Which States are Friendly to Small Businesses?

Recently, Thumbtack.com conducted a Small Business Survey in partnership with Kauffman Foundation.  You can find the survey results here: http://www.thumbtack.com/survey.  The survey involved a two-month long interview of over 6,000 small business owners nationwide.

Most of the states in the survey have been given a grade for small business friendliness.  In evaluating the states, Thumbtack.com looked at such factors as the ease of starting a business, hiring costs, regulations, including tax code and licensing requirements, availability of training programs and networking, as well as the current economic health of the state. 

I cannot say I am surprised by the results.  Idaho, Texas, Oklahoma and Utah received “A+”, followed by Louisiana, Georgia, Virginia and New Hampshire who got an “A”.  Several states received the lowest grade, an “F”.  These states are California, Hawaii, Vermont and Rhode Island.  Massachusetts, Connecticut, Michigan and New York received a “D”.  Overall, it seems that the southern states and those in the middle are more friendly to small businesses, whereas the northeastern states and California are less friendly. 

I would like to mention several key findings about New York.  According to the survey, it was ranked among the top five least friendly states for small businesses and was ranked as #1 nationwide as the least friendly in terms of the professional licensing regulations.  I am sure that high tax rates, the onerous LLC publication requirement and the high hiring costs have all contributed to the grade.  On the bright side, I don’t think any other city surpasses New York City in terms of the training and networking opportunities available for entrepreneurs and small business owners.  If you have difficult time finding them, - email me and I will point you in the right direction.     

Four states are missing from the survey, including Wyoming.  I wouldn’t be surprised if Wyoming got an “A+” if it were evaluated since it is truly easy to start a business there and Wyoming corporations do not pay income tax.  

This article is not a legal advice, and was written for general informational purposes only.  If you have questions or comments about the article or are interested in learning more about this topic, feel free to contact its author, Arina Shulga.  Ms. Shulga is the founder of Shulga Law Firm, P.C., a New York-based boutique law firm specializing in advising individual and corporate clients on aspects of business, corporate, securities, and intellectual property law.