10 Best States to Start a Business (2025)

The US consistently ranks among the best countries in the world to start a business. In fact, there were 448,758 new small business applications in November 2024 alone. 

But the US is a huge place, made up of 50 states that can each seem like their own country—and rightly so: virtually every state operates within its own set of laws, which can make running a business in, say, Georgia a pretty different experience from setting up shop in Utah.

Some states offer a better business environment than others, which makes choosing your business’s home base (or market entry) an important consideration. To help you with that decision process, this article highlights the top 10 best states to start a business in, plus more information on what makes those the most business-friendly states.

Ready to start your business? Create your website today or learn more about Shopify’s tools for selling online and in person.

10 best states to start a business

1. Utah
2. Florida
3. Texas
4. North Carolina
5. Indiana
6. South Dakota
7. Nevada
8. Montana
9. Alaska
10. New Hampshire

Year to year, media outlets designate select states as the best states to start a business; these ratings tend to fluctuate over time. In order to rank these most business-friendly states, analysts look at various factors—from labor costs to tax treatments—and, in many cases, weigh certain factors over others. 

The following 10 states are among those most frequently cited as the best states to start a business in America.

1. Utah

• 4.55% corporate tax
• 4.85% sales tax
• $59 filing fee
• 352,191 small businesses (99.4% of Utah businesses)
• 3.5% unemployment rate
• 654,553 small business employees 

Utah is considered one of the most business-friendly states in the West, due to several important factors. Those include its low taxes (4.55% corporate income tax), fast-growing economy, highly skilled workforce, state-of-the-art technological infrastructure, and support for startups and small businesses.

One of the key benefits to starting a business in Utah is the state’s strong venture capital community, which provides access to funding for small businesses in their startup phase. According to research, one out of every 61 Utah startups backed by venture capital reaches unicorn status. That means the number of Utah’s privately held startups valued at more than $1 billion is almost 70% above the national average.

2. Florida

• 5.5% corporate tax
• 6% sales tax
• $150 filing fee
• 3.3 million small businesses (99.8% of Florida businesses)
• 3.3% unemployment rate
• 3.6 million small business employees 

Florida’s business-friendly environment is thanks to low taxes, pro-growth policies, and a robust economic landscape. Its 5.5% corporate tax rate and zero personal income tax make for a highly favorable climate for small businesses and their employees.

Florida is especially attractive for industries like tourism, aerospace, and health care. Its large population and steady influx of new residents provide a growing customer base and a dynamic workforce.

The state also offers incentives for small businesses, including tax exemptions, workforce training grants, and access to capital programs. With its warm climate, world-class infrastructure, and entrepreneurial spirit, Florida continues to rank as one of the top states for business.

3. Texas

• 0.375% gross receipts tax for retail or wholesale
• 6.25% sales tax
• $300 initial filing fee
• 8th largest economy in the world
• 3.3 million small businesses (99.8% of Texas businesses)
• 4.9 million small business employees

As the saying goes: Everything is bigger in Texas—including economic opportunity for small businesses. The Lone Star State’s favorable business climate is based largely on its low taxes, large and highly educated skilled workforce, pro-business laws, and favorable tax codes.

Small businesses in the technology, energy, health care, and logistics sectors do particularly well in Texas—though businesses of any type can take advantage of its tax credits, job creation incentives, and startup financing initiatives. Texas is also one of the few states that levies no income tax on corporate earnings.

4. North Carolina

• 2.5% corporate tax rate
• 4.75% sales tax
• $200 annual filing fee
• 1.1 million small businesses (99.6% of North Carolina businesses)
• 1.7 million small business employees

North Carolina is one of the fastest-growing economies in an already fast-growing region of the US—only two states have grown more in population than the Tarheel State in recent years. This is due primarily to its pro-business policies, relatively low taxes (a 2.5% corporate tax rate), and overall favorable business climate.

North Carolina has a highly skilled workforce, making it an attractive location for small businesses in technology and manufacturing industries. The state also offers various incentives for businesses, like tax credits and startup support initiatives such as the Research Triangle Regional Partnership.

Plus, business opportunities abound here. North Carolina has a strong business presence across several key industries, including furniture, textiles, biotechnology, information technology, and finance.

5. Indiana

• 4.9% corporate tax rate
• 7% sales tax rate
• $32 online, $50 by mail filing fee every two years
• 569,851 small businesses (99.4% of Indiana businesses)
• 1.2 million small business employees

Indiana’s business-friendly reputation is built on its low taxes and streamlined regulations. Its 4.9% corporate tax rate is among the lowest in the Midwest, making Indiana an attractive destination for entrepreneurs and businesses looking to reduce operational costs.

The state’s central location and extensive transportation infrastructure of highways, railways, and ports makes it a hub for logistics and manufacturing industries. Plus, a relatively low cost of living helps small businesses attract and retain talent. Indiana also supports small businesses with tax incentives, grants, and workforce development programs aimed at fostering growth in emerging sectors.

