Would you be surprised to learn that South Dakota is considered the most friendly state for small businesses and entrepreneurs? And that it is followed by Nevada (2), Texas (3), Wyoming (4) and Washington state (5)?
“Who comes up with these rankings, anyway?”
“And what are the rankings based on?”
- Taxes: Includes rates of personal income taxes, capital gains taxes, corporate income taxes, C-corp taxes; sales and excise taxes; and tax deductions for health savings accounts – among others.
- Healthcare: Includes whether states require “guaranteed issue” for the self-employed (means insurance companies cannot turn them down for coverage); and the number of mandated coverages (the more, the worse the score).
- Minimum wage rates
- Legal liability costs
- Internet taxes
- Government spending levels, including the number of state government employees
- Private property protection (refers to the Kelo vs. New London decision -- whether eminent domain can be used to take property just because local governments think another use would bring in more tax revenue)
Here are the overall rankings for the 50 states and the District of Columbia:
2. Nevada
3. Texas
4. Wyoming
5. Washington
6. Florida
7. South Carolina
8. Colorado
9. Alabama
10. Virginia
11. Ohio
12. Alaska
13. Tennessee
14. Utah
15. Indiana
16. Arizona
17. North Dakota
18. Missouri
19. Mississippi
20. Georgia
21. Oklahoma
22. Kentucky
23. Michigan
24. Illinois
25. Arkansas
26. Kansas
27. Pennsylvania
28. New Mexico
29. Louisiana
30. Wisconsin
31. Montana
32. Idaho
33. New Hampshire
34. Nebraska
35. Delaware
36. West Virginia
37. Maryland
38. Oregon
39. North Carolina
40. Connecticut
41. Iowa
42. Hawaii
43. Minnesota
44. Massachusetts
45. Rhode Island
46. Maine
47. Vermont
48. New York
49. California
50. New Jersey
51. Dist. of Columbia
This PDF report of the Small Business Survival Index explains the methodology and the factors used in the rankings. It also ranks the states for each of the 36 government-related costs factors, in case you want it broken down.