 | 64.72% | 4.00% | $57,300 | $7.25 |
Taxation and Cost of Living
| State | Personal Income tax rate | Sales Tax Rate | Corporate tax rate | Corporate tax rate brackets | Region price parities (cost of living) |
| Texas | none | 6.25% | none | none | 97.5 |
Business and Economic Growth
| State | 1-year business survival rate | 5-year business survival rate | Average approved loan for small businesses | Business applications in 2023 | Real GDP growth Q3 2023 |
| Texas | 77.80% | 52.70% | $832,000 | 41,141 | 7.70% |
The tax climate of the Lone Star Stunmatched, offering unparalleled financial incentives with no personal income or corporate taxes. This tax advantage is complemented by a strong one-year business survival rate of 77.8%, showcasing a robust ecosystem for startups.
The state’s economic vitality is further reflected in its 7.7% real GDP growth in the third quarter of 2023, marking Texas as a fertile ground for businesses looking to leverage a favorable tax policy and a thriving economic landscape. With its no personal or corporate income tax policy, Texas not only attracts small business owners but also garners significant interest from venture capital firms looking to invest in promising startups.
Texas saw an impressive 41,141 business applications in 2023, underscoring its status as a hotbed for entrepreneurial activity. This surge in interest can be attributed to the state’s exceptional tax climate, economic resilience, and overall business environment, which encourages starting a business in the state.
Utah – Best Economic Momentum
Demographics, Labor, and Income
| State | Working age (16 to 65) population | Percentage of total population | Unemployment rate | Average annual salary | Minimum hourly wage |
| Utah | 2,157,145 | 63.81% | 2.80% | $57,360 | $7.25 |
Taxation and Cost of Living
| State | Personal Income tax rate | Sales Tax Rate | Corporate tax rate | Corporate tax rate brackets | Region price parities (cost of living) |
| Utah | 4.85% | 6.10% | 4.65% | $0 | 94.5 |
Business and Economic Growth
| State | 1-year business survival rate | 5-year business survival rate | Average approved loan for small businesses | Business applications in 2023 | Real GDP growth Q3 2023 |
| Utah | 76.30% | 50.50% | $691,000 | 6,753 | 6.10% |
Utah’s economic momentum is exceptional, thanks to its remarkable 6.1% real GDP growth in the third quarter of 2023 and a low unemployment rate of 2.8%. These factors, combined with a 76.3% one-year business survival rate, position Utah at the forefront of economic growth and stability.
The state’s commitment to fostering business development is further evidenced by the provision of significant small business loans, averaging $691,000, making Utah an ideal environment for any small business owner aiming for rapid growth and long-term success.
Utah’s entrepreneurial landscape is thriving, with 6,753 business applications filed in 2023. This influx of new ventures points to the state’s strong economic momentum, competitive tax environment, and supportive framework for business growth and innovation.
South Dakota – Best Cost of Labor
Demographics, Labor, and Income
| State | Working age (16 to 65) population | Percentage of total population | Unemployment rate | Average annual salary | Minimum hourly wage |
| South Dakota | 551,056 | 60.57% | 2.00% | $49,890 | $11.20 |
Taxation and Cost of Living
| State | Personal Income tax rate | Sales Tax Rate | Corporate tax rate | Corporate tax rate brackets | Region price parities (cost of living) |
| South Dakota | none | 4.20% | none | none | 88 |
Business and Economic Growth
| State | 1-year business survival rate | 5-year business survival rate | Average approved loan for small businesses | Business applications in 2023 | Real GDP growth Q3 2023 |
| South Dakota | 74.00% | 56.10% | $539,000 | 942 | 5.20% |
South Dakota, with an amazing five-year business survival rate of 56.1%, showcases a stable and nurturing environment for starting a business. The absence of personal and corporate income taxes, along with an average yearly wage of $49,890, underscores a cost-effective landscape for labor and operations.
Additionally, a competitive average small business loan amount of $539,000 provides the financial backing businesses need to thrive, making South Dakota a standout state for entrepreneurs prioritizing low labor costs and long-term sustainability.
In 2023, South Dakota received 942 business applications, indicating a growing interest among entrepreneurs attracted by the state’s advantageous tax policies, low business costs, and a conducive environment for both new and established businesses aiming for long-term success.
