Top States to Start a Business In

Starting a business is an exciting journey, but choosing the right location can make all the difference in the organization's success. Across the U.S., certain states stand out for their business-friendly policies, robust economies, and access to resources that help entrepreneurs thrive. From low taxes and affordable operating costs to vibrant markets and skilled labor pools, these states offer unique advantages that attract startups and small businesses. We'll explore the top five states to start a business, highlighting what sets them apart and why they could be the perfect launchpad for your organization.

Delaware

Delaware is one of the most famous business-friendly states, home to Fortune 500 companies like Alphabet (Google’s parent co), Comcast, CVS, and Amazon. Many businesses, specifically corporations, choose to initially form in Delaware to gain all their business advantages, like preferential taxes and legal systems, and then register as foreign entities in whatever state(s) they're executing business operations in—Delaware's proximity to large East Coast markets and Wall Street benefits established businesspeople.

Advantages:

• Reasonable initial filing fees with streamlined processes.
• Low-cost annual report filing fees for corporations and no annual report requirements for other entity types.
• There is no sales tax or economic nexus for sellers.
• No corporate income tax on goods or services not conducted within the state.
• Relatively low payroll taxes for employers.
• The Court of Chancery, a separate court system specifically for handling corporate cases, referenced globally.

Things to Keep in Mind

• All businesses in Delaware will need a general business license through the Division of Revenue.

Costs

Please review all the basics when starting a business in Delaware via our Startup Costs tool; a summary of basic business costs by entity for all states mentioned in this article can be found at the bottom.

Nevada

Nevada's conservative, business-friendly environment has influenced the increasing popularity of business establishments there in recent years. The state offers tax abatements, while its location provides access to many West Coast markets and tourism. Reno and Las Vegas boast the most significant economies and are becoming major hubs for startups and small/medium businesses. The lack of state income tax draws in individuals and businesses alike.

Advantages

• Low initial filing fees.
• No franchise tax or individual/corporate income tax.
• Relatively low payroll tax for employers.
• Actively encouraging business growth with programming and monetary/tax incentives.
• Intuitive and robust online SoS system with straightforward processes.

Things to Keep in Mind

• Every business entity in Nevada will need a general business license for a flat fee of $200.

Costs

Please review all the basics when starting a business in Nevada via our Startup Costs tool; a summary of basic business costs by entity for all states mentioned in this article can be found at the bottom.

Texas

Texas is another conservative environment that promotes pro-business and beneficial tax laws. As the second-largest state economy (after California), the area's size ensures access to a diverse, robust workforce and unique but thriving economies in metropolises like Dallas, Houston, and Austin. Less bureaucratic red tape ensures Texas businesses have fewer hoops to jump through and more straightforward obligations that can be handled with smaller teams.

Advantages:

• Annual report fees are based on revenue rather than a flat fee.
• Franchise taxes only apply to larger businesses with over $2 million in revenues.
• No individual/corporate income tax.
• High sales tax economic nexus, at $500,000.
• Minimum wage equivalent to federal minimum wage.

Things to Keep in Mind:

• The state does have a sales tax, with local jurisdictions able to add up to 2% more to the base rate of 6.25%.

Costs

Please review all the basics when starting a business in Texas via our Startup Costs tool; a summary of basic business costs by entity for all states mentioned in this article can be found at the bottom.

Wyoming

While Wyoming might be a bit more rurally located than other top states to start a business in, its advantages far outweigh any of the challenges. With its low costs and supportive business infrastructure, Wyoming offers a solid foundation for founding or growing a company. The state can also significantly reduce operating costs with affordable labor, real estate, utilities, and more.

Advantages:

• Reasonable, flat filing fees for most entity types.
• Reasonable annual report fees based on company assets.
• No franchise tax or individual/corporate income tax.
• Minimum wage equivalent to federal minimum wage.
• Pro-business legal and social environment.

Things to Keep in Mind:

• Only domestic entities can register online; foreign entities must register by mail or in person.

Costs:

Please review all the basics when starting a business in Wyoming via our Startup Costs tool; a summary of basic business costs by entity for all states mentioned in this article can be found at the bottom.

South Dakota

To round off our top five favorite states, we'll keep up the rural theme and review South Dakota! The state's economy is driven by industries like agriculture, manufacturing, and finance, focusing on supporting small & mid-sized businesses and veteran ownership. While it might be challenging to translate marketing segments and opportunities in the smaller state, the simplicity of formation and continued management means a domestic entity filing could make it much easier to facilitate growth in larger states.

Advantages

• Reasonable initial filing fees.
• Low, flat annual report fee for most entity types.
• No franchise tax or individual/corporate income tax.
• Initiative and robust online SoS system.
• Low operating costs (rent, labor, etc.).
• Pro-business legal and social environment.

Things to Keep in Mind:

• Fees will be lower when utilizing online services versus in-person or office services.
• Some entity types will need to be registered via mail rather than online.

Costs:

Please review all the basics when starting a business in South Dakota via our Startup Costs tool; a summary of basic business costs by entity for all states mentioned in this article can be found below.