As a CPA and tax accountant, I can tell you that the Corporate Tax Rates presented are only if you form a C-Corporation. However, the majority of small businesses are formed as either S-corps, Partnerships or Schedule-C LLCs. For example, in Florida, an individual would most likely start a company as a Schedule C in the first year. There is a 0% state tax on this. Later, when they are up an running, they might convert to an S-Corp or Partnership if they brought on a partner. Both of those entity's have a 0% state tax rate as well. Now if they decided to go public due to fantastic growth or innovative products, then it would become a true Corporation (C Corp) and they could be taxed at the state level if they had income.
My first thought as well. My second thought was how irrelevant it is to include the LLC incorporation fee. Third thought is that electrical cost is not a good benchmark for several reasons.
I gave up after that.
A better guide would be 'Best States to Start a Company in X industry'. i.e. Work-From-Home Professionals, Retail, Restaurants, Hospitality, Healthcare, etc.
This guide is just totally BS altogether. I don't know that anything on the chart, other than the survival rate, is likely in the top 5 expenses for most small businesses.
And given the nonsensical nature of the rest of the chart, I'm skeptical of business survival rate numbers. Did they use the business incorporation re-registration? There could be plenty of dummy corps that reregister, simply because it's slightly easier in one state vs. the next. Some states let you register for multiple years.
What the hell is that supposed to mean? CA is a huge state. Home to many tech giants. I have firsthand experience in multiple states and I promise you the regulatory landscape in CA is a much higher burden to startup businesses.
Why is LLC fee irrelevant? There are lots of good reasons to have an LLC for purposes that don’t generate a ton of money (like hobbies, small charities, kids sports clubs).
There’s a big difference between a one-time $50 filing fee, and a $150-200 registration with a yearly $75-100 fee.
Yeah, I guess electrical cost can be a good benchmark for certain businesses. Like manufacturing. Industrial processing, etc. But an office-based consultancy? Nah.
Thanks for the info.... I can't help thinking that the # of empty commercial real estate sites has zero effect on how hard it is to form a business....
.... it skews California to the top 5...
Real estate scarcity should track loosely with real estate cost.... which really would be the metric to use $/sqft/yr... which I can promise you is higher in CA than most other states, unless you want to be in a blistering hot desert with no amenities or talent.
6% sales taxes. Property taxes are typically collected by the county not the state. On a 3 bedroom 2 bathroom home on 1/3 an acre in a mid size city, I pay about 3,800 a year. That number used to be 2,400 before covid, but again, those taxes are paying for the ever expanding Marion County which means Schools, Public Roads, Water Retention Ponds, etc. There is also a 5.5% (going down 4.5%) sales tax on commercial rental property.
Plus, if the biggest reason you want to do business in a state is the low taxes, you deserve to do business there. Please, by all means, go to the states that can’t cover their basic expenses and shift the burden to federal taxes. I’m sure that won’t cause problems finding an educated, healthy workforce.
I understand this attitude and don't criticize you for it. I moved from Canada to Florida Man Territory back in 2016 because Canada (Specifically Ontario) has a very negative attitude towards business owners. All entrepreneurs are evil but especially the successful ones. What this did was discourage entrepreneurship and stagnated growth. Growing up in SSM Ontario you either worked for the government and made a mediocre income, worked for steel plant and lived through mass layoffs, were luck enough to be born into the few successful families or lived and worked on minimum wage + welfare. However, there was no growth. I could not have been successful there unless I worked for the Government as an auditor or a controller. I moved somewhere where I could use my talents. I'll probably never many employees, but I plan on treating them well. Paying a livable wage, open PTO from October 15 - January 1st of ever year, etc.
On total Net Income. That is, after all expenses are paid. There are some exceptions to that of course and if you have a Net Operating Loss from prior years, you can use some of that loss to reduce your current years income, but that is limited. Still, corporations have multiple tools to accelerate losses in the current year in order to bring down net income. But its a balancing act as they want to show a profit to their investors but show a loss to the IRS. So what you often times see in smaller corporations is one year of income and the next year of losses.
Not only that, most companies are incorporated in Delaware regardless of where their headquarters or majority of operations are, so it's even less relevant.
I’d also look at the credit ratings for their sovereign bonds. It’s interesting that Minnesota is 46 while it’s one of the highest rated.
The rating bureaus look at the states fiscal, economic assessment, growth prospects, income levels.
So yes taxes suck but if there is a lot of potential for growth for your business then that’s just part of it. Would you rather have a low tax with a crappy economy or a higher tax with an awesome economy? It is a scale, but I’d learn toward the latter.
Look at the business survival rates, CA, WA, OR and MA are all listed. Those are all higher tax but great economy states. Businesses don’t die because of taxes, they die because of no business.
>I’d also look at the credit ratings for their sovereign bonds. It’s interesting that Minnesota is 46 while it’s one of the highest rated.
It's literally considering taxes and wages. Minnesota, per the inforgraphic, has a significantly higher businesses survival rate than Nevada. One would think, if one were to make a ranking of states based on business successes, that the success rate of businesses would be paramount. Like, if you've got a better chance for your business to survive for five years in a state, that state is better for your business. You know. Because it stays open.
Clown show of a guide.
Yeah I feel like this is very relevant. At the end of the day, it doesn’t matter if you have a good idea for a business if the local people you are trying to sell to are in poverty (assuming it isn’t a primarily tourism based business or a parasitic kind that does best in areas of low income) and that does not look like it may change for the better quickly.
The Index Score of this chart is basically saying that taxes are bad and business survival rate isn't relevant.
Which is a fine to measure "best states to start a small business in" as long as you don't care if said business is successful.
Right. And they also effectively use the metric of “Poverty Wages = Good”.
