You can start a business anywhere, but your chances of success may vary depending on where you are. Not all cities and states are equal when it comes to the business environment and local regulations. 

Securing finances and funding as you start a small business will look different from city to city, and so will the registration and licensing process. Some states are far more popular than others for new business owners, but not all states are popular for the same reasons. 

Before you decide where to start your business, make sure to do your research and consider all the factors. Your location is an important choice that will significantly impact the future of your business and your life. 

Best States to Open a Small Business

If you’re getting ready to start a business, and you’re interested in relocating to a different state to do it, these are some of the top states you should consider:

1. Illinois

With the city of Chicago at its center, Illinois is a hotspot for sustainable business growth and entrepreneurship. The state has one of the largest economies in the United States, including robust and ongoing growth in the tech sector. 

Most of the best places to start a business in Illinois are in suburbs and small towns in the greater Chicago area. This way, you get access to Chicago’s markets, talent, and culture without paying to be in the city or having to put up with increased travel times.

The business culture in Chicago values collaboration and healthy business fundamentals. The workforce is well-educated and skilled, and the city’s central location makes logistics easy when it comes to shipping or setting up your supply chain. 

2. New York

You might not think of New York as an exceptionally friendly place for businesses, but New York State and New York City are top locations for small businesses. New York City is full of new and thriving startups. It’s a center for innovating thinking and entrepreneurship everywhere you go. 

Entrepreneurs planning to start or expand a business in New York might also take advantage of special tax incentives for companies to start near particular universities or towns around the state. This can give you access to the talent and commerce of the big city nearby without having to deal with the increased cost. With 16 airports across the state, it’s always easy to get around. 

New York is a place that receives countless visitors but also produces an enormous amount of talent. It might give your company an unexpected boost to take advantage of the creativity and diversity that New York City and New York State have to offer.  

3. Texas

Texas ranks highly in every study that assesses how friendly a state is to businesses, especially new small businesses. Texas is a hot state for starting a business because it has worked hard to create a sustainable environment for startups.

That means there are already thriving industries and a culture of commerce and innovation in the cities of Texas. Texas doesn’t have a state income tax either, which makes it very attractive to businesses that want to make money and keep or reinvest as much of it as possible. 

Cities like Austin and Houston in Texas are popular growing cities for young people, which means businesses have an easier time finding the right talent. There are also many strong universities in Texas that make it more likely you can find the right people for the job.

4. Florida

Florida is another business-friendly state that tries to keep the barriers to entry low for new businesses. There’s no individual income tax, and the tax system is among the best in the country for supporting business. 

Unlike some other states, the cost-of-living is relatively low in Florida, and it’s still an attractive region for startups and business talent.

Florida’s business advantages include easy access to funding and resources and a strong economy with various growing industries. 

Cities like Orlando, Miami, and Jacksonville can also offer a better quality of life for you and your workforce than some comparable cities elsewhere in the United States. The beautiful weather and beaches encourage a healthy balance between work and life.    

5. California

California is a diverse and wealthy state with a thriving and varied economy. Entrepreneurs can find endless chances for networking and learning from others in their industries. Tech and agriculture are prominent in California, but the state’s massive economy also includes many other sectors. 

There is a lot of money in California, and with that comes many opportunities to raise and earn money. However, it also means a higher cost-of-living and more significant tax burdens. California can be a sometimes challenging place to run a business, but many entrepreneurs find it incredibly worthwhile for the quality of life and available resources.   

Many cities in California and their surrounding suburbs are magnets for high-performing talent from around the country. The beautiful weather and sight-seeing opportunities are big draws for entrepreneurs looking to open a business in California.  

Which is the Best Choice?

The best choice for location depends on a lot of factors. It depends on what kind of business you want to start, what resources you’re starting with, and what exactly you hope to do with your company. If you’re worried about your choice and want to find the very best option for you, consult with accountants and lawyers that know the particular conditions in different states. 

Remember, wherever you start, your business will not just be your business environment; it will be your living environment. Even if you don’t live there full-time, you’re going to be spending a lot of time there. It needs to be a place where both your business and you can thrive. 

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Written by Brendon Pack

Brendon Pack is Chief Revenue Officer (CRO) at 1-800Accountant, the nation's leading accounting firm for small business. Brendon has worked ...