The 10 Best States to Start Your Own Business

Advertising Disclosure: When you buy something by clicking links on our site, we may earn a small commission, but it never affects the products or services we recommend.

Businesswoman opening her business for the day
Monkey Business Images /

What do you need to succeed in business? It might depend on where you set up shop — and we’re not just talking about the right street corner either.

“The truth is, tax laws, cost of living, and median household income can all play a role in how your business fares in the long run,” says Looka, an artificial intelligence-powered graphic design company that recently released an analysis of the best states for entrepreneurs.

Those factors were combined with data on how often businesses succeed and what percentage of businesses are new in each state to establish the ranking.

Here’s a look at the top states to start a business.

1. California

Palm Springs, California
gg-foto /

California can be an expensive place to live, but it’s also where small businesses are most likely to survive, Looka says. We previously noted two California metros among the “10 Top Cities for Women Entrepreneurs.”

2. Texas

Corpus Christi Texas
Sean Pavone /

Everything’s bigger in Texas, except apparently the cost of living and personal income tax. If you’re looking for a more specific area to earn your first dollar, Austin and McAllen are two of the top picks in the country.

3. New Jersey

Jersey City, New Jersey
f11photo /

New Jersey’s high median household income vaults it high up on this list, despite the state’s high tax rates. Its median household income is second only to California on this list, Looka notes.

The rest of the top 10

Outdoor dining in Chicago
Page Light Studios /

These are the remaining states in the top 10 best states for starting a business, according to Looka’s analysis:

  • Illinois
  • Georgia
  • Massachusetts
  • New York
  • Florida
  • Oklahoma
  • Tennessee

Get smarter with your money!

Want the best money-news and tips to help you make more and spend less? Then sign up for the free Money Talks Newsletter to receive daily updates of personal finance news and advice, delivered straight to your inbox. Sign up for our free newsletter today.