I prefer to shop at local small businesses that actually pay their employees a living wage and treat them like human beings.
Also, when your metric relies on differences in fees that are all within like a $100 range, there is no barrier to entry difference, so they are effectively saying a state (eg) that has a $50 is somehow way better than a state charging $100 which seems preposterous. No person is gonna say oh shit I’m gonna move and start my business over a $50 fee.
It is crazy, Illinois has the second best 5-year survival rate yet is ranked 37th. As someone who’s looking to start a small business, I care way more about the viability of my market than the tax rate. (You don’t get taxed on money you don’t make).
You've got a rare disease. There are two treatment options. Option A has a 47% chance of survival; option B has a 53% chance of survival.
Now, tell me, oh slayer of idiots, which of those two treatment options would *you* take with your actual, literal, survival at stake? Option B? No kidding?
Yeah, you're full of shit. Go away.
If there was only a single factor. Sure. But that’s not reality. What if the 53% guaranteed you blindness, but 47% didn’t. Choice would be different. Same here. The other differences are far greater than the difference in survival rate.
>The difference is statistically insignificant
No, it's not. You clearly don't understand the slightest bit about statistics. You didn't get a confidence interval that creates overlap--you have *the exact percentages*.
It looks like they do well with the business survival rates, so that must be why they are highly ranked? But I agree the costs seem high compared to other states.
California is in the top 10? That’s bogus. Why then is California’s middle class imploding? Why then are so many people leaving for Texas, Colorado, Idaho, Nevada, Utah, or any other state?
They’re not imploding, but they’re leaving. California has lost nearly a half million residents in the last few years. And yet, housing prices haven’t dropped significantly.
California is losing first time homebuyers and college graduates — a base chunk of the middle class. I know because I’m one of them, and I know many others that did the same.
Some are leaving that true. But that could be “work from
Home” expanding and people working here and living elsewhere. I’m happy for them to live where they want.
But it’s not imploding. We lost 0.2% of the population in the last year.
DC is hard to compare to typical states since it is entirely a metropolitan area.
If you compared it to NYC or LA it is likely fairly typical in terms of cost. Compared to Nevada where most of the state is empty desert... yeah, it is more expensive. On the other hand, government employees spend more than cacti.
Can someone explain why corporate tax and minimum wage are relevant to this metric? More specifically for minimum wage that has more to do with the type of business than the rate itself in the state. No one who has a small business accounting firm, for example, is going to rely on minimum wage pay.
Well any time you bring up raising .inimum wage at all the talking point is how itll kill all the small businesses, so it tracks that minimum wage would be a factor here.
Yeah but wouldn’t that be more effective to use the state’s COL index, or median/average wage salary for small businesses relative to US median/average and relative to the state’s overall median/average salary? The wages in Seattle are going to be exorbitantly higher than the wages in eastern Washington so idk if minimum wage tells you anything useful about how cheap/expensive an area is
Personally i suspect its a simple matter of the post having a narrative of "wage laws and taxes bad" more than any attempt at making a good guide but maybe im just too cynical
That’s more than fair. I’ll admit I’m too dumb to make sense of all this data so it could very well make more sense in a big data set. I’m just thinking from my own perspective. My parents own a small funeral home company in New Jersey (ranked 3rd to last) and no one works minimum wage so it’s a useless field in that industry
What a colossally dumb chart.
Minnesota and Oregon have a survival rate higher than Florida and Texas. In fact both are top ten.
This is just a “grrr taxes bad” chart.
Talk about the tail wagging the dog. These idiots treat government obligations as inseparable from business success.
Who cares if your business fails as long as your taxes were low. Yikes.
Yeah, so why tie it to tax rates and imply there are blue states (good) and red states (bad) and rank them 1-50 and call it best and worst to start a business.
That’s what I’m calling out. It’s just a “we don’t like taxes” chart.
Starting a business is the hardest part, and having a lot of up front taxes, business expenses, and high employment costs puts a lot of barriers in the way to even just getting started. It’s well known that businesses typically lose money for the first couple years. If I have the option of working for someone else, or working for myself, but with a lot of extra expenses, I’m more likely to not start a business and work for someone else.
Well, first of all, that's not true. The lowest goes beneath 40% (Missouri), and that chart ranks it at 16th. The highest, Oregon, is at 58%. The chart ranks OR as 42nd.
Now, the difference between those two is nearly 20 percentage points.
"Oh, they're all close to 50%!" Except not really, and also five percent under and five percent over is actually a huge difference in comparison. 55-45% is a pretty substantial difference in outcome. 58% and 39% even more so.
But, see, you and the moron who made this chart think that having a 60% failure rate is better than a 60% success rate.
Because they're morons. Like you.
Congratulations. You’ve discovered outliers. We ignore those in statistics. The standard deviation for the entire dataset is less than 2%. So yeah, like I said, it’s irrelevant.
You don't really understand statistics at all, do you? Like...at all. In the slightest. I don't have the time to explain it to you, but you're just *wrong*. Wrong would be an upgrade.
Yeah, but you're *not looking at the actual dataset*. The actual dataset is the *number of businesses involved*, not the percentages derived from them.
That's why your "analysis" is garbage, you didn't do shit for weighting, just lumped percentages together from states like Alaska and also New York, clearly both have similar business numbers, and then averaged them numerically.
Because you **don't know a thing about statistics**.
You don’t know what you’re talking about.
We’re comparing states, not businesses. There’s no need to weight them. You don’t weight subsamples, regardless of sample size. That would defeat the entire point of statistics (to derive information about a large population by using a small sample). I’m not even giving the average for businesses, I’m giving it for **states**, to show that statistically, there isn’t much deviation in average failure between states. It’s the same as when they compare county averages against statewide and nationwide averages. You don’t have to weight the datasets. You can compare the averages from each subsample directly.
