10 Best and Worst States to Start a Business in the USA

You are probably the wannabe entrepreneur, and you have done everything to inspire and motivate yourself to form the first company of your life. But if you are still in the research mode, you need to know that geographic location also matters a lot in setting up a business. In simple words, some states in the United States are known and trending for new business enterprises, while others are not-so-famous to open business ventures. 

There are numerous factors for this major segregation as the best and worst states. In fact, they are the best and not-so-best states for business enterprises.

While setting up a business entity, a mere business plan or a strong mission statement is not sufficient. You are a dynamic entrepreneur, and so, you should decide where the business is to be based. Fortunately, the business industry has made it easy for a layman to start a business in any state and flourish it. 

Before we step into the best and worst states, let us understand the factors that govern this significant distinction. Let us go through these critical factors. 

Economy and access to capital

The first factor that determines the best state is the economy or the gross domestic product. When the GDP of a particular state is favourable, then indeed, there are higher prospects for a new business or growth of an existing one. 

The next important thing for a new business is capital or financing. From where can they source finance? Is it easy to access financial institutions and banks for start-up capital needs? Does the state impose any regulations while raising finance, particularly if it is a new business entity? The best rankings are awarded to those who have a huge investment size. 

Tax implications

Another important aspect that dominates the functioning of a business enterprise is the tax code. The more complex the tax code, the harder it gets for a business to run and grow. The best state is one that does not over-burden you with the payments but makes it more relaxing for you to complete this legal formality. Some states have extra charges for businesses, while others do not have this aspect. Before you step into a state for running a business, going through the tax code is utterly important. 

Talented human resource

A business is not just made of lavish premises and sufficient capital. It is made of people who work and contribute their skills and abilities. And for a successful business, you need talented and humble staff who are passionate about working in your entity. The state of business operation must have young graduates willing to work in a corporate. You do not search only for talent. You also need to find a competitive salary structure. Your staff should seek reasonable paychecks without letting you drain out of all money. 

A competitive business culture

Now, how do you know that the state has a pleasant business culture? Probably, one can check the survival rate of the new business entities in that state. The higher the survival rate, the better it is for you to have more business opportunities. 

As you have checked the factors that entail the best and worst states to start a business, let us go through some of these for your easy reference. Do your best while initiating a business in the USA, and start in a state with less legal formalities and more business growth. 

The best states to set up a business are as follows: 

1. Utah

The internet brags about this wonderful state of Utah to start a business operation. The taxes are low, the GPD is higher, and there is a considerable adult population that can be a targeted workforce. It is also easy to access venture capital. The flourishing business options in this state are from health to technology, and also travel and tourism sectors. 

2. California

One of the demanding business states in the USA is California. It not only has a pleasant climate to live in but also for business growth and expansion. It is the best state to set up a tech company due to the incredible infrastructure, human resources, and vast market structure. Do you know that it has a business survival rate of 90 percent, including new businesses? Then why not set up a small business in this state and seek better prospects! 

3. Washington

The favourable GDP and young population are the striking features of this state that compel you to start a business enterprise here. It is not only growing in terms of people, but the economy is swift and as desirable for a business to succeed. Venture capital is accessible, and new businesses flourish in this state without major difficulties. If you wish to invest in a business in Washington, then for a real estate venture, hospitality, or even media agency. You will surely grow! 

4. Colorado

A significant state in the United States for energy and infrastructure is Colorado. It has a high population rate and has numerous venture capital opportunities. No doubt the economy is hiking up, and the tax implications and reasonable and within reach of a new business entrepreneur. With fewer formalities and more growth prospects, Colorado has a future for food and agriculture businesses too. 

5. Texas

We cannot miss out on Texas as it has a greater number of construction workers, suitable for someone into a relevant business venture. If you decide to start a construction business, no matter how small-scale it is, set up in Texas. It appeals to new and young population from other states, and the economy is favourable. Venture capital is higher, and it also has scope for business domains like oil and gas industries, banking sectors, etc. 

Other best states to start a business in the USA are Florida, North Carolina, Idaho, Georgia, and Oklahoma. 

