5 Worst States To Start a Business, Thank You Gov’t


Starting a successful business is really difficult no matter where you live. But there are certain states whose governments make it unnecessarily difficult, due to tedious red tape, high taxes, and other annoying intrusions.

If your dream is to start your next enterprise somewhere in Anerica, but you want to make sure your state is on your side, here are the places you may want to avoid.

1. Hawaii

“But dude, it’s so beautiful there.” Yeah, I know. That doesn’t make it great for business. Just because things are nice to look at doesn’t mean they’re great places to invest your capital. Yes, the state seems to have a high percentage of new entrepreneurs, but couldn’t this be because it’s a gorgeous location to live? The cost of living problem isn’t directly related to businesses, but it’s still a valid consideration.

2. New Jersey

I used to like New Jersey on some level. It’s a nice respite from the madhouse of New York City, some of its suburbs are quite pristine, and it’s cheaper (overall) compared to areas around Manhattan. Unfortunately, when you look at corporate tax rates and property taxes, Jersey lives up to its reputation as “Dirty Jersey.”

Sure it’s one of the most productive states in America, according to GDP, but that’s in spite of itself. A 9% corporate income tax? Seriously? Come on NJ, you can do better.

3. Minnesota

It turns out that freezing to death isn’t the only danger of living in Minnesota. Your business might suffer as well. It’s tied for the 6th-worst startup activity score in the U.S., because the area totally lacks entrepreneurs.

So why is this the case? Well, Minneapolis is a relatively expensive place to live given the terrible weather. If you’re going to encourage people to live in an ice box you MUST make it more affordable.

4. Mississippi

Yikes. Just, yikes. Mississippi is a tough place to do business, not because of high tax rates or anything, but because it’s a challenge to find high-quality workers. The state has the country’s lowest per capita GDP at $31,894.

5. California

Another example of, “but it’s so beautiful there.” In fairness, California does have a lot of great qualities, especially for business owners. There’s access to millions of highly-skilled workers, especially in places like San Francisco, Los Angeles, and San Diego. But for those getting started in their business endeavor, the state can prove to be quite a burden.

California’s business tax climate ranks 3rd-worst in the nation. The annual fee to pay for an LLC is $800 for cryin’ out loud! This is why so many business owners, big and small, are migrating east to Arizona, New Mexico, and Texas.

Of course, you shouldn’t let the government get in the way of your dreams. If your dream is to found a multinational corporation in the heart of downtown San Francisco, then by all means do it! Just make sure to hire a good accountant.