Business

6 Best States to Start a Business in the US in 2024

The dream of an entrepreneur is to start a business in the US, as it is the world’s largest economy, contributing 25.32% of the global GDP. Various factors such as tax benefits, cost of living, infrastructure, and talented workforce shape the decision of an entrepreneur as to which State is best to start a business in the US. In this blog, we will be looking at the six best US states where you can start your journey to a successful business. We will also analyze the factors that make these states the first choice for foreign entrepreneurs and business owners to start a business in the US.

Factors to Decide the Best US State to Start a Business

Every State in the US has its own set of opportunities and challenges, and it is the preference of an entrepreneur to choose which are the best states to start a business in the US as per his or her business plan and strategy. Several factors contribute to making a state the best location to start a business in the USA. Below, we will discuss these factors for your understanding:

Tax rates play a crucial role in deciding your place for business. Some states may apply higher tax rates than others, and some states might even exempt the tax. How much taxes are to be paid by the business to the State has to be a deciding factor concerning the best states to start a business in the US.

An entrepreneur considers the cost of living and expenses in a state to be the principal factor in deciding the business location. It covers various costs such as formation fees of the business, annual compliance fees and other operation costs. States such as New York, having a higher cost of living and expensive real estate, have a higher cost of doing business, but on the other hand, the businesses operating in New York have a higher investor appeal, i.e., it is easier for a business in New York to raise funds and investments from the venture capital firms.

Another important factor that will help you finalize the location of your business is the availability of a talented workforce in the State. Employees are the engine of the business, i.e., no business can be successful without its hardworking and talented employees. So, it is a very essential factor in deciding where to start a business in the US. The states having the largest population and good literacy rate are likely to have the most talented workforce.

One of the vital factors to consider while starting a business is the business friendliness of the State. A state should have a business-friendly climate for a business to thrive. The business-friendly climate is determined by various factors such as the local laws of the State, business operating policies and the procedure of business formation. If the local laws of the State are lenient and the process of filing is easier, then it is assumed that the State is business-friendly and encourages entrepreneurs to set up a business in their territory.

You should consider the infrastructure of the State before starting your business. Infrastructure includes connectivity, utilities, communication systems and technological advancements. If you want to start your IT business, then the technologically advanced State will be the best option for you. So, whether the infrastructure of a particular state is adequate for your business or not will depend on your business needs and preferences.

One more factor that influences the decision of an entrepreneur or a business owner is the cost of registering a business in a state. Different states charge different costs for registering your business in their territory.

The last factor that also helps in shaping the decision of the business location is access to capital. There are various locations like Texas where venture capital firms easily fund your business, and it is relatively easier for you to raise capital for your business. These are the factors based on which we will decide the best states to start a business in the US.

Best States to Start a Business in the US

The United States holds a share of 25.12% of the global GDP, which makes it the largest economy in the world, but there needs to be an evaluation of the best states to start a business in the US. This depends on a variety of factors listed above. Below is a list of the six best states in the US to start a business.

Tennessee

Tennessee is an excellent choice to start your business owing to a favorable business climate and low cost of living in the State. To attract business owners and entrepreneurs, the State of Tennessee has no personal income tax, and even the business taxes are very low in comparison to other states in the US. The local laws and business regulations are very friendly and lenient, encouraging entrepreneurs to set up their businesses in the State. Tennessee provides access to a large workforce of more than 3.5 million working adults and the number is growing rapidly year over year. Due to continuous investment in developing the infrastructure and workforce of the State, many companies like Fed Ex and Mitsubishi have shifted their headquarters to the State of Tennessee.

