10 Best and Worst States to Start a Business in the US 📍

AMS Digital
Jun 6
18 min read

And Why Delaware Didn’t Make the Cut...

So You’ve Got a Dream - Now Let’s Talk Geography Before It Eats Your Wallet

You’ve got the million-dollar idea. You’ve brainstormed for weeks, survived on Red Bulls and stubborn optimism, and even bought a domain name after only nine hours of soul-searching and shouting “everything is taken!” at your laptop. Your business name might still sound like a rejected IKEA product, but hey - progress.

You're ready to launch. You’ve got Canva graphics, a half-working logo, and your cousin agreed to do the bookkeeping “for now.” But then comes the question no one warned you about:

Where are you starting this thing?

Here’s the plot twist no entrepreneur movie montage ever includes - the state you choose to launch your business in is just as important as the idea itself. Actually, scratch that - it might be more important. Because if you set up shop in the wrong place, your “disruptive” business model could be disrupted right into bankruptcy court before you ever print a business card.

Why? Because not all states are created equal. Some want to hold your hand, shower you with tax breaks, and name a street after you if you just file your LLC there. Others will slap you with a $900 annual fee just for existing and bury you in forms written in legal hieroglyphics. And let’s not forget those surprise “you owe us” letters you get in the mail six months later from the Department of Sadness and State Revenue.

Here’s What to Actually Pay Attention To:

Tax rates - both business and personal. Some states want a cut of your lemonade stand before you sell your first lemon.
Startup red tape - how many forms, how much waiting, and do you need a lawyer to fill them out without crying.
Ongoing compliance - are there annual fees, strange reports, or secret rituals involving quarterly filings?
Incentives - does the state give you grants, breaks, or the digital equivalent of a high five for creating jobs?

Example: You launch your e-commerce candle store from your cozy New Jersey basement. Cute. Until you realize the annual LLC fee is enough to buy you 200 candles and the tax on your profits makes you question why you even left your 9-to-5. Meanwhile, someone in South Dakota is selling squirrel-shaped soap on Etsy with zero state income tax and a grin.

So before you say “I do” to any state, let’s do a little pre-nup research. Because this isn’t just about geography - it’s about giving your dream a fighting chance.

And don’t worry - we’ll break it down with facts, laughs, and zero guilt trips. Unless you're in California. Then maybe just a light tap on the shoulder and a raised eyebrow.

🚀 Top 10 Best States to Start a Business

These states are like the golden retrievers of business partnerships - loyal, low-drama, and they don’t chew up your paperwork when you're not looking.

While there’s no one-size-fits-all (unless your business sells one-size-fits-all pants), these 10 states consistently show up as the best places to launch a company without needing a personal line of credit from your grandma. What makes them so good? A combo of low taxes, minimal red tape, reasonable costs of living, and pro-business vibes that scream “go ahead, make your millions.”

But this isn’t just about stats - let’s make it real with the kind of examples that hit home for cleaning businesses, tech startups, law offices, nail salons, and whatever glorious hustle you’re cooking up in your garage.

Here’s why these states are basically the cool kids of commerce:

Low or no state income tax - meaning you keep more of your hard-earned cash instead of feeding it to a bureaucratic black hole.
Business-friendly regulations - AKA fewer surprise paperwork monsters.
Affordable real estate - whether you need a storefront, warehouse, or just a kitchen table with Wi-Fi.
Access to talent - because hiring your cousin’s friend who once made a Canva post isn’t a long-term strategy.
Startup ecosystems - tech incubators, business grants, helpful humans in city government who don’t immediately send your emails to spam.

Example: Let’s say you open a mobile detailing service in Texas. The state doesn’t take your income, you get to operate year-round (because weather), and you can literally network over BBQ. That same business in New York? You’ll be shut down four months a year due to snow and the taxes might cost more than your van.

Another one - maybe you’re launching a boutique marketing agency in Florida. Sunshine tax? Zero. Clients? Everywhere. Meanwhile, your friend opened the same thing in Illinois and now spends half her time dodging LLC fees and explaining her $1,200 annual report filing to her accountant.

Basically, the top 10 aren’t perfect, but they won’t try to sabotage your dreams either.