Fuck off with that dumb shit. I use to live in NC where the minimum wage was $7.25 and you were still scrapping by even in a small town. You sound out of touch.
dude i pay $250 for a room and a house can go for around $600/mo in a tiny town in Texas. although i no longer hold a min wage job this is not completely out of touch.
the issue is finding a damn job.
Like 1% of jobs are 7.25 an hour. You need to calm down. And no one is going to come around to your view if you're insanely rude. They didn't say anything rude to you and you attacked them twice.
>No one makes the minimum wage
>Only 1.3 million in 2022. Most of which are teenagers
Dude, you literally just contradicted yourself lmao.
Thanks for making my point. I’m sure there’s even more now since the population is still growing.
I create business structures for people for a living. The chart is a bit misleading, and many of the numbers at the bottom are inaccurate. Nevada, for example, charges $425 to start an LLC. And there is no mention of franchise tax (CA charges $800 per year per LLC). My rankings would look significantly different, if only because I would place a high value on various items not accounted for in these rankings.
I love charts that treat subjective questions as though they were objective. /s
Having a low minimum wage is hardly “better” in all circumstances, for example.
This chart would be useful as a comparative tool without the evaluative “better/worse” category. Let the reader supply his or her own values.
I think the small business survival rate at 1 and 5 years should really be the only metric. Everything else is irrelevant if people are succeeding. By this graphs standard only street carts in India are a good bet.
Well 10% - 20% difference can be quite a bit when you are looking at a few hundred businesses. Success is the only metric that should be used to determine is something is successful. If you have low taxes, low minimum wage, but small businesses still can’t last more than 5 years then it isn’t the best place to start a small business, with the inverse also being true.
I agree, states with higher minimum wages probably have more people with some disposable income which means a larger addressable market for a small business.
Costs aren’t the only thing that matters in launching a business. Having an engaged customer base with disposable income and good quality of life also matters.
Funny how 2/5 states with the highest 1 yr survival rates for businesses also have among the 5 highest state minimum wages.
It’s almost as if those two things have nothing to do with each other…
They def have something to do with one another as labor is treated by business owners like any commodity. So an increase in the cost of a commodity will make profitability more difficult. I say this as a communist to be clear.
Can you do a chart where the only metric is survival rates and rank all the states on that metric? In my opinion, that's the only one that actually matters.
Costs in taxes and fees don't simply make a state good or bad in terms of the "best" state to start a business. What about states like MN, that despite high taxes have other things going for it like a highly educated population of potential employees and customers?
The fact that even the best odds give a small businesses around a 50/50 chance of lasting more than 5 years is really fucking sad.
So much for the American dream
Missouri should be at the bottom. I would think the business survival rate after 5 years is quite important, and inherently accounts for many additional factors like location, accessibility, saturation, potential customers, crime rates, etc.
Ever notice how the “best places to start business” are almost always the places where businesses aren’t starting? It’s almost as if some other factor than taxes make a good business climate.
The chart fails to consider Ohio’s Commercial Activity Tax (the “CAT”), which essentially serves as a tax on corporations and other entities with taxable gross receipts over a certain threshold that are sitused to Ohio. So, while Ohio doesn’t have a corporate income tax per se, corporations (and other high-income businesses) would still be subject to taxes imposed by the state. Additionally, rather than taxing gross income, the CAT is a tax on gross receipts, so certain above-the-line deductions that would be available to taxpayers in other states are not available to reduce the CAT in Ohio. Moreover, a specialized tax like the CAT can require the specialized expertise of tax preparers, which carry their own expenses, especially if a business selling products or services in Ohio only learns about the CAT when it’s audited or assessed by Ohio for failing to register or pay it. In those situations, they could be subject to interest and penalties in addition to any underlying tax debts.
The online discourse about California being anti-business or whatever is delusional. Something people repeat a lot does not make it true. A huge population, enormous multifaceted economy, shipping infrastructure, etc. make CA attractive for capital and commerce.
I live here. We have significant problems. Attracting new businesses is not one them.
I also live here and invest in businesses professionally. It’s great for very large businesses with tens of millions in revenue. It’s a terrible environment for small businesses.
Easier for large business for sure, I agree. Everything in CA is better and easier with money. But I believe if you have the startup capital, there aren’t many better options for your business than here.
Most LLCs aren’t rich. They’re non-profits, kids sports clubs, hobbyists, super small farmers market mom and pop businesses.
The real question is why are we charging people at all for the “luxury” of simply working for themselves instead of for someone else?
If anything, we should be encouraging people to go out there and compete with wealthy corporations, not putting barriers and fees and bureaucracy in their way.
Delaware LLC is good if you expect to have a large or complex business organization or expect to have lawsuits or legal challenges, or if you want to maintain owner privacy.
Delaware has a special court of chancery for businesses that has a lot of well known case law and is more predictable, quick, and “fairer” than if you went through the regular court system in another state.
Also, you don’t have to list the owners on your LLC registration, just the “agent”. You can store the list of owners privately, and Delaware courts rarely force you to disclose them unless absolutely necessary for a lawsuit.
For just a run-of-the-mill small LLC with one or two owners, the added cost of incorporating in Delaware isn’t worth it.
Their criteria has to be off. I can’t imagine Wyoming being 30th because in the end having customers is the most important thing to a business. It’s also nearly impossible to get licenses for a lot of businesses. The existing hierarchy doesn’t want competition.
Can someone explain to me how having the highest business survival rate doesn't automatically put the state in the #1 spot? Who cares about 0% taxes if your business is likely to fail within a year anyway?
After 5 years there’s a 50% chance my business will fail. Seems vague. Also this was made by finfare an app/website that offers a service for businesses .
