Monday, August 24, 2020

5 best U.S. states for starting a small business

I've been checking out the immigration policies of other countries. It seems like one of the most guaranteed ways of getting permanent residency in any country is to put up a business there. It's not cheap, of course, but I can see why governments want new businesses to be pumped into their economy. This guest post is a list of the 5 best states in the United States that you can start a small business in. Good luck!

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GUEST POST - If you’ve been considering starting a small business, we’re here to tell you that it pays to do your research first. Yes, you can set up in any state in the country, but some states are much more favorable than others when it comes to things like taxes. Some states also have declining populations and economies which make starting a business in them a pretty poor idea. For a state to be positive, it needs to be flourishing, both economically and socially. Using research performed by Seek Capital, we are going to show you the top five states to start a small business and explain why each is a good choice.

1. Utah

At the top of the list is Utah. Venture capital flows freely in this state with just over 100 companies receiving $1.16 billion in funding in 2019. This is the fifth best in the country. In addition, the growth rate of companies in the state and the number of employees taken on by companies in Utah is higher than average. Of course, what most people are interested in is the tax savings they can make should they move to Utah. This varies depending on whether you have an LLC or a corporation – with LLCs able to post their losses on members’ private tax returns. However, the low corporate income tax rate of 4.95% is certainly attractive.

2. Texas

Nicknamed the Lone Star State, Texas is the second most populated state in the country and is also one of the best states for starting a small business. Especially well known for its crude oil industry, this state is also home to a lot of tech startups, especially in the cities of Houston, Austin and Dallas. Starting a company in a state such as Texas is also relatively simple, making it a top choice for those new to entrepreneurship. With affordable living and property, a surging GDP, a strong working population, and good weather year-round, Texas is a top choice.

3. Florida

Florida may be a top state for retirees, but it’s also one of the best for those who want to start a travel company. The glorious year-round weather, a low top marginal income tax rate, and a lack of state income tax for individuals all combine to make this state a great contender for new entrepreneurs. What’s more, a good percentage (18.8%) of businesses are able to get up and running for under $5,000 in Florida. It is perhaps this that led to Florida having the largest number of new entrepreneurs in 2019.

4. Colorado

For those who want to get away from the heat, Colorado is an enticing option. Economically a great choice, the working population in the state has grown by 7% over the last five years, and its GDP growth is also higher than average. In addition, over 80% of businesses that start up in Colorado are still active a year later. The state ranks as the tenth best in the country for corporate tax rates, and a high number of jobs tend to be created by those starting up in the state. If you love the mountain air, and want to launch a new company in 2020, Colorado is certainly a worthy choice.

5. California
Finally, we have California. Full of big name companies like Facebook, Google and Apple, California is a great choice for tech companies, but entrepreneurs in other industries as well. 99.8% of the businesses in California are small, yet they’re certainly mighty and employ over 7 million people between them. And, while there is quite a bit more red tape in this state than others, and the corporate income tax rate is higher than almost all over states, the five year survival rate of businesses is higher than average. Although possibly not as impressive as the four proceeding it, it’s still a good option to consider.


Which state are you planning to start a small business in?

*Photos by Ian Schneider, Carlos Alfonso and Ahmet Yalçınkaya on Unsplash.

* This is a guest post, with my edits. To place a guest post, email frances@topazhorizon.com. 

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