Texas

Texas is considered one of the best states for entrepreneurs in the United States. It is preferable for entrepreneurs who want to start a small business, i.e., a business having less than 5 employees. Corporate or Personal income tax is exempted in Texas, and it is ranked fourth among the list of states having the highest number of businesses with less than 5 employees. Another factor that makes it one of the best US states to start a business is access to a talented workforce of more than 14 million working adults. It also has a lower cost of living, which significantly reduces the cost of doing business in the State. Moreover, it will cost only a few dollars if you want to register an LLC in Texas. Texas has the best corporate infrastructure in the US, making it a hub for foreign direct investments and a leading export state. Texas’s location makes it a hub for investors, and it is relatively easier to raise capital for business in Texas than in other states.

Florida

Florida, also termed the Sunshine State, is not only a top destination for vacations but also the most preferred location for entrepreneurs. In the United States, the highest number of entrepreneurs is located in Florida, which also ranks second among the states with the highest number of businesses with less than 5 employees. It clearly implies that it is an excellent location for operating small businesses. Apart from this, it has exempted personal income tax, and the corporate income tax is very low, i.e., 5.5%. The State also has access to a talented workforce of more than 10.5 million people. So, you can start a business in Florida with a minimum number of employees and enjoy these perks, as the filing fee for an LLC in Florida is only 100$. 

Georgia

Georgia is an outstanding location for small business owners and entrepreneurs due to the low cost of living in the State. Being the 8^th biggest State in the US in terms of population, it has a talented workforce of more than 5.3 million people. It produces over two lakh graduates every year; this makes it an attractive location for businesses that want to hire young talents with brilliant new ideas. The business environment is perfect for growth and as per a study, Georgia has achieved the highest rate of business growth among US states in the years 2021 and 2022. The tax rate in the State is also very low, i.e., corporate income tax is charged at 5.75%.

Delaware

Delaware also termed the ‘Diamond State,’ is known for its business-friendly climate that fascinates entrepreneurs and makes them want to start a business in the US. It has an excellent infrastructure and favourable local laws that encourage business owners to set up the business in their territory. The one defining feature of Delaware that is different from other US states is that it has established specialized courts that only handle disputes arising from businesses. It allows them to resolve the disputes at a faster rate. Moreover, the business formation process is quite easy and fast in the State. If you are selling the goods in the Delaware state only, then no sales tax or VAT is charged on the sale of those goods. Due to its favourable local laws and lenient tax policies, it has become a hub for entrepreneurs looking to start their small businesses.

Ohio

Ohio is an exciting location for entrepreneurs due to its low-income tax rate of 3.99% and an exemption on corporate income tax. It provides access to a large workforce of more than 5.7 million adults, and this is the reason why many big companies like Kroger and Macy’s have been established in the state. The cost of living in Ohio is below the national average, and it only charges a minimal amount of 99$ as the fee for registration.

Conclusion

The United States, being the world’s largest economy, is a dream destination for entrepreneurs and business owners. The access to a talented workforce and an excellent infrastructure make it a perfect location to start a business. There are 50 states in the US, which makes it difficult for entrepreneurs to select an adequate state for their business. Various factors contribute to this decision, i.e., which is the best State to start a business in the US. It includes the cost of doing business in a state, infrastructural facilities available, such as digital connectivity and utilities, tax rates for businesses, a talented workforce, local laws and policies, filing procedures and technological advancements. Based on these features, we have prepared a list of the six best states to start a business in the US, namely, Texas, Tennessee, Georgia, Ohio, Delaware and Florida. Texas has the second largest workforce in the US and has no corporate or personal income tax. Delaware has a business-friendly climate with favourable tax policies and specialized courts for resolving business disputes. Ohio provides access to a large, talented workforce of more than 5.7 million people and charges only a registration fee of $99. Georgia charges corporate income tax at a low rate of 5.75% and produces more than 2 lakh graduates every year, making it a hub of young and brilliant minds. Florida has the highest number of entrepreneurs in the US, along with a talented workforce of 10.5 million working adults. Tennessee has an excellent infrastructure, low cost of living and charges no personal or corporate income tax. So, based on these facts and analysis, you can choose where to start a business in the US based on your business needs and strategy.

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