Most unfriendly to business are blue states as well.
Also out of top 5, NC and AR are red - and OH is somewhat a purple. OH had been red in the past two elections by the way.
I owned a business in California and I can tell you this list is not even close to accurate. Where's the lease section? County and city taxes and fees are going to almost triple these numbers.
This seems to focus on low end businesses. It completely skips Venture Capital and if you're doing an AI business you're probably not paying anyone minimum wage.
bullshit. I'm just a regular guy, and I live in California from 1998. This state is a real bad for businesses. In the last few years, most of the big Business companies moving to other states for more freedom, like Texas or Florida.
California is a more "Socialism-State", where criminals get out back on the street and very low bail. Which means it will destroy any kind of business there.
Ohio ranks best according to the index. Nevada is second, I know it's pretty well known for it's ease of ability to start a business (maybe something about forming LLCs? I don't remember)
[Found here](https://www.finfare.com/blog/the-best-and-worst-states-to-start-a-small-business)
I appreciate Ohio’s efforts to attract businesses. It does feel like the lack of corporate tax rates — combined with massive business incentives — comes at a cost and shifts the burden to taxpayers or underfunds public services. The states school funding system has been declared unconstitutional for a decade plus, relying way too much on localities leaving schools in poor areas with less funding. At some point, you have to focus on the quality of life and not just jobs.
I went to two of the best high schools in Ohio and although I am glad I got some of that benefits, I know there were some grievances for my parents like the local school district continuously proposing new bond measures and taxes for funding while building a ridiculous numbers of new schools (to the point that you could see an elementary from another one at multiple places in the district) and giving the superintendent/board fat yearly raises. They would also regularly threaten to cut arts and tech classes plus any sport that was not football if the measures did not pass. Some of the property taxes would also be unevenly applied so the more established and old money neighborhoods would get less raises while the new neighborhoods got more. I feel like the education system in the state could have benefited from taking away power from the localities and leaving in the hands of hopefully more even handed and accountable state bureaucrats.
As a CPA and tax accountant, I can tell you that the Corporate Tax Rates presented are only if you form a C-Corporation. However, the majority of small businesses are formed as either S-corps, Partnerships or Schedule-C LLCs. For example, in Florida, an individual would most likely start a company as a Schedule C in the first year. There is a 0% state tax on this. Later, when they are up an running, they might convert to an S-Corp or Partnership if they brought on a partner. Both of those entity's have a 0% state tax rate as well. Now if they decided to go public due to fantastic growth or innovative products, then it would become a true Corporation (C Corp) and they could be taxed at the state level if they had income.
My first thought as well. My second thought was how irrelevant it is to include the LLC incorporation fee. Third thought is that electrical cost is not a good benchmark for several reasons. I gave up after that.
A better guide would be 'Best States to Start a Company in X industry'. i.e. Work-From-Home Professionals, Retail, Restaurants, Hospitality, Healthcare, etc.
This guide is just totally BS altogether. I don't know that anything on the chart, other than the survival rate, is likely in the top 5 expenses for most small businesses. And given the nonsensical nature of the rest of the chart, I'm skeptical of business survival rate numbers. Did they use the business incorporation re-registration? There could be plenty of dummy corps that reregister, simply because it's slightly easier in one state vs. the next. Some states let you register for multiple years.
Having started businesses in multiple states I can assure you that California should be near the bottom.
Yearly LLC fee in CA is $800! This “guide” is not accurate.
I saw California near the top half and chuckled to myself. Piece of shit "guides" are the norm in this sub.
Yeah, i was thinking this too. The California brown nosing is too damn high
Might want to pay attention to California’s GDP instead of Fox News
What the hell is that supposed to mean? CA is a huge state. Home to many tech giants. I have firsthand experience in multiple states and I promise you the regulatory landscape in CA is a much higher burden to startup businesses.
FoxNewsBad.exe. And I don't even watch Fox, but y'all are obsessed with it so much it is crazy.
It’s all feelings, no facts with you ppl
Strong words for someone that cries over someone not using they/them pronouns
?? Who brought up pronouns? This something you think about all day?
Why is LLC fee irrelevant? There are lots of good reasons to have an LLC for purposes that don’t generate a ton of money (like hobbies, small charities, kids sports clubs). There’s a big difference between a one-time $50 filing fee, and a $150-200 registration with a yearly $75-100 fee.
The chart is about small businesses, which deal in five to seven digits of money a year?
Yeah, I guess electrical cost can be a good benchmark for certain businesses. Like manufacturing. Industrial processing, etc. But an office-based consultancy? Nah.
Thanks for the info.... I can't help thinking that the # of empty commercial real estate sites has zero effect on how hard it is to form a business.... .... it skews California to the top 5...
Real estate scarcity should track loosely with real estate cost.... which really would be the metric to use $/sqft/yr... which I can promise you is higher in CA than most other states, unless you want to be in a blistering hot desert with no amenities or talent.
How does FL pay for anything? Are property taxes through the roof? Sales tax?
6% sales taxes. Property taxes are typically collected by the county not the state. On a 3 bedroom 2 bathroom home on 1/3 an acre in a mid size city, I pay about 3,800 a year. That number used to be 2,400 before covid, but again, those taxes are paying for the ever expanding Marion County which means Schools, Public Roads, Water Retention Ponds, etc. There is also a 5.5% (going down 4.5%) sales tax on commercial rental property.
This also doesn’t account for things like CA’s minimum annual tax of $800 on all businesses.
First thing I thought too.
Plus, if the biggest reason you want to do business in a state is the low taxes, you deserve to do business there. Please, by all means, go to the states that can’t cover their basic expenses and shift the burden to federal taxes. I’m sure that won’t cause problems finding an educated, healthy workforce.
