Millions of Americans are ditching their day jobs in pursuit of starting a business that will give them more happiness, fulfillment and—hopefully—income. But starting a successful business is no easy feat, and with so many challenges ahead, even the decision of which state to start a business in can influence your odds of success.
To rank the best states to start a business in 2023, Forbes Advisor analyzed 18 key metrics across five categories to determine which states are the best and worst to start a business in. Our ranking takes into consideration factors that impact businesses and their ability to succeed, such as business costs, business climate, economy, workforce and financial accessibility in each state.
Key Findings
- Overall best state to start a business: Indiana ranks as the best state to start a business. With a combination of low taxes, a reasonable cost of living and a prime workforce, Indiana provides ideal conditions for new businesses to succeed.
- Overall worst state to start a business: New York ranks as the worst state to start a business. A high cost of living, high unemployment rate and a relatively low survival rate of 79% make the city that never sleeps a less-than-ideal place to start a business.
- Best and worst states by business survival rates: Washington state has the highest year-to-year business survival rate across the nation at 89%. While Hawaii has the lowest survival rate at just 75%.
- Rate of new businesses by state: Entrepreneurs in Florida, Texas, and North Carolina have seen a net increase in new businesses of 29,995, 15,656, and 14,581 respectively, since 2020. Meanwhile, New York saw the largest decrease in business with 3,550 less business in 2021 than in 2020.
- States with the highest and lowest cost to register a business: Startups in Massachusetts have to shell out the most cash to get started with the highest formation fee across the nation at $500. Whereas, Kentucky has the lowest formation fee in the US, at just $40.
- States with the best workforce: For businesses looking to hire degree-level workers—Massachusetts, Colorado, and Connecticut provide the best workforce, with over 40% with a college education. Meanwhile, California, Alaska, and Colorado have the largest working population.
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