Have a Money-Making Business Idea? The 3 Best (and 3 Worst) States for Success
Written by
Peter Burns
Edited by
Molly Sullivan
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Being your own boss, following your dreams, having a flexible schedule and being financially independent are just a few of the many reasons to start your own business.
If you’re thinking of becoming an entrepreneur, choosing the state to register your company in is an important decision. Where you start your business can have a big impact on your chances for success.
The Best States for Starting a Business
If you’re looking for a great place to register your new company, you’ll want to take a look at these three states.
Wyoming
At first glance, Wyoming might not seem like a great place to start a business, but it offers several important perks for those launching an LLC. Many online businesses can take advantage of the benefits because you don’t need to live in Wyoming to register an LLC there.
One major benefit is that Wyoming allows LLCs registered in the state to remain private and doesn’t require business owners to list their names in public records. This anonymity protects you from unwanted attention, creditors and personal attacks from online communities.
South Dakota
Saving money on taxes means more revenue for your business, and South Dakota is a great place for this. It uses pass-through taxation, which means companies don’t file tax returns because the revenue passes down to the owners, investors and shareholders of a company. Because only individuals pay their company’s taxes, they aren’t taxed twice. Traditional corporations that don’t use pass-through taxation would need to pay taxes on their profits, and then individuals must pay taxes on their earnings as well.
Utah
Starting a business usually requires a lot of funding, and there isn’t a better place to get it than Utah. The State Small Business Credit Initiative (SSBCI) recently provided Utah’s small business community with $23 million in U.S. Treasury funding. Adding to Utah’s reputation as an excellent place to start a business is the fact that banks distributed $846.1 million in loans to Utah businesses with $1 million or less in 2022.
The Worst States for Starting a Business
Many factors can make a state a bad place for a startup, and these three states show what those are.
California
When it comes to the worst states for starting a business, you can’t overlook California. Between 2019 and mid-2024, over 200 businesses relocated from California to other states. This is more than double the number for New York, which has the second-most relocations. The number of regulations California has continued to impose is a big reason for this. The California Code of Regulations has over 400,000 restrictions as of 2023.
Illinois
Illinois is an expensive state to start a business in because of its high corporate tax rate. It is one of four states that levies a corporate income tax rate of 9% or above, coming in at 9.5%. With a tax rate this high, businesses end up with reduced profit margins and are less attractive to investors. The lack of capital can limit companies in hiring new employees or raising salaries.
Washington
Out of all of the states, Washington has the lowest rate of business survival, with 75.12% of businesses surviving one year and only 42.75% lasting more than five years. One reason for this may stem from how expensive it is to pay employees. The statewide minimum wage in Washington is $16.28 per hour, which is the highest in the nation.
More From GOBankingRates