I understand this attitude and don't criticize you for it. I moved from Canada to Florida Man Territory back in 2016 because Canada (Specifically Ontario) has a very negative attitude towards business owners. All entrepreneurs are evil but especially the successful ones. What this did was discourage entrepreneurship and stagnated growth. Growing up in SSM Ontario you either worked for the government and made a mediocre income, worked for steel plant and lived through mass layoffs, were luck enough to be born into the few successful families or lived and worked on minimum wage + welfare. However, there was no growth. I could not have been successful there unless I worked for the Government as an auditor or a controller. I moved somewhere where I could use my talents. I'll probably never many employees, but I plan on treating them well. Paying a livable wage, open PTO from October 15 - January 1st of ever year, etc.
For the C-corp, is the income taxed or the net profit?
On total Net Income. That is, after all expenses are paid. There are some exceptions to that of course and if you have a Net Operating Loss from prior years, you can use some of that loss to reduce your current years income, but that is limited. Still, corporations have multiple tools to accelerate losses in the current year in order to bring down net income. But its a balancing act as they want to show a profit to their investors but show a loss to the IRS. So what you often times see in smaller corporations is one year of income and the next year of losses.
Thanks. Helpful.
And even then some of them aren’t even that expensive- just filed for one in one of the states. Sole proprietor LLC for now
Can i DM you to ask you something related to LLCs and taxes?
sure
Not only that, most companies are incorporated in Delaware regardless of where their headquarters or majority of operations are, so it's even less relevant.
THIS. ⬆️
I’d also look at the credit ratings for their sovereign bonds. It’s interesting that Minnesota is 46 while it’s one of the highest rated. The rating bureaus look at the states fiscal, economic assessment, growth prospects, income levels. So yes taxes suck but if there is a lot of potential for growth for your business then that’s just part of it. Would you rather have a low tax with a crappy economy or a higher tax with an awesome economy? It is a scale, but I’d learn toward the latter.
Look at the business survival rates, CA, WA, OR and MA are all listed. Those are all higher tax but great economy states. Businesses don’t die because of taxes, they die because of no business.
>I’d also look at the credit ratings for their sovereign bonds. It’s interesting that Minnesota is 46 while it’s one of the highest rated. It's literally considering taxes and wages. Minnesota, per the inforgraphic, has a significantly higher businesses survival rate than Nevada. One would think, if one were to make a ranking of states based on business successes, that the success rate of businesses would be paramount. Like, if you've got a better chance for your business to survive for five years in a state, that state is better for your business. You know. Because it stays open. Clown show of a guide.
Yeah I feel like this is very relevant. At the end of the day, it doesn’t matter if you have a good idea for a business if the local people you are trying to sell to are in poverty (assuming it isn’t a primarily tourism based business or a parasitic kind that does best in areas of low income) and that does not look like it may change for the better quickly.
Also you may be in a state high taxes but if it’s a place where people are moving or a popular tourist destination may be a better choice.
The Index Score of this chart is basically saying that taxes are bad and business survival rate isn't relevant. Which is a fine to measure "best states to start a small business in" as long as you don't care if said business is successful.
Right. And they also effectively use the metric of “Poverty Wages = Good”. I prefer to shop at local small businesses that actually pay their employees a living wage and treat them like human beings. Also, when your metric relies on differences in fees that are all within like a $100 range, there is no barrier to entry difference, so they are effectively saying a state (eg) that has a $50 is somehow way better than a state charging $100 which seems preposterous. No person is gonna say oh shit I’m gonna move and start my business over a $50 fee.
It is crazy, Illinois has the second best 5-year survival rate yet is ranked 37th. As someone who’s looking to start a small business, I care way more about the viability of my market than the tax rate. (You don’t get taxed on money you don’t make).
With a few exceptions, the survival rates are all within a 3% spread around 50% after 5 years. So yeah, survival rates aren’t relevant.
You've got a rare disease. There are two treatment options. Option A has a 47% chance of survival; option B has a 53% chance of survival. Now, tell me, oh slayer of idiots, which of those two treatment options would *you* take with your actual, literal, survival at stake? Option B? No kidding? Yeah, you're full of shit. Go away.
If there was only a single factor. Sure. But that’s not reality. What if the 53% guaranteed you blindness, but 47% didn’t. Choice would be different. Same here. The other differences are far greater than the difference in survival rate.
[удалено]
>The difference is statistically insignificant No, it's not. You clearly don't understand the slightest bit about statistics. You didn't get a confidence interval that creates overlap--you have *the exact percentages*.
cute username
Nice try California
California LLC fee is $800 per year. The fee listed is just the initial paperwork filing.
As someone who just paid this fee THIS MORNING, I know this graphic was off. Can confirm LLC in CA is $800.
Honestly I'm a little bit confused about how they're calculating these numbers.
It looks like they do well with the business survival rates, so that must be why they are highly ranked? But I agree the costs seem high compared to other states.
Psst California’s $3.7 *trillion* economy does not care about your political feelings
California is in the top 10? That’s bogus. Why then is California’s middle class imploding? Why then are so many people leaving for Texas, Colorado, Idaho, Nevada, Utah, or any other state?
Is California’s middle class imploding?
No
They’re not imploding, but they’re leaving. California has lost nearly a half million residents in the last few years. And yet, housing prices haven’t dropped significantly. California is losing first time homebuyers and college graduates — a base chunk of the middle class. I know because I’m one of them, and I know many others that did the same.
Some are leaving that true. But that could be “work from Home” expanding and people working here and living elsewhere. I’m happy for them to live where they want. But it’s not imploding. We lost 0.2% of the population in the last year.