Let’s roll into the rankings next - with jokes, real numbers, and reasons you should or shouldn’t pack your things and head to the promised land of business bliss.

✅ 1. Texas 🤠

No corporate or personal income tax - That’s right. The government doesn’t want a piece of your pie - which means more pie for you. Whether you’re a solo web designer or running a janitorial empire, Texas lets you keep your queso and cash.
Low cost of living - Office space won’t drain your soul (or savings), and hiring local talent won’t require a fundraising campaign. Plus, tacos are cheap and plentiful - which helps morale more than yoga.
Strong economy - Texas is not just cowboy hats and brisket. The state is booming in tech, energy, logistics, and manufacturing. Austin alone is like Silicon Valley with better barbecue.
Business-friendly laws - Forming an LLC is smoother than your cousin’s jazz playlist. Licensing is straightforward, and the paperwork won’t make you want to eat it out of frustration.

Example: Imagine you’re launching a cleaning company. In Texas, you can advertise year-round (hello, warm winters), build a client base faster than you can say “deep clean,” and you won’t have to budget thousands for income tax payments. Plus, clients are friendly, referrals flow like sweet tea, and if you're really lucky, someone might even tip you with rodeo tickets.

✅ 2. Florida 🏖️

No personal income tax - That’s right - your hard-earned money won’t get swallowed by the state. More funds for growth, staff, or that espresso machine your office absolutely does not need but totally deserves.
Booming population - Florida is basically the VIP lounge of America - people keep moving in. That means more potential customers, more networking, and more chances to accidentally hand out your business card at a retirement party.
Easy business registration - You can register an LLC in Florida faster than you can find parking at the beach during spring break. The process is online, affordable, and doesn't require you to swear an oath over a mountain of paperwork.
Perfect for real estate, tourism, and healthcare - If your business falls into one of these categories, Florida rolls out the red carpet. The real estate market’s sizzling, tourism never sleeps, and healthcare is in constant demand thanks to its growing senior population.

Example: Say you’re opening a wellness spa. Between tourists who’ve been sunburned into oblivion and retirees looking for weekly massages, business will be booming. Plus, you’ll never run out of palm trees for your Instagram feed. Just don’t schedule appointments during hurricane season - those winds will mess up your mood lighting.

✅ 3. Wyoming 🦬

No corporate or personal income tax - Wyoming doesn’t just wave at your profits from a distance - it lets you keep them. Whether you're running an eCommerce empire or a goat-themed merch store, your revenue stays yours.
Simple and cheap LLC formation - Starting a business here is easier than making instant noodles. Filing fees are low, renewals are chill, and no one’s asking you to fax anything from 1998.
High privacy protection - Want to stay off the grid like a business ninja? Wyoming lets you keep member names off public filings. It’s like LLC witness protection - minus the shady past.
Remote-first friendly - You don’t need a brick-and-mortar office. Wyoming’s laws and structure are made for founders who prefer managing from coffee shops, cabins, or that one Airbnb in the mountains with spotty Wi-Fi and great vibes.

Example: Imagine you’re launching a digital marketing agency that’s fully remote. You register in Wyoming, avoid state income tax, keep your personal info private, and spend your days working from anywhere with decent coffee. Your clients never know you're in flannel pajamas 24/7 - and they don’t need to.

✅ 4. Nevada 🎰

No corporate income tax - Nevada lets your business keep its chips. Whether you're selling sneakers or running a content studio, your profits don’t take a detour through the tax collector.
Minimal reporting and regulatory requirements - Forget the paperwork avalanche. Nevada's like the chill teacher who just wants to see you try. Less red tape, more runway.
Great for entertainment and e-commerce startups - From Vegas stages to Shopify carts, Nevada loves businesses that know how to sell a good time. It’s where influencers, event planners, and dropshippers find common ground - and customers.

Example: Say you're launching an e-commerce site that sells quirky home goods. You form your LLC in Nevada and skip corporate income tax, avoid annoying bureaucracy, and maybe even partner with a Vegas magician for your TikTok ads. It’s business with a flair for drama - minus the IRS spotlight.

