Best and Worst States for Business Owners

August 27, 2014 / Reading: 2 minutes

Owning and operating a successful small business is challenging enough, and as a professional grinding the pavement trying to make your businesses successful, you want to be in an environment that is supportive, appreciative and recognizes the contribution small business makes to a successful economy.

The survey conducted on a yearly basis by and the Kauffman Foundation is very insightful as it tracked more than 12,000 entrepreneurs nationwide and asked questions ranging from their ranking of their state’s support for small businesses to questions about taxes. A total of 82 cities participated in the study.

While you might think tax rates would be the most important factor in determining the overall friendliness score, it actually isn’t. Red-tape has always been a headache for small business owners which is why they rated the friendliness of professional licensing requirements as the most important issue, followed by the ease of filing taxes. Jon Lieber, Chief Economist of Thumbtack, stated that:

Thousands of small business owners across the country told us that the keys to a pro-growth environment are ease of compliance with tax and regulatory systems and helpful training programs.

What is interesting about this particular finding is that States can attract small businesses without necessarily having to sacrifice tax revenues. Just simplify the tax code and make the process of operating a business as simple and straight-forward as possible.

The rankings are not overly surprising, with Utah being recognized as the best place in the country for small business, and California dead last (No wonder many refer to is as the “Socialist Republic of California“). However, It is worth noting that Texas, Utah and Idaho have been rated in the top five every year for the past 3 years. California and Rhode Island on the other hand, have been rated at the bottom every year.

The Top 5 “Business Friendly” states:

  • Utah
  • Idaho
  • Texas
  • Virginia
  • Louisiana

The Worst 5 States:

  • California
  • Rhode Island
  • Illinois
  • Connecticut
  • New Jersey

You can find the complete survey results here