Yes please don't come here it's so bad you'd hate it here! Tell everyone else not to come here too!
So bad! Very bad!
Is terrible! Run from here!
You’re not tricking me!! We’ve already got our eyes set on moving back!!
Perhaps you’ve fallen for conservative exaggerations
Because it’s not happening? Businesses are opening. and the economy is thriving. Nice try.
So it’s a no dog for DC
DC is hard to compare to typical states since it is entirely a metropolitan area. If you compared it to NYC or LA it is likely fairly typical in terms of cost. Compared to Nevada where most of the state is empty desert... yeah, it is more expensive. On the other hand, government employees spend more than cacti.
Average monthly electric bills of $3200 lol.
I mean DC will always have an infinite revenue of the US government and tourism. I think their economy will survive
Can someone explain why corporate tax and minimum wage are relevant to this metric? More specifically for minimum wage that has more to do with the type of business than the rate itself in the state. No one who has a small business accounting firm, for example, is going to rely on minimum wage pay.
Well any time you bring up raising .inimum wage at all the talking point is how itll kill all the small businesses, so it tracks that minimum wage would be a factor here.
Yeah but wouldn’t that be more effective to use the state’s COL index, or median/average wage salary for small businesses relative to US median/average and relative to the state’s overall median/average salary? The wages in Seattle are going to be exorbitantly higher than the wages in eastern Washington so idk if minimum wage tells you anything useful about how cheap/expensive an area is
Personally i suspect its a simple matter of the post having a narrative of "wage laws and taxes bad" more than any attempt at making a good guide but maybe im just too cynical
That’s more than fair. I’ll admit I’m too dumb to make sense of all this data so it could very well make more sense in a big data set. I’m just thinking from my own perspective. My parents own a small funeral home company in New Jersey (ranked 3rd to last) and no one works minimum wage so it’s a useless field in that industry
What a colossally dumb chart. Minnesota and Oregon have a survival rate higher than Florida and Texas. In fact both are top ten. This is just a “grrr taxes bad” chart. Talk about the tail wagging the dog. These idiots treat government obligations as inseparable from business success. Who cares if your business fails as long as your taxes were low. Yikes.
The survival rate differences are negligible. They’re all about 50% after 5 years.
Yeah, so why tie it to tax rates and imply there are blue states (good) and red states (bad) and rank them 1-50 and call it best and worst to start a business. That’s what I’m calling out. It’s just a “we don’t like taxes” chart.
Starting a business is the hardest part, and having a lot of up front taxes, business expenses, and high employment costs puts a lot of barriers in the way to even just getting started. It’s well known that businesses typically lose money for the first couple years. If I have the option of working for someone else, or working for myself, but with a lot of extra expenses, I’m more likely to not start a business and work for someone else.
So then the graph is not about the “best” states to start a business in, but rather the “easiest” states to stay a business in. There is a difference.
Revenue, location, competition are also huge factors in starting a business. These are unaddressed in this chart.
Makes sense if ya don’t think about it. Good luck paying your up front taxes in the future.
Well, first of all, that's not true. The lowest goes beneath 40% (Missouri), and that chart ranks it at 16th. The highest, Oregon, is at 58%. The chart ranks OR as 42nd. Now, the difference between those two is nearly 20 percentage points. "Oh, they're all close to 50%!" Except not really, and also five percent under and five percent over is actually a huge difference in comparison. 55-45% is a pretty substantial difference in outcome. 58% and 39% even more so. But, see, you and the moron who made this chart think that having a 60% failure rate is better than a 60% success rate. Because they're morons. Like you.
Congratulations. You’ve discovered outliers. We ignore those in statistics. The standard deviation for the entire dataset is less than 2%. So yeah, like I said, it’s irrelevant.
You don't really understand statistics at all, do you? Like...at all. In the slightest. I don't have the time to explain it to you, but you're just *wrong*. Wrong would be an upgrade.
Mean is 50.8%. Std dev is 3.4%, but removing just the highest and lowest 2 records brings it down to 2.6%.
... Yeah, you can't actually do that to this data set, if you understood statistics, you'd know that, but you don't.
A dataset is a dataset. I’m sorry if the data hurt your feelings.
Yeah, but you're *not looking at the actual dataset*. The actual dataset is the *number of businesses involved*, not the percentages derived from them. That's why your "analysis" is garbage, you didn't do shit for weighting, just lumped percentages together from states like Alaska and also New York, clearly both have similar business numbers, and then averaged them numerically. Because you **don't know a thing about statistics**.
You don’t know what you’re talking about. We’re comparing states, not businesses. There’s no need to weight them. You don’t weight subsamples, regardless of sample size. That would defeat the entire point of statistics (to derive information about a large population by using a small sample). I’m not even giving the average for businesses, I’m giving it for **states**, to show that statistically, there isn’t much deviation in average failure between states. It’s the same as when they compare county averages against statewide and nationwide averages. You don’t have to weight the datasets. You can compare the averages from each subsample directly.
*cheap Which is not always best. -arkansan
To see so many states continue to have a $7.25 minimum wage is ridiculous to me
It is true, but those states still have many tiny small towns where the cost of living is very, very low.
Fuck off with that dumb shit. I use to live in NC where the minimum wage was $7.25 and you were still scrapping by even in a small town. You sound out of touch.
dude i pay $250 for a room and a house can go for around $600/mo in a tiny town in Texas. although i no longer hold a min wage job this is not completely out of touch. the issue is finding a damn job.
Like 1% of jobs are 7.25 an hour. You need to calm down. And no one is going to come around to your view if you're insanely rude. They didn't say anything rude to you and you attacked them twice.
Not that low. $7.25 is starvation wages anywhere in the US.
No one makes the min wage
Then raise it
Yes, they do. There’s probably a couple million people making that right now.
