The Best U.S. States to Start a Business

The Best U.S. States to Start a Business
Location, location, location.
by Alise Bailey Apr 25, 2017 — 2 min read
The Best U.S. States to Start a Business

Location, location, location. For entrepreneurs, it can make or break a business. From real estate costs to taxes and labor, there are many factors that contribute to your success.

A recent report from U.S. News and World Report lists the top states to start a business. The list is based on two metrics: a state’s business birth rate (average annual number of new businesses in a state, as a percentage of the total number of establishments, between 2013 and 2015) and total patent creation.

These metrics tell us two things: how strong the climate is for businesses to get started and continue to thrive, and how innovative businesses are.

If you’re looking for the perfect location for your new endeavor, consider one of these top 10 states. Their work to become attractive for businesses has encouraged entrepreneurs of all types to put down roots.

  1. California: The birthplace of Silicon Valley and the home of Hollywood, California is a booming home for just about any type of business. Beware though, California comes with a price. Its major cities are some of the most expensive in the country.
    • Business birth rate: 3.5
    • Patents granted: 996.7
    • In good company: Airbnb, Disney, Apple
  2. Massachusetts: The Bay state boasts a robust technology industry, and educated talent is in high supply from numerous notable secondary educational institutions.
    • Business birth rate: 3.2
    • Patents granted: 976.8
    • In good company: Boston Scientific, Staples, General Electric
  3. Idaho: While Idaho is known for agriculture, it’s also a hub for technology and manufacturing. The cost of living is low, and the state’s job growth has led the country in the last six months.
    • Business birth rate: 3.6
    • Patents granted: 577.9
    • In good company: Albertsons, Coldwater Creek
  4. Colorado: Colorado is a burgeoning center for technology, health care, and the outdoor industry. It’s also recently become an innovator in the agricultural field.
    • Business birth rate: 3.4
    • Patents granted: 551.1
    • In good company: Coors, Vail Resorts, RE/MAX International
  5. Utah: An affordable corporate tax and a strong talent pool make Utah an attractive home for many companies. The outdoor industry, tourism, and technology are leading sectors.
    • Business birth rate: 3.5
    • Patents granted: 445.7
    • In good company: 1-800 Contacts,, Black Diamond Equipment
  6. Florida: The Sunshine state has no income tax and booming tourism, agriculture, and trade industries, since 40 percent of all U.S. exports to Latin and South America go through the state.
    • Business birth rate: 3.8
    • Patents granted: 200.9
    • In good company: Tupperware, Gulfstream, Tropicana
  7. Nevada: From Lake Tahoe to Vegas, there are plenty of exciting opportunities for tourism in Nevada. Other industries include logistics, mining, and manufacturing.
    • Business birth rate: 3.6
    • Patents granted: 276.6
    • In good company: MGM Resorts, Zappos
  8. Delaware: With laws that are heavily in favor of corporations, Delaware is the base of over half of publicly traded companies. However, you may be subjected to additional taxes and fees if you operate out of another state.
    • Business birth rate: 3.3
    • Patents granted: 442.6
    • In good company: AT&T, DuPont
  9. Washington: With plenty of highly educated and skilled workers, Washington is a hub for aerospace, manufacturing, health care, and technology. And there’s no income tax.
    • Business birth rate: 2.6
    • Patents granted: 869.5
    • In good company: Microsoft, Boeing, Starbucks
  10. Arizona: The state’s industry is dominated by health care and transportation, but a low cost of living makes Arizona a great place to start a company and hire talent. You can read about some of the best Arizona cities to start a business here.
    • Business birth rate: 3.4
    • Patents granted: 355.5
    • In good company: P.F. Chang’s, Yahoo, and GoDaddy

Alise Bailey
Alise Bailey is an editor at Square, where she writes about how to start, run, and grow a business, highlighting our sellers around the world.


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