Each dollar counts when you start a new business. Some American states are more expensive than others for entrepreneurs, which can make a big difference if your new business takes a little time to start, as many do.
Unsurprisingly, California and New York are the two most expensive states to start a new business, according to a classification Published last month by the online advisor for small Simplifyllc businesses. The two states have tax rates of companies above average and the costs of life, which affect both the commercial rent and the wages you may need to pay to attract and retain employees.
Companies in California – The home of Silicon Valley, a long -standing start -up center – pay the third highest tax rate in the country, 8.84%, and the second highest average commercial rent, at $ 31.78 per square foot, noted the classification, citing data from the National Association of Realtors. Californians also pay some of the highest electricity prices in the country, and the State has the largest number of regulations for businesses, depending on the report.
Here are the 10 most expensive states and districts in the ranking – including Washington, DC – to start a new business:
- California
- new York
- Hawaii
- Tennessee
- Massachusetts
- Alabama
- New Jersey
- Washington, DC
- Illinois
- Virginie-Western
The southern states such as Tennessee and Alabama rank the fourth and sixth, respectively, on the list could be more surprising. Neither is generally known for high costs of life, and the two states have a tax rate of 6.5%higher companies, which is the nationalAccording to the Foundation tax.
However, they have low labor participation rates, both below 60%, and a relative lack of available talents can make more expensive for companies to recruit and keep the best workers. The two states have also ranked in the last 10 for their loan environments for small businesses, based on the loans granted by the Small Business Administration. A lack of available funding can make a new business more expensive and risky.
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Money problems are generally the main reason Potential entrepreneurs decide not to start a new business. And lack money, whether due to unforeseen obstacles or slower than expected initial sales, is the most common reason Companies fail.
“You must put yourself in a situation which, whatever happens, you can pay your bills,” said Suze Orman, expert in personal finance and successful author said to CNBC in 2021.
If you are looking for a cheaper place to make challenges for a new adventure, Simplifyllc classified Utah cheapest US State to start a business. However, California and New York are destinations of popular startups for a reason: despite their high costs, they generally have access to a highly qualified and educated workforce, and the proximity of large established industries and the basics of rich customers.
The Simplifyllc ranking has considered a range of factors, in particular corporate tax rates and companies’ deposit costs, the