Starting a business in the United States can be a great opportunity for non-U.S. citizens. However, choosing the right State to establish your business might be challenging. States have various business climates and resources, and it's important to consider these factors when making your decision. As the United States of America is a federation, the rules, regulations, and socio-economic and demographic factors for new businesses vary by state. Changing variables such as taxation, working-age population, government funds, and many more affect the establishment and development of companies. Therefore, certain States draw more capital and investment than others.
By evaluating different content from sources such as seeking capital and tax foundation and considering various economic, social, political, and demographic factors that play into the success and sustainability of business operations we have selected the ten best states to start your business in the United States:
- North Carolina
The USA is renowned for its business-friendly environment, where thousands of start-ups are initiated each year. This is because the U.S. has long been a center of investment and innovation in various technology and media sectors. It continues to attract business individuals and their projects by creating convenient immigration opportunities and viable financial incentives. Furthermore, through the continuous flow of investment and bright ideas, the States can race past the world's leading economies. The U.S. provides its citizens and nonimmigrant residents with various employment opportunities. The best state for your company depends on your specific industry, business model, and location preferences.
Read Starting Your Business in the USA on our blog.
*Please be reminded that the states below are in no particular order.
Which State Should You Start Your Business in?
Utah is one of the prominent states that rank high on several factors for the success of start-up businesses. The steady increase in the working-age population, easy access to venture capital, and angel investors make Utah a “go-to place” for corporate foundations. Recently, companies in Utah have achieved a total of $1.16 billion and $11.5 million per entity in funding. This is in line with the growth rate of start-up companies in Utah which shows overall business success and creates abundant employment opportunities.
Utah has low taxes and a pro-business regulatory climate, and a highly educated and skilled workforce. These factors enable businesses to operate without the burdensome cost of taxation.
Utah has a relatively small immigrant population, with a significant presence of Hispanic immigrants.
Texas is amongst the most popular states for entrepreneurs to start their businesses. This is because Texas doesn’t levy corporate or individual income tax, making the foundation of various company types easy and cost-effective. Besides, Texas rates high on venture capital investment with approximately $3 billion and has a dramatic 8 percent increase in the working-age population. These factors, with the low cost of living and affordable property prices, make the Lone State a great place to start your business.
Texas has a large and diverse immigrant population, with a significant presence of Hispanic and Asian immigrants. Its diverse population can provide a strong customer base.
Georgia is leading the recent ascent of Southern states as a beautiful place to start a business. Though Georgia has corporate and individual income taxes, their rates are low. Furthermore, these taxes are compensated by factors such as the high venture capital investment ($10.2 million per company), being rated well above the average in population percentage that started a new business (with 0.42 percent), and entrepreneurs' share that started their businesses out of opportunity instead of necessity.
Although Colorado doesn’t rate high on the venture capital invested in new businesses, it makes up for the lack of money with the early survival rate of its companies (81.12 percent). Besides, Colorado ranks excellent on the number of jobs created in the first year of start-up businesses with 6.45 and has a promising working-age population increase of 7.2 percent. Furthermore, Colorado has one of the lowest corporate and individual income taxes throughout the United States, with 4.55 percent for each!
The state also has a growing tech sector and a highly educated workforce. Colorado has a relatively small immigrant population compared to other states, but it is diverse and includes significant numbers of Asian, Hispanic, and European immigrants.
As one of the shining stars rising from the South, North Carolina’s venture capital invested in start-up businesses is one of the nation’s best, with $15.1 million per company. Easy access to capital and a solid 4 percent increase in the workforce enables Colorado businesses to have a survival rate of 81.2 and attract investors from both inside and outside the United States. This is strengthened by the fact that North Carolina has the third-lowest corporate income tax in America with only 2.50 percent and one of the lowest individual income taxes with 4.99 percent!