Florida – Best Business Environment
Demographics, Labor, and Income
| State | Working age (16 to 65) population | Percentage of total population | Unemployment rate | Average annual salary | Minimum hourly wage |
| Florida | 13,664,639 | 61.43% | 3.00% | $55,980 | $12.00 |
Taxation and Cost of Living
| State | Personal Income tax rate | Sales Tax Rate | Corporate tax rate | Corporate tax rate brackets | Region price parities (cost of living) |
| Florida | none | 6.00% | 5.50% | $50,000 | 102.1 |
Business and Economic Growth
| State | 1-year business survival rate | 5-year business survival rate | Average approved loan for small businesses | Business applications in 2023 | Real GDP growth Q3 2023 |
| Florida | 77.40% | 50.80% | $672,000 | 52,677 | 6.10% |
Florida’s absence of personal income tax and a high one-year business survival rate of 77.4% cultivate a supportive climate for startups and established enterprises. This is further bolstered by a 6.1% real GDP growth in the third quarter of 2023, highlighting the state’s robust economic health conducive to business expansion.
The remarkable influx of 52,677 business applications in 2023 underscores Florida’s attractiveness to entrepreneurs, driven by favorable tax policies and favorable regulatory environment.
Additionally, the balance between an average yearly wage of $55,980 and a cost of living index at 102.1 suggests a viable environment for maintaining a good quality of life. Florida’s blend of economic vitality and supportive business infrastructure makes it an ideal locale for pursuing growth and sustainability.
Montana – Best for Long-term Business Success
Demographics, Labor, and Income
| State | Working age (16 to 65) population | Percentage of total population | Unemployment rate | Average annual salary | Minimum hourly wage |
| Montana | 690,153 | 61.46% | 3.20% | $52,220 | $10.30 |
Taxation and Cost of Living
| State | Personal Income tax rate | Sales Tax Rate | Corporate tax rate | Corporate tax rate brackets | Region price parities (cost of living) |
| Montana | 5.90% | none | 6.75% | $0 | 90.3 |
Business and Economic Growth
| State | 1-year business survival rate | 5-year business survival rate | Average approved loan for small businesses | Business applications in 2023 | Real GDP growth Q3 2023 |
| Montana | 73.90% | 57.60% | $614,000 | 2,164 | 4.20% |
Montana distinguishes itself with one of the highest five-year business survival rates at 57.6%, illustrating a conducive environment to start a business. The state’s policy of no sales tax further reduces operational burdens, while an average small business loan amount of $614,000 demonstrates strong support for business growth and innovation.
Montana’s balanced approach, combined with a low cost of living index at 90.3, positions it as an ideal state for entrepreneurs and small business owners looking for long-term stability and success.
With 2,164 business applications in 2023, Montana is becoming increasingly popular among entrepreneurs looking for a state that supports long-term business success, offers tax benefits, and maintains a balanced cost of living, all conducive to fostering business innovation and development.
Georgia – Best for Supporting Business Ventures
Demographics, Labor, and Income
| State | Working age (16 to 65) population | Percentage of total population | Unemployment rate | Average annual salary | Minimum hourly wage |
| Georgia | 7,064,035 | 64.73% | 3.40% | $58,000 | $7.25 |
Taxation and Cost of Living
| State | Personal Income tax rate | Sales Tax Rate | Corporate tax rate | Corporate tax rate brackets | Region price parities (cost of living) |
| Georgia | 5.49% | 4.00% | 5.75% | $0 | 95.8 |
Business and Economic Growth
| State | 1-year business survival rate | 5-year business survival rate | Average approved loan for small businesses | Business applications in 2023 | Real GDP growth Q3 2023 |
| Georgia | 71.30% | 49.00% | $875,000 | 20,721 | 4.50% |
Georgia shines in supporting business ventures with generous average small business loans of $875,000, the highest among the states, facilitating access to capital for growth. Its economy is thriving, as evidenced by a 4.5% real GDP growth in the third quarter of 2023, providing a fertile ground for new businesses.
Additionally, the state’s sizable working-age population underscores a robust labor market, making Georgia a prime location for entrepreneurs seeking strong support and dynamic economic expansion.
Georgia saw 20,721 business applications in 2023, demonstrating its strength in supporting business ventures with its dynamic economy, access to capital, and robust labor market. This burgeoning interest underscores Georgia’s role as a prime location for businesses seeking growth and a supportive financial climate.
