5 Best States for Starting a Business

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Starting a new business is hard, and many states make it even harder with tangled regulations, annoying paperwork and high taxes. Certain states support entrepreneurs, however, by keeping the tax burden low, transportation costs reasonable, and hiring and employment guidelines relatively simple. Find business success by heading to one of a handful of states that seem to be perennial winners in the race to attract new and young companies.

5 Wyoming

Startup businesses that run vehicle fleets could do much worse than Wyoming, which has a low fuel tax rate of 14 cents a gallon, as of 2013, and generally lower-than-average energy costs. Wyoming also follows the South Dakota example with no personal or corporate taxes, or capital gains taxes. That intangible quality-of-life factor is also high in Wyoming, which offers uncrowded cities, extensive national park and forest land, and easy transportation links.

4 Utah

Utah makes just about every list there is of the most business-friendly states in the nation. The state is easy on regulations and low on taxes, and has attracted a large number of entrepreneurial refugees from tax-happy California. Utah also encourages high-tech startups with generous funding of the Utah Science, Technology and Research initiative, which provides an interface for academic researchers and new commercial enterprises.

3 Maryland

Maryland ranks high for science, engineering and technology startups. The state placed first in a 2013 Entrepreneur.com survey of the best states to run a high-tech business. Although it doesn’t have the business-friendly reputation equal to that of rival Virginia, Maryland actually beat Virginia in private-sector job growth after the recession of 2008-10. The Washington, D.C., suburbs provide a well-educated and productive workforce. The Entrepreneur study also cited ACTiVATE, a program supported by the state and the city of Baltimore that allows women entrepreneurs a full year of support for startup businesses.

2 Texas

A recent survey by “Forbes” ranked Texas high on the list of business-friendly states, citing Austin, San Antonio and Dallas-Fort Worth as three top-ranked cities for general business climate. According to a statistical survey in the same periodical, the state enjoyed a net population migration of 186,500 in 2012 and boasts business costs that run 4.6 percent below the national average.

1 South Dakota

South Dakota offers several tangible benefits to startups, including a zero corporate tax rate. Business proprietors also benefit from the lack of a personal income tax and low property tax rates, averaging 2.9 percent. There is no tax on personal or business capital gains, and the state minimum wage as of 2013 was $5.85 an hour, below the national average. The state also ranks high on quality-of-life measures, with a low crime rate and uncongested cities.
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