The admiral ship of Southern states, Florida, is renowned for its one of the lowest actual labor compensation costs per hour and “no individual income tax” policy. Though Florida levies corporate income tax (5.5 percent), its rate is comparatively low and the State has the highest population percentage of new entrepreneurs, with 0.46 percent. The prevalence of unique business formations also makes Florida one of the leading states, with start-up companies creating 6.41 employment opportunities annually on average.
The State has a large and diverse population and a relatively mild climate that can be attractive to businesses. However, it should be noted that the state has a high risk of natural disasters, which can pose a risk to businesses. Florida has a large and diverse immigrant population, with significant numbers of Hispanic, Asian, and European immigrants.
Even though the working-age population increase in Oklahoma is only 0.7 percent, its venture capital invested in new businesses is quite impressive, with $4.39 million per company. Moreover, Oklahoma is prone to entrepreneurship, with 0.39 percent of its population, which is higher than the national average, starting a new business. Cost-efficiency of doing business in Oklahoma also makes it the third-best state in the rating of early business survival rate (81.51 percent). Lastly, Oklahoma has modest corporate and individual income tax rates, which are 4 and 4.75 percent, respectively.
New York is a great state for businesses, with a strong economy and a diverse population that can provide a strong customer base. It is home to many world-renowned businesses and financial institutions and has a highly educated and skilled workforce. New York has a large and diverse immigrant population, with significant numbers of Hispanic, Asian, and European immigrants.
However, the cost of living in New York is generally higher than in other parts of the country, and the State has relatively high taxes and regulations.
The start-up heaven for Americans as well as immigrants, California is by far the leading state when it comes to venture capital investment amount. Thousands of new businesses are initiated yearly, yet California provides a fantastic $27 million per company in funding. It also has a highly educated and skilled workforce, and a relatively mild climate.
Easy access to capital makes California an attractive hub for entrepreneurs whose population share is 0.45 percent. This rate is second-best in the country and designates the Golden State as a unique destination for start-up employment opportunities, with an average of 6.47 new jobs created annually.
However, like New York, the cost of living in California is generally higher than in other parts of the country, and the state has relatively high taxes and regulations. California has the largest immigrant population of any state, with significant numbers of Hispanic, Asian, and European immigrants.
What makes Montana great for new business formation is its favorable tax rates. Montana has a comparatively low corporate and individual income tax rate (6.75 each) and no state income tax! Montana's other critically important opportunity is its inexpensive yet qualified workforce. “Montana has the second-lowest cost of real labor compensation at 31.56 per hour on average” 1 and above the average rate of population percentage that started a new business with 0.40 percent.
When it comes to being tax-wise business-friendly, no other state beats Wyoming as it levies neither corporate nor individual income tax at all! This makes the entrepreneur share rate of Wyoming's population one of the highest in America (0.45 percent). Though the working-age population of Wyoming is declining, it achieves a solid amount of venture capital investment per company. It has one of the highest early business survival rates, with 81.66 percent.
Virginia is a great state for businesses, with a strong economy and a business-friendly environment. It has a well-educated and skilled workforce and is home to a number of government agencies and contractors that can provide opportunities for businesses.
Virginia has a large and diverse immigrant population, with significant numbers of Asian, Hispanic, and European immigrants.
Nebraska is a good state for non-U.S. citizens to start a business, with a strong economy and a business-friendly environment. It has low taxes and a pro-business regulatory climate, and a highly educated and skilled workforce. Its central location makes it easily accessible to other parts of the country.
Nebraska has a small immigrant population, with a significant presence of Hispanic immigrants.
Too Many Options to Choose!
It's worth noting that the presence of a large and diverse immigrant population can be beneficial for businesses, as it may provide access to a wide range of cultural activities and be a significant customer base. However, it's crucial to be mindful of the local laws and regulations regarding immigration and employment and to ensure that your business is in compliance with these laws.
We are here to help you!
As with every new endeavor, starting a business in the U.S. is a challenging and difficult experience, it is best to consult an expert team of U.S. business law professionals to assist you throughout this long and bumpy road. As Grape Law, we are here to help you. Please don't hesitate to send your emails to [email protected] or schedule a meeting with us through our Calendly calendar!