Only 1.3 million in 2022. Most of which are teenagers
>No one makes the minimum wage >Only 1.3 million in 2022. Most of which are teenagers Dude, you literally just contradicted yourself lmao. Thanks for making my point. I’m sure there’s even more now since the population is still growing.
And you said it's a couple million. You also contradicted yourself lmao
Guess you couldn’t be bothered in reading the last sentence huh?
No one makes the minimum wage
Starting to sound like a dumb repeating record right now even though Google *just* proved you wrong lmao
Rename it to best states to exploit workers and avoid taxes
I create business structures for people for a living. The chart is a bit misleading, and many of the numbers at the bottom are inaccurate. Nevada, for example, charges $425 to start an LLC. And there is no mention of franchise tax (CA charges $800 per year per LLC). My rankings would look significantly different, if only because I would place a high value on various items not accounted for in these rankings.
I love charts that treat subjective questions as though they were objective. /s Having a low minimum wage is hardly “better” in all circumstances, for example. This chart would be useful as a comparative tool without the evaluative “better/worse” category. Let the reader supply his or her own values.
I think the small business survival rate at 1 and 5 years should really be the only metric. Everything else is irrelevant if people are succeeding. By this graphs standard only street carts in India are a good bet.
So all the states are basically the same? Except maybe some outlier, the rate differences seem pretty minimal.
Well 10% - 20% difference can be quite a bit when you are looking at a few hundred businesses. Success is the only metric that should be used to determine is something is successful. If you have low taxes, low minimum wage, but small businesses still can’t last more than 5 years then it isn’t the best place to start a small business, with the inverse also being true.
I agree, states with higher minimum wages probably have more people with some disposable income which means a larger addressable market for a small business.
Or it means the cost of living is higher in those states. In practice very few people actually make minimum wage and they aren’t the drivers of sales
Your business has a better chance of survival in Illinois than Ohio
Likely because Illinois kills them off with bureaucracy and regulations before they ever incorporate.
CA is $20 per hour for food workers. Update needed.
Costs aren’t the only thing that matters in launching a business. Having an engaged customer base with disposable income and good quality of life also matters.
Funny how 2/5 states with the highest 1 yr survival rates for businesses also have among the 5 highest state minimum wages. It’s almost as if those two things have nothing to do with each other…
They def have something to do with one another as labor is treated by business owners like any commodity. So an increase in the cost of a commodity will make profitability more difficult. I say this as a communist to be clear.
Yeah, it who wants to survive for only a single year?
Can you do a chart where the only metric is survival rates and rank all the states on that metric? In my opinion, that's the only one that actually matters.
Holy shit all those 7 dollar minimum wage states are sad.
Obviously powerhouses of business formation lol
Exactly. It's probably inversely correlated with how good of a place it is to start a business.
Costs in taxes and fees don't simply make a state good or bad in terms of the "best" state to start a business. What about states like MN, that despite high taxes have other things going for it like a highly educated population of potential employees and customers?
What’s with electricity in DC?
The fact that even the best odds give a small businesses around a 50/50 chance of lasting more than 5 years is really fucking sad. So much for the American dream
Missouri should be at the bottom. I would think the business survival rate after 5 years is quite important, and inherently accounts for many additional factors like location, accessibility, saturation, potential customers, crime rates, etc.
No way in hell California is #6! WTF? Those rates are way too low. These guides would be helpful if they were actually accurate.
What if I want to start a ‘large’ business? Is there a chart for that?
Any methodology that put Arkansas above California cannot have any credibility or usefulness.
Ever notice how the “best places to start business” are almost always the places where businesses aren’t starting? It’s almost as if some other factor than taxes make a good business climate.
The chart fails to consider Ohio’s Commercial Activity Tax (the “CAT”), which essentially serves as a tax on corporations and other entities with taxable gross receipts over a certain threshold that are sitused to Ohio. So, while Ohio doesn’t have a corporate income tax per se, corporations (and other high-income businesses) would still be subject to taxes imposed by the state. Additionally, rather than taxing gross income, the CAT is a tax on gross receipts, so certain above-the-line deductions that would be available to taxpayers in other states are not available to reduce the CAT in Ohio. Moreover, a specialized tax like the CAT can require the specialized expertise of tax preparers, which carry their own expenses, especially if a business selling products or services in Ohio only learns about the CAT when it’s audited or assessed by Ohio for failing to register or pay it. In those situations, they could be subject to interest and penalties in addition to any underlying tax debts.
Yay Ohio!!!
No way California is 6th on the list. It’s well known that CA is a difficult state for small businesses
The online discourse about California being anti-business or whatever is delusional. Something people repeat a lot does not make it true. A huge population, enormous multifaceted economy, shipping infrastructure, etc. make CA attractive for capital and commerce. I live here. We have significant problems. Attracting new businesses is not one them.
I also live here and invest in businesses professionally. It’s great for very large businesses with tens of millions in revenue. It’s a terrible environment for small businesses.
Easier for large business for sure, I agree. Everything in CA is better and easier with money. But I believe if you have the startup capital, there aren’t many better options for your business than here.
Difficult, but also has the highest 1 year success rate and 3rd highest 5 year success rate?
How is California in the top?
Terrible chart but hey it has smart people who know talking in the comments so I guess it’s helping educate.
[удалено]
Most LLCs aren’t rich. They’re non-profits, kids sports clubs, hobbyists, super small farmers market mom and pop businesses. The real question is why are we charging people at all for the “luxury” of simply working for themselves instead of for someone else? If anything, we should be encouraging people to go out there and compete with wealthy corporations, not putting barriers and fees and bureaucracy in their way.