Idaho – Best Growth Potential
Demographics, Labor, and Income
| State | Working age (16 to 65) population | Percentage of total population | Unemployment rate | Average annual salary | Minimum hourly wage |
| Idaho | 1,201,199 | 61.95% | 3.30% | $51,350 | $7.25 |
Taxation and Cost of Living
| State | Personal Income tax rate | Sales Tax Rate | Corporate tax rate | Corporate tax rate brackets | Region price parities (cost of living) |
| Idaho | 5.80% | 6.00% | 5.80% | $0 | 91.8 |
Business and Economic Growth
| State | 1-year business survival rate | 5-year business survival rate | Average approved loan for small businesses | Business applications in 2023 | Real GDP growth Q3 2023 |
| Idaho | 69.30% | 47.80% | $565,000 | 2,589 | 7.00% |
Idaho’s impressive real GDP growth of 7.0% in the third quarter of 2023 marks it as a state with outstanding growth potential. With balanced personal and corporate tax rates of 5.80%, Idaho offers a favorable fiscal environment for ambitious entrepreneurs looking to start a business.
The state’s average small business loan amount of $565,000 further supports entrepreneurial ventures, coupled with a cost of living index at 91.8, making Idaho an attractive state for those seeking a combination of growth potential and financial viability.
With 2,589 business applications in 2023, the state is witnessing an uptick in entrepreneurial interest, making Idaho an attractive option for those seeking to benefit from a growing economy, supportive financial initiatives, and a competitive cost of living.
New York – Best High-Earnings Potential
Demographics, Labor, and Income
| State | Working age (16 to 65) population | Percentage of total population | Unemployment rate | Average annual salary | Minimum hourly wage |
| New York | 12,589,645 | 63.98% | 4.50% | $74,870 | $15.00 or $16.00 |
Taxation and Cost of Living
| State | Personal Income tax rate | Sales Tax Rate | Corporate tax rate | Corporate tax rate brackets | Region price parities (cost of living) |
| New York | 4.00% to 10.90% | 4.00% | 6.50% to 7.25% | $0 $5,000,000 | 107.6 |
Business and Economic Growth
| State | 1-year business survival rate | 5-year business survival rate | Average approved loan for small businesses | Business applications in 2023 | Real GDP growth Q3 2023 |
| New York | 78.50% | 49.90% | $500,000 | 26,073 | 3.50% |
New York’s high Average annual salary reflect a state with substantial consumer spending, providing a lucrative market for businesses. The state’s business survival rate of 78.5% after the first year reflects a nurturing environment for ambitious entrepreneurs looking to launch a new business.
Its progressive tax system, with personal income tax rates ranging up to 10.90%, supports a robust infrastructure for business and workforce development, making it an appealing location for entrepreneurs aiming for high earnings in a dynamic market.
The fact that this market drew 26,073 business applications in 2023, only highlights that starting a business in New York offers unique advantages, such as access to a large, affluent market and a vibrant economic landscape, despite its higher operational costs.
North Dakota – Best Overall Alternative
Demographics, Labor, and Income
| State | Working age (16 to 65) population | Percentage of total population | Unemployment rate | Average annual salary | Minimum hourly wage |
| North Dakota | 487,417 | 62.55% | 1.90% | $55,800 | $7.25 |
Taxation and Cost of Living
| State | Personal Income tax rate | Sales Tax Rate | Corporate tax rate | Corporate tax rate brackets | Region price parities (cost of living) |
| North Dakota | 1.41% to 4,31% | 5.00% | 1.41%, 3.55%, 4.31% | $0 $25,000 $50,000 | 88.7 |
Business and Economic Growth
| State | 1-year business survival rate | 5-year business survival rate | Average approved loan for small businesses | Business applications in 2023 | Real GDP growth Q3 2023 |
| North Dakota | 77.10% | 51.00% | $532,000 | 727 | 2.90% |
North Dakota’s exceptionally low unemployment rate of 1.9% sets the stage for a thriving job market. The state’s favorable tax environment, with an individual income tax rate as low as 1.41%, alongside commendable business survival rates (77.1% after one year), highlights a supportive ecosystem for startups.
With a real GDP growth of 2.9% in the third quarter of 2023, North Dakota offers a balanced quality of life and economic stability, presenting itself as an excellent alternative for entrepreneurs seeking a blend of low unemployment, supportive tax policies, and economic resilience.
North Dakota, with 727 business applications in 2023, is seeing an increase in entrepreneurial activity, driven by the state’s low unemployment rate, favorable tax conditions, and economic stability.
The Bottom Line
The terrain for starting a business is abundant with opportunities across numerous regions, each presenting its unique benefits. From advantageous tax policies to dynamic economic climates, selecting the optimal state for your venture is ultimately guided by your individual preferences and the specific requirements of your business.
Ultimately, the success of any business is determined by more than just the opportunities offered by a region’s economic environment. While selecting the appropriate state can lay the foundation, making informed decisions and executing effective strategies can foster success no matter your location.