15 Cheapest & Most Expensive States To Start a Business

Starting a business is a great way to become your own boss and build wealth. According to the Bureau of Labor Statistics, over 600,000 businesses are started yearly.

But starting a business can be expensive. From startup costs to wages to taxes, there are a lot of factors that can affect how much money you need to get a business off the ground.

A recent analysis by Simplify LLC found that some states cost a lot less than others to start and run a business. We combed through the data to find out which states are the most business friendly – and which ones cost a lot more to start a business.

We’ve reviewed the data, and these are the 8 most expensive states to start a business in:

• LLC filing fees: $100
• Average annual wage: $51,392
• Average monthly commercial electric bill: $431.95
• Average corporate income tax rate: 6.42%

Nebraska has a high corporate tax rate with an average salary over $51,000. Pair that with a low business survival rate and lack of qualified workers, and it makes it tough to start a business in Nebraska.

• LLC filing fees: $101
• Average annual wage: $49,817
• Average monthly commercial electric bill: $382.04
• Average corporate income tax rate: 6.50%

West Virginia’s high corporate tax rate makes it an expensive place to start a business. But its low labor force participation makes it difficult to find good help, with only 65% of the eligible population working. Pair that with less than 24% of workers with a bachelor’s degree (or higher), and starting a business could prove tricky in West Virginia.

• LLC filing fees: $130
• Average annual wage: $52,069
• Average monthly commercial electric bill: $587.18
• Average corporate income tax rate: 7.90%

Wisconsin charges a very high corporate tax rate of nearly 8% on top of regular taxes, plus their LLC filing fees are on the higher side. Pair that with above-average wages for workers and high utility bills, and Wisconsin is an expensive place to launch a new business.

• LLC filing fees: $200
• Average annual wage: $51,815
• Average monthly commercial electric bill: $573.08
• Average corporate income tax rate: 6.50%

Alabama might seem like a cheap place to live, but starting a business there is another story. High LLC fees, a 6.50% corporate tax rate, and higher-than-average utility costs make it one of the most expensive states in the U.S. for new businesses.

• LLC filing fees: $250
• Average annual wage: $61,352
• Average monthly commercial electric bill: $746.45
• Average corporate income tax rate: 5.30%

Alaska has become an expensive place to own a business, with very high LLC filing fees and well above average-worker wages. Pair that with cold weather and a remote location, and the utility bills are much higher than in most other places. This makes Alaska one of the most expensive places to start a business.

• LLC filing fees: $100
• Average annual wage: $51,586
• Average monthly commercial electric bill: $643.18
• Average corporate income tax rate: 5.50%

Louisiana charges corporate taxes at 5.50%, which automatically makes it more expensive than some other states that don’t have additional corporate taxes. Pair that with high utility costs, and a low amount of qualified workers, and it’s tough to start a business in Louisiana. 

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• LLC filing fees: $200
• Average annual wage: $62,026
• Average monthly commercial electric bill: $806.07
• Average corporate income tax rate: 6.88%

It’s no surprise that it is expensive to start a business in New York. With a corporate tax rate near 7%, very high utility costs, high workers’ wages, and high LLC filing fees, you’ll need quite a bit of up-front capital to start a successful business in New York.

• LLC filing fees: $135
• Average annual wage: $60,958
• Average monthly commercial electric bill: $673.61
• Average corporate income tax rate: 9.80%

Surprisingly, Minnesota is more expensive for businesses than New York. A lot of it has to do with the ski-high 9.80% corporate tax rate, which is a few percentage points higher than any other state. High wages and utility costs hurt as well, making Minnesota the most expensive place to start a business.

• LLC filing fees: $75
• Average annual wage: $51,885
• Average monthly commercial electric bill: $463.41
• Average corporate income tax rate: 0%

Nevada is a business-friendly state, with very low LLC filing fees, a lower employee wage (on average), and no additional corporate taxes assessed. With a low cost of living and reasonable utility costs, Nevada ranks as the least expensive state to start a business.

• LLC filing fees: $50
• Average annual wage: $59,688
• Average monthly commercial electric bill: $478.70
• Average corporate income tax rate: 4.40%

While the cost of living can be high in Colorado, it is a very business-friendly state. With a low corporate tax rate, relatively low utility costs, and a large pool of qualified workers, businesses can thrive in Colorado.

• LLC filing fees: $45
• Average annual wage: $46,311
• Average monthly commercial electric bill: $455.71
• Average corporate income tax rate: 3.30%

Arkansas is a business-friendly state with a low corporate tax rate (which is probably why Walmart is headquartered there). Paired with low LLC filing fees, low worker wages, and low utility costs, Arkansas is a great place to save costs when starting a business.

• LLC filing fees: $70
• Average annual wage: $47,834
• Average monthly commercial electric bill: $382.07
• Average corporate income tax rate: 6.75%

Montana is beautiful, and it also is a great place to start a business and save money. With low fees, wages, and utility costs, the state lets you get started without costing an arm and a leg. The corporate tax rate is on the higher side at 6.75%, but everything else is cheap.

• LLC filing fees: $125
• Average annual wage: $53,592
• Average monthly commercial electric bill: $461.77
• Average corporate income tax rate: 2.50%

North Carolina is business friendly, with a low 2.50% corporate income tax rate. Paired with reasonable utility costs and wages for workers and it’s not too expensive to start a business here. 

• LLC filing fees: $150
• Average annual wage: $47,626
• Average monthly commercial electric bill: $540.50
• Average corporate income tax rate: 0%

South Dakota is one of the few states with no extra corporate taxes, making it much cheaper than other places to run a business. And while LLC filing fees and utilities are about average, the annual wages are lower, keeping the #1 expense (at most businesses) lower than other locations. 

• LLC filing fees: $100
• Average annual wage: $52,164
• Average monthly commercial electric bill: $478.60
• Average corporate income tax rate: 0%

The cheapest state to start a business is Wyoming. With no corporate income taxes, low utility costs, and reasonable annual wages, businesses can thrive without paying too much. Plus, workforce availability is near 80%, making it a great place to find workers.