The worst states to start a business are as follows: 

  1. Rhode Island. 
  2. New Jersey. 
  3. Alabama. 
  4. Connecticut.
  5. Maryland. 
  6. Arkansas. 
  7. Maine.
  8. Pennsylvania. 
  9. New Hampshire. 

As you pick up a state to start your business, you get one step closer to your aspiration and dream. Be wise and make sound decisions with this short guide.


1. What are the best states to start a business in the USA?

There is no single best state to start a business in the USA. Each state has its own strengths and weaknesses, and the best state for a particular business depends on the specific business’s needs. Some factors to consider when choosing a state for starting a business include: the business’s industry, the size of the market, the availability of resources and talent, the tax climate, and the business’s location.

2. What are the worst states to start a business in the USA?

The worst states to start a business in the USA are Mississippi, Louisiana, Alabama, and Arkansas.

3. What are the most important factors to consider when starting a business in the USA?

This is a question with many answers, as there are many important factors to consider when starting a business in the USA. Some of the most important factors include:
1. The type of business you want to start: There are different types of businesses, each with their own set of rules and regulations. It is important to choose the right type of business for your unique products or services.
2. The location of your business: The location of your business can impact many aspects of your business, including its success. You will need to consider the demographics of the area, the competition, and the infrastructure.
3. The financing of your business: Securing the right financing is critical for any business. You will need to consider your start-up costs, operating expenses, and whether you will need to borrow money.
4. The marketing of your business: Marketing is essential for any business. You will need to create a marketing plan that includes advertising, public relations, and social media.
5. The management of your business: Proper management is essential for any business. You will need to put together a team of qualified individuals to help run your business.

4. What are the best resources for starting a business in the USA?

There are many resources available for starting a business in the USA. The Small Business Administration (SBA) is a good place to start. The SBA provides counseling, training, and financing programs to help small businesses start and grow. Other resources include the U.S. Chamber of Commerce, the National Federation of Independent Business, and SCORE, a nonprofit association that helps small businesses with advice, training, and mentoring.

5. What are the most common mistakes made when starting a business in the USA?

The most common mistakes made when starting a business in the USA are failing to do proper research, not having a well-thought-out business plan, and not having enough capital. Other mistakes include underestimating the competition, not understanding the regulatory environment, and not having a clear understanding of the target market.

6. What are the best ways to market a new business in the USA?

There are many ways to market a new business in the USA. Here are some of the most effective:
1. Create a strong online presence. Make sure your website is well-designed and optimised for search engines. Use social media platforms to connect with potential customers and create a community around your brand.
2. Get involved in local events and meetups. This is a great way to connect with potential customers and create brand awareness.
3. Use traditional marketing methods. Place ads in local publications and on billboards. Make use of flyers, brochures, and other printed materials to spread the word about your business.
4. Use word-of-mouth marketing. engaging with your target audience and providing great customer service will encourage people to spread the word about your business to their friends and family.

7. What are the most effective methods for promoting a new business in the USA?

The most effective methods for promoting a new business in the USA will vary depending on the type of business, the product or service being offered, the target market, and many other factors. However, some general tips that may be helpful include using social media platforms such as Facebook and Twitter to create a buzz around the business, conducting marketing campaigns targeting specific demographics, and using traditional marketing channels such as print and television advertising.

8. What are some common pitfalls to avoid when starting a business in the USA?

The common pitfalls to avoid when starting a business in the USA are:
1. Not doing your homework: Make sure you research the market and understand the competition before you start your business.
2. Not having a solid business plan: A business plan will help you map out your business goals and objectives, as well as your marketing and financial strategies.
3. Not securing financing: Make sure you have the capital you need to get your business off the ground.
4. Not being realistic: Don’t underestimate the amount of work and effort it takes to run a successful business.
5. Not taking advantage of resources: There are numerous resources available to help you start and grow your business. Take advantage of them!

9. What are the best states to form an LLC in the USA?

The best states to form an LLC in the USA are California, Colorado, Delaware, Florida, Georgia, Illinois, Kansas, New York, Nevada, North Carolina, and Texas.

10. What are the best states to incorporate a business in the USA?

The best states to incorporate a business in the USA depend on the type of business and the state’s tax laws. Some states have lower corporate tax rates than others, and some have more lenient rules for businesses.