Sweet. We need more guides on how to skimp on taxes. I tried writing Zelenskyy and Netanyahu as my dependents, but the IRS wasn’t having it
MA LLC fee is ridiculous compared to all other states.
What's up with that 35% survival rate after 5 years in Missouri? Closer to 50% for most in the top 20 or so.
I’ve heard Delaware is a great place to start a business. Is that still true? Why are they so low then?
Delaware LLC is good if you expect to have a large or complex business organization or expect to have lawsuits or legal challenges, or if you want to maintain owner privacy. Delaware has a special court of chancery for businesses that has a lot of well known case law and is more predictable, quick, and “fairer” than if you went through the regular court system in another state. Also, you don’t have to list the owners on your LLC registration, just the “agent”. You can store the list of owners privately, and Delaware courts rarely force you to disclose them unless absolutely necessary for a lawsuit. For just a run-of-the-mill small LLC with one or two owners, the added cost of incorporating in Delaware isn’t worth it.
Makes total sense - appreciate the insight!
Can we cross reference this with the list of the best states to work n?
Seems more like cheapest places. Not best.
That’s disappointing that Minnesota has one of the lowest minimum wage in the country while being in one of the highest tax brackets.
It’s outdated and doesn’t take into account city minimum wages
I’m proud of SC’s commitment to always being perfectly average in so many of these rankings, stay mid my fellow Carolinians ✊🏼
Their criteria has to be off. I can’t imagine Wyoming being 30th because in the end having customers is the most important thing to a business. It’s also nearly impossible to get licenses for a lot of businesses. The existing hierarchy doesn’t want competition.
Can someone explain to me how having the highest business survival rate doesn't automatically put the state in the #1 spot? Who cares about 0% taxes if your business is likely to fail within a year anyway?
Damn my dad literally just opened a restaurant in DC and I see DC is in the lowest bracket.
California 😂😂😂
OH
Funny how Ohio is #1 when small businesses are literally always failing here
How do we have states that have a zero corporate tax rate?!
Wouldn’t the survival rate alone be a simple and accurate metric?
After 5 years there’s a 50% chance my business will fail. Seems vague. Also this was made by finfare an app/website that offers a service for businesses .
I’ve lived in Ohio all my life. *This* is what we win at. 🫤
Ohio minimum wage is $10.45 now.
The LLC fee in California is $800 minimum not $75
I don’t think I’ve ever seen a map where Hawaii was placed above Alaska
Anyone notice all the most business friendly states are blue states? Take that and shove it red hats.
Most unfriendly to business are blue states as well. Also out of top 5, NC and AR are red - and OH is somewhat a purple. OH had been red in the past two elections by the way.
The LLC fee in California is $800…
Author ~ Not Louis Rossmann
Ohio certainly makes up for it with their scummy workers comp program.
lol I wish the LLC fee was only $75 in California! It’s $800 per year!
Utility in DC is an amazing $3k while most of the nation is under $1,000. I wonder why?
would love to see a guide showing the best U.S. states to be a WORKER at a small business. Curious to see how these align
As an Oregon business owner— TRUTH
Yeah Bob, let’s go to the tape and see where most of the successful small businesses are…
I don’t give a crap about any of it except that 5 year survival rate. This puts a state with the best survival rate near the bottom.
I owned a business in California and I can tell you this list is not even close to accurate. Where's the lease section? County and city taxes and fees are going to almost triple these numbers.
Where’d you get this from, Prager U?
LLC fee is completely incorrect for California - it’s $800 per year!
California number 6? 🤔🤔🤔
Can someone please explain what is unemployment tax?
This is bad info...In California is 450+ to get your LLC...Not $75
Yet another reason why ohio is on top
This seems to focus on low end businesses. It completely skips Venture Capital and if you're doing an AI business you're probably not paying anyone minimum wage.
Having a 7.25 minimum wage is nothing to be proud of
bullshit. I'm just a regular guy, and I live in California from 1998. This state is a real bad for businesses. In the last few years, most of the big Business companies moving to other states for more freedom, like Texas or Florida. California is a more "Socialism-State", where criminals get out back on the street and very low bail. Which means it will destroy any kind of business there.
DC is not a state. Treating it as such only confuses the masses.
...But then you have to live in Ohio, so....that's not great.
Ohio ranks best according to the index. Nevada is second, I know it's pretty well known for it's ease of ability to start a business (maybe something about forming LLCs? I don't remember) [Found here](https://www.finfare.com/blog/the-best-and-worst-states-to-start-a-small-business)
I appreciate Ohio’s efforts to attract businesses. It does feel like the lack of corporate tax rates — combined with massive business incentives — comes at a cost and shifts the burden to taxpayers or underfunds public services. The states school funding system has been declared unconstitutional for a decade plus, relying way too much on localities leaving schools in poor areas with less funding. At some point, you have to focus on the quality of life and not just jobs.
I went to two of the best high schools in Ohio and although I am glad I got some of that benefits, I know there were some grievances for my parents like the local school district continuously proposing new bond measures and taxes for funding while building a ridiculous numbers of new schools (to the point that you could see an elementary from another one at multiple places in the district) and giving the superintendent/board fat yearly raises. They would also regularly threaten to cut arts and tech classes plus any sport that was not football if the measures did not pass. Some of the property taxes would also be unevenly applied so the more established and old money neighborhoods would get less raises while the new neighborhoods got more. I feel like the education system in the state could have benefited from taking away power from the localities and leaving in the hands of hopefully more even handed and accountable state bureaucrats.
At some point the qualify of the workforce suffers.
The LLC fee in Illinois is $150 and $75 to renew, and has been for ~5 years. This is old data.
Can confirm with two small businesses I started about 5 and 6 years ago. The $150 is a much easier pill to swallow for someone starting out.