The Best and Worst US States to Start a Business

Choosing the right state is crucial for the success of a business startup in the USA. Each state offers unique conditions that affect taxes, regulation, costs, and access to resources.

This article emphasizes the importance of a thorough analysis of each state to find the best conditions for starting and operating a business.

Table of Contents:

  • Best US States for Business Incorporation
  • Worst US States for Business Incorporation
  • Key Factors in Choosing a State
  • Conclusion
  • FAQs
the best and worse USA States for company incorporation

Best US States for Business Startups

  • Delaware: Delaware has long been known as a corporate haven. Forming an LLC is easy and inexpensive, and corporate tax rates are among the lowest in the country. Many large companies are headquartered in Delaware due to its business-friendly laws.
  • Wyoming: Wyoming offers favorable conditions for startups as it does not levy a corporate income tax and has low bureaucracy. The flexibility in business formation and low operating costs make Wyoming an attractive location for entrepreneurs.
  • Nevada: Nevada attracts businesses with its tax system that features no sales tax and low corporate tax rates. The low bureaucracy and the high number of Fortune 500 companies in the state make Nevada an ideal location for businesses looking for growth opportunities.
  • Texas: Texas is known for its favorable tax rates, large population, and abundant resources for startups. The state’s diverse economy offers businesses opportunities for growth and success in various sectors.
  • Florida: Florida is popular among entrepreneurs as it does not levy a corporate income tax and offers significant potential for high-growth businesses. The thriving economy and high quality of life make Florida an attractive destination for business startups.

Worst US States for Business Startups

  • California: Although California has a leading economy and a large number of technology companies, high taxes, strict regulations, and high living costs are often seen as barriers to business startups.
  • New York: New York is a major economic hub, but high taxes, complex bureaucracy, and high living costs can make starting and growing a business challenging.
  • Illinois: Despite its central location and diverse economy, high taxes, high operating costs, and a high crime rate have made Illinois an unattractive location for business startups.
  • New Jersey: New Jersey suffers from similar issues as New York and California, including high taxes, strict regulations, and high living costs.
  • Connecticut: Connecticut has a high quality of life, but high taxes, complex bureaucracy, and high living costs have led many businesses to avoid the state.

Key Factors in Choosing a State for Incorporation

When selecting a state for starting a business, various factors should be considered:

  • Taxes: Corporate tax rates and corporate income tax can vary significantly from state to state and should be carefully reviewed.
  • Regulation: The complexity of bureaucracy and the permitting processes can impact the startup process and should also be considered.
  • Costs: Living costs, operating costs, and startup costs can differ greatly from state to state and should be factored into the decision.
  • Access to Resources: The availability of skilled labor, capital, and infrastructure can affect the long-term development of a business and should therefore be closely examined.
  • Type of Business: The needs and requirements vary depending on the industry, so it is important to consider the specific needs of your business.


Choosing the right state can have a significant impact on the success or failure of a business startup. It is important to carefully weigh the various factors and compare the conditions in each state to make the best decision for your business.

Clevver, Your Partner for Company Formation in the USA

Clevver specializes in services related to business establishment in the USA and offers comprehensive support in navigating the country’s complex system.

Our team has the necessary experience with incorporation services in the US and compliance with accounting standards.

Additionally, we offer tax and accounting services and virtual offices in the USA and worldwide, including registered agent servicesbusiness addresses and digital mailboxes.

Are you ready to start your business? Contact us!


    FAQs on how to choose the best US State for company incorporation

    • Which state is the best for starting a startup? The answer to this question depends on the individual needs and the industry of the business. There is no general “best” state for startups.
    • How much are the startup costs in the USA? Startup costs vary by state and legal form. They can range from $100 to $1,000, depending on specific requirements.
    • What taxes do I have to pay as a US business? US businesses must pay several taxes, including corporate tax, sales tax, and business tax. The exact tax rates and types vary by state and business type.