✅ 5. South Dakota 🦬

No corporate or personal income tax - South Dakota is the quiet genius of the tax world. You keep your profits, and the state doesn’t even ask for a thank-you card. Great for solopreneurs and growing teams alike.
Low cost of doing business - Office rent, utilities, even the coffee for your tiny team - all surprisingly affordable. You won’t need to max out credit cards just to buy a printer.
Less competition, great for niche services - Want to launch a goat yoga retreat or a boutique snowplow design agency? This is your place. With fewer competitors and a tight-knit community, standing out is easier than finding corn in... well, South Dakota.

Example: Imagine starting a digital marketing agency specializing in local home service businesses. In South Dakota, you’d have low overhead, loyal clients, and more breathing room to test, learn, and scale - without competing with every flashy startup in a 10-mile radius. Plus, you can brag that your HQ has more bison than traffic jams.

✅ 6. Utah 🏔️

Low taxes - Utah keeps it chill with both corporate and personal tax rates. It won’t drain your budget just for daring to dream big. More of your earnings stay with you - and your accountant sleeps better at night.
Rapidly growing tech scene - Nicknamed “Silicon Slopes,” Utah is home to a thriving tech ecosystem. Startups, VC funding, and nerdy coffee shops are everywhere - without the soul-crushing rent of Silicon Valley.
Young, educated population - The state has one of the youngest median ages in the country, with a workforce that’s tech-savvy, motivated, and doesn’t require you to explain what a Slack channel is.
Streamlined startup ecosystem - Incubators, coworking spaces, and local government support make launching a business less like solving a Rubik’s Cube and more like assembling IKEA furniture - slightly confusing but doable.

Example: Say you’re starting a SaaS company helping salons book clients and upsell hair masks. In Utah, you’ll find tech talent, local funding, and community support faster than you can say “QR code loyalty program.” Plus, your biggest challenge might be choosing between hiking or skiing after your pitch meeting.

✅ 7. North Carolina 🐗

Moderate taxes but great infrastructure - Sure, you’ll pay some state taxes, but they’re not outrageous - and in return, you get excellent highways, airports, and broadband that doesn’t quit halfway through your Zoom pitch.
Booming cities like Charlotte and Raleigh - These cities are growing faster than your cousin’s crypto obsession. Whether you’re opening a law firm or launching a food truck empire, there’s a thriving, diverse market waiting.
Low cost of living - Office space, housing, and that daily iced latte won’t force you into selling organs. You can actually afford a team - and maybe even give them a break room with a couch.
Strong support for small businesses - Local grants, training programs, and small biz advocacy groups are everywhere. It’s like having a cheerleading squad that also understands QuickBooks.

Example: Imagine you’re opening a beauty salon. In North Carolina, rent is reasonable, stylists are plentiful, and clients love loyalty programs more than sweet tea. With community support and a client base that’s eager to glam up, you’ll go from grand opening to booked-solid Fridays in no time.

✅ 8. Indiana 🏁

Low tax burden - Indiana’s not trying to be fancy - just friendly. With a flat corporate income tax and no drama from personal income taxes, your budget breathes easier. More for growth - less for Uncle Sam.
Affordable labor and real estate - Want a warehouse without mortgaging your dog? Or a reliable employee who doesn’t expect a kombucha bar? Indiana’s your place. You can actually scale without selling your soul - or your equity.
Central U.S. location great for logistics - If your business moves stuff (products, parts, or panic merch), Indiana’s smack in the middle of everywhere. Ship to the coasts, the South, or that mysterious client in Iowa - fast and cheap.

Example: You’re launching a subscription box service for cat lovers. From Indiana, your monthly “Purrfect Parcel” reaches Chicago, New York, and Atlanta without breaking your shipping budget. Bonus - the warehouse is affordable, and your packaging team loves the fact you don’t make them sort glitter.

✅ 9. Tennessee 🎸

No personal income tax on wages - That’s music to your wallet. Tennessee won’t touch your paycheck - which means more money for growth, payroll, or treating yourself to actual branded coffee.
Major hubs like Nashville and Memphis - Whether you're chasing the rhythm of Music City or the freight lanes of Memphis, Tennessee offers urban buzz without coastal chaos. Pro tip: your startup pitch hits different with a banjo in the background.
Strong in healthcare, music, and logistics - Want to launch a telehealth app, open a music-themed cafe, or run a warehouse operation? Tennessee’s got the talent, the infrastructure, and the vibe for all three.