6. South Dakota

• 0% corporate tax rate
• 4.2% sales tax rate
• $50 annual filing fee
• 94,379 small businesses (98.9% of South Dakota businesses)
• 207,825 small business employees 

South Dakota is popular among entrepreneurs for its tax advantages—there’s neither corporate income tax nor personal income tax. This has made it ideal for entrepreneurs and businesses looking to maximize profitability.

Small businesses thrive with a strong sense of community and minimal regulations. Agriculture, manufacturing, and financial services in particular benefit from the state’s pro-business policies and skilled workforce. Plus, a low cost of living and high quality of life make it an attractive place for both businesses and employees alike.

7. Nevada

• 1.17% General Business Modified Business Tax rate
• 6.85% sales tax rate
• $150–$200 annual filing fee
• 333,471 small businesses (99.3% of Nevada businesses)
• 524,247 small business employees

Nevada offers low taxes and minimal regulatory requirements for small businesses. There’s no corporate income tax, and its Modified Business Tax (MBT) rate is highly competitive. These factors, plus its strategic location near major markets like California, make Nevada a prime spot for businesses.

The state’s economy is diverse, spanning tourism, entertainment, logistics, and renewable energy. Nevada also offers incentives for small businesses, including grants and tax abatements aimed at driving innovation and growth. Entrepreneurs benefit from the state’s vibrant business community and access to resources like startup incubators and networking opportunities.

8. Montana

• 6.75% corporate tax rate
• 0% sales tax rate
• $35 annual filing fee
• 136,968 small businesses (99.3% of Montana businesses)
• 250,638 small business employees

Montana’s zero sales tax and relatively low corporate tax rate make it an attractive destination for small businesses. Its straightforward regulatory environment and low filing fees further enhance its appeal for entrepreneurs.

The state’s economy is driven by industries such as agriculture, tourism, and energy. Small businesses play a vital role in these sectors, supported by the state’s commitment to workforce development and access to financial resources. Additionally, Montana’s stunning natural landscapes and high quality of life make it an appealing place to live and work.

9. Alaska

• 9.4% corporate tax rate
• 0% sales tax rate
• $50 annual filing fee
• 75,980 small businesses (99.1% of Alaska businesses)
• 133,542 small business employees 

Alaska is another excellent state to start a business. While its corporate tax rate is higher than many other states, its zero sales tax and low filing fees offset this cost for businesses. Alaska’s unique location and access to natural resources make it an ideal place for businesses in industries like fishing, oil, and tourism.

Small businesses in Alaska also benefit from state programs for entrepreneurship and innovation. The Alaska Small Business Development Center, for example, offers resources, training, and mentorship to help entrepreneurs thrive. 

Despite its remote location, Alaska’s tight-knit communities and unique market opportunities create an environment where many small businesses can succeed.

10. New Hampshire

• 7.5% corporate tax rate
• 0% sales tax rate
• $100 annual filing fee
• 142,626 small businesses (99% of New Hampshire businesses)
• 294,022 small business employees

Zero sales tax and relatively low corporate tax rate make Nevada another great choice for businesses. It offers a skilled workforce and strong infrastructure, which support industries ranging from manufacturing to technology.

Small businesses in New Hampshire can take advantage of numerous state initiatives, including tax credits and grants. The state’s strategic location in New England provides easy access to major markets, while its quality of life—including top-tier schools and outdoor recreational opportunities—makes it an attractive destination for entrepreneurs and their families.

What makes a state business-friendly?

There are several factors that contribute to certain states consistently ranking among the best states to start a business in the US. Let’s take a look at these business-friendly factors, including labor laws, demographics, and more. 

Taxation

Although all businesses in the US are subject to certain federal tax obligations, local tax treatment can vary greatly from state to state. Some state tax systems are friendlier to small business owners than others. South Dakota and Texas, for example, levy no corporate tax on income generated by corporations.

Labor laws

State laws regarding minimum wage, employee insurance requirements, and payroll taxes can substantially drive up labor costs. States like Louisiana and New Mexico have been recognized for their low costs of labor.

Infrastructure

Businesses across the US rely on dependable local infrastructure like roads, rail lines, and business utilities. A well-designed and maintained transit system is crucial for on-time shipping, smooth logistics, and a continuous supply chain.

Additionally, up-to-date telecommunications infrastructure is critical for small businesses that operate primarily online. Operating in a state with high-speed internet and low incidence of service disruption lets businesses quickly—and consistently—fulfill orders and support customer inquiries. 

Education and skills of the local population

The education level of a state’s workforce is linked to business success. States with traditional colleges, as well as alternative occupational training programs and opportunities, tend to produce a more diverse and well-educated local workforce. This is a valuable resource to businesses because it helps ensure a skilled workforce and adequate labor supply to meet various business needs.

Ease of business setup

Some states offer easier pathways to setting up a small business than others. Colorado and North Carolina, for example, offer low new business formation fees and quickly navigable online incorporation processes. This makes it easier to set up your business and choose your business name.

Cost of doing business

Besides startup costs, average ongoing business costs also inform how business-friendly a state is. This often coincides with a state’s cost of living. More densely populated urban states like California generally levy higher costs of doing business as a factor of their higher costs of living, compared to more sparsely populated rural states like North Dakota, or states with smaller populations overall, like Delaware.