Example: You start a boutique logistics consulting firm. In Memphis, you’re next door to FedEx HQ. Clients are impressed. Packages are moving. And somehow, every networking event involves barbecue and a live band. You fit right in.

✅ 10. Georgia 🍑

Low cost of doing business - From office rent to payroll, Georgia keeps things affordable so you can invest in growth - not just keeping the lights on. You might even have budget left for actual branded pens.
Incentives for startups and tech firms - Georgia rolls out the red carpet for entrepreneurs. Tax breaks, grant programs, and innovation hubs make it feel like the state is actually rooting for you - because it is.
Thriving Atlanta metro area - Atlanta isn’t just peaches and hip-hop - it’s a booming hub for logistics, fintech, media, and everything in between. The talent pool is deep, the connections are strong, and the networking events include sweet tea and sass.

Example: You launch a boutique digital marketing agency. In Atlanta, you’re surrounded by startups, influencers, and tech companies desperate for branding help. By month three, you're booked solid, invited to panels, and figuring out how to scale - all while sipping cold brew on a BeltLine patio.

🤔 But Wait - Where’s Delaware?

We hear it all the time -“But Delaware is where ALL the LLCs live! ”True. It’s like the Beverly Hills of business filings. Fancy, popular, and a little misunderstood.

✅ Great for Big Corporations - Delaware is beloved by Fortune 500s, unicorn startups, and anyone whose legal department has more employees than your whole company. They get perks like the Court of Chancery - a court that only hears business cases. That’s right - it’s basically Judge Judy for CEOs.
✅ Strong Legal Protections - Delaware’s laws are written to favor predictability in business disputes. That’s awesome... if you’re publicly traded or have investors who say “portfolio diversification” a lot.
⚠️ Not So Great for Small Businesses - Here's the twist - if you form your LLC in Delaware but operate in another state, you have to also register as a foreign business there. That means more paperwork, double the fees, and possibly more taxes. It’s like ordering a simple sandwich and getting charged for two.
❌ Hidden Costs for Solo Founders - You’re dreaming of a candle empire, not legal complications. But if you pick Delaware, you might have to pay for a registered agent, file reports in two states, and explain to your accountant why your “simple LLC” is suddenly a tax maze.

Example: Let’s say you’re opening a local cleaning service in Ohio. Forming your LLC in Delaware means you’d still have to register (and pay fees) in Ohio. So now you’re paying two states for the privilege of sweeping floors in one. Not exactly efficient. Unless you love admin work and red tape, Delaware’s probably not your vibe.

🧨 10 Worst States to Start a Business

These states might have gorgeous mountains, iconic skylines, or bagels that bring grown adults to tears - but when it comes to launching a business, they’re about as welcoming as a DMV line at 4:59 PM.

High taxes, brutal regulations, expensive rent, and more red tape than a holiday gift-wrapping station. Unless you enjoy fighting zoning boards and donating half your profits to the state treasury, proceed with caution.

These aren’t business dealbreakers for everyone - but if you’re a small business owner without a legal team, espresso IV drip, and a Zen monk’s patience, they might make you wish you’d opened that coffee cart somewhere else.

❌ 1. California 🌴

High corporate and personal income taxes - If your dream is to work 80 hours a week just to hand half your earnings to the government - welcome home. California’s tax rates hit harder than a double espresso on an empty stomach.
Expensive real estate and labor - Want to rent a shoebox office in San Francisco? That’ll be $10K a month. Hiring a junior marketer? Hope you budgeted like you’re building a rocket.
Heavy regulations - From compost rules to business licenses that feel like a scavenger hunt, California’s red tape is more like a red velvet rope - and you're not always on the list.

Example: Let’s say you’re starting a mobile detailing service. In California, you’ll need permits for water usage, emissions, and possibly even a meditation certification to stay calm through the process. Between taxes, fees, and the 12-page invoice from your lawyer - your budget may need its own fundraiser.

❌ 2. New York 🗽

Sky-high taxes and rent - Want to open a bakery in Brooklyn? Be ready to sell $19 croissants just to cover rent. Between state and city taxes, even your side hustle might need a side hustle.
Endless red tape - Getting permits in NYC feels like applying for a role in a Broadway play - expensive, competitive, and loaded with drama. You’ll need patience, a pen, and possibly a PhD in bureaucracy.
Tough for new and small businesses to compete - You’re not just up against competitors - you’re up against legacy brands with 100-year head starts, billion-dollar marketing budgets, and an uncle on the zoning board.

Example: You open a hair salon in Queens. Great! Except rent is $6,000, your signage needs 3 approvals, and your insurance costs more than your car. Add taxes and mandatory inspections, and suddenly you’re cutting hair just to keep your business’s head above water.

❌ 3. New Jersey 🛣️

High cost of living - Want to run your business and still afford groceries? Good luck. Between gas, rent, and accidentally taking the wrong turnpike exit (hello tolls), New Jersey squeezes every penny.
Some of the highest business taxes in the U.S. - That’s right - you’ll be taxed for existing, breathing, and daring to make a profit. The state’s corporate tax rate can make even your accountant cry in cursive.
Bureaucracy galore - Starting a business here feels like a game of “Guess Which Form Is Missing.” Spoiler alert - it’s always the one you just mailed.

Example: Say you're opening a small home renovation company. After weeks of paperwork, phone tag, and surprise inspections, you finally launch - only to find out your business is taxed like it’s Amazon. You end up painting walls during the day and doing tax yoga at night.

❌ 4. Illinois 🌽

Corporate and property tax burdens - Illinois treats taxes like toppings at a deep-dish pizza place - they keep piling them on. You’ll pay more in property taxes than your office coffee machine is worth.
Complicated regulatory environment - Starting a business here can feel like you're applying to join a secret society - confusing rules, vague requirements, and endless paperwork ceremonies.
Economic uncertainty - Between budget shortfalls, political gridlock, and mysterious potholes that never get fixed, the future can feel shakier than a Chicago skyscraper in a windstorm.

Example: Imagine you're opening a boutique bakery in Chicago. You spend more time filling out compliance forms than kneading dough. The city wants fees, the state wants taxes, and your accountant wants hazard pay. And just when you think it’s smooth sailing - surprise inspection. For your cupcakes.

❌ 5. Connecticut 🐚

High startup costs - Want to open a coffee shop in Connecticut? Better have Wall Street money. From leasing costs to permits, it’s like getting charged a premium just for dreaming.
Shrinking population - People are packing up faster than leftovers at Thanksgiving. With fewer locals sticking around, your potential customer base starts looking like a family reunion - small and aging.
Weak small business support - Grants and resources? Let’s just say Connecticut isn’t exactly throwing parades for entrepreneurs. Support often feels more like a polite shrug than a helping hand.

Example: Say you want to launch a mobile massage therapy service. First, you’ll need multiple licenses. Then, you’ll need to drive far to find clients who haven’t moved to Florida. By the time you’re done with state paperwork, your hands will be too sore to give the massages anyway.

❌ 6. Hawaii 🌺

Beautiful, yes. Business-friendly? No - Starting a business in Hawaii is like trying to open a smoothie bar on a volcano - dreamy, but full of obstacles. The views are breathtaking, but so are the startup costs.
High operating costs and isolation - Everything costs more when it has to fly thousands of miles or hitch a ride on a cargo ship. From paperclips to pineapples, your overhead will feel like it’s been doing squats at the gym.
Supply chain challenges - Waiting for that new shipment of inventory? It’s on island time now. Delays, backorders, and shipping fees that’ll make your accountant cry - welcome to logistics luau.

Example: Imagine starting an e-commerce boutique. You source cute tote bags from LA, but every shipment gets delayed and taxed like it’s a luxury yacht. Your customers are upset, your margins are evaporating, and your supplier just texted “Aloha” instead of tracking info. Beautiful? Yes. Practical? Not unless you're selling fresh coconuts from your backyard.

❌ 7. Rhode Island 🐚

Small market - With fewer than 1.1 million residents, Rhode Island’s customer pool is more of a puddle. If your business relies on volume, you’ll be fishing in a very small pond - and someone already owns the boat.
High taxes and fees - Despite its tiny size, Rhode Island somehow manages to have taxes that feel like they belong to a much bigger, meaner state. Filing fees, licensing costs, and surprise surcharges will nibble away at your budget like seagulls at a beach picnic.
Limited access to funding - Investors here are rarer than parking spots in Providence. If you’re looking for venture capital or even a friendly bank loan, prepare to drive to Boston - or build your pitch deck out of seashells and hope it goes viral.

Example: You open a mobile pet grooming business. You max out your market after two zip codes. Your permit fees cost more than your van. You pitch a local bank for a loan, and they hand you a coupon for dog treats instead. Charming? Sure. Sustainable? Only if your second business is selling antique maps of New England.

❌ 8. Vermont 🧀

Heavy regulations - Vermont may look like a maple syrup-scented postcard, but behind the scenic barns and cozy sweaters is a maze of environmental, zoning, and business regulations that can turn your LLC dreams into an alphabet soup of paperwork.
High cost of living - Housing, utilities, and even oat milk lattes will make your budget cry into a flannel napkin. It's hard to bootstrap your startup when your rent costs more than your first round of funding.
Not very startup-focused - Vermont’s vibe is more “handcrafted goat soap” than “high-growth SaaS unicorn.” The entrepreneurial scene exists, but it's slower, smaller, and mostly built for lifestyle businesses - not scaling tech giants or launching nationwide brands.

Example: You launch a small e-commerce candle company from your cabin in the woods. Cute, right? Until you realize the internet speed is slower than dial-up, permits take four months, and your neighbors think “digital marketing” is just gossip on Facebook. Add in high taxes and limited investor interest, and your Vermont startup might stay stuck in snow boots.

❌ 9. Minnesota 🧊

High personal income tax - Minnesota might be nice, but the tax man sure isn’t. With one of the highest top income tax rates in the country, bootstrapping founders may feel like they’re financing a snowplow with every invoice they send.
Costly for employers - Between healthcare mandates, payroll taxes, and compliance requirements that read like IKEA instructions (but in Swedish), hiring your first employee might cost you your will to expand.
Better for established businesses than bootstrapped ones - Fortune 500 companies thrive here. But if you’re a startup on a shoestring budget, Minnesota might freeze your momentum faster than a January blizzard.

Example: Let’s say you’re launching a digital design agency. Between the taxes, mandatory benefits, and legal hoops, you spend more time doing math than making logos. You consider hiring, then realize your “junior designer” costs more than your car. Meanwhile, the startup support scene is polite, but slow - like most conversations in subzero temps.

❌ 10. Oregon 🌲

Corporate activity tax (CAT) adds surprise bills - Just when you thought you had your budget under control - BAM - here comes the CAT. And no, it’s not the cuddly kind. This tax hits gross receipts, not profit, meaning you can owe the state money even if you didn’t make any.
Complex compliance rules - Oregon’s regulations come with fine print... and then more fine print. If you love paperwork and decoding state tax forms with your morning coffee, you’ll fit right in.
High personal income tax - Your reward for launching your dream business? Up to 9.9% personal income tax. It’s like the state’s way of saying “congrats, now pay up.”

Example: Imagine starting a boutique food delivery service in Portland. You support local farms, pay your employees fairly, and barely break even - only to get slapped with CAT fees, environmental compliance notices, and a tax bill that could feed your entire customer base for a month. Oregon might have the vibes, but it also brings the fines.

🎯 Let AMS Digital Help You Pick the Right Zip Code

Your business might have the best product since sliced gluten-free bread - but if you launch it in the wrong state, it could feel like swimming upstream in molasses. Taxes, regulations, paperwork, and overhead all depend on one major factor - location.

That’s where AMS Digital comes in.

We’re not just logo lovers and website wizards. We’re your launch partners. Whether you're building your empire in a tax-friendly cowboy paradise or navigating red tape in a coastal labyrinth - we help you make smart, stress-free moves.

Need branding that doesn’t look like it was built in PowerPoint? We got you.
Want a website that loads fast and SEO converts even faster? Click us.
Ready to dominate social media without dancing on TikTok (unless you want to)? Let’s go.
Running paid ads that don’t perform? We’ll fix that like it’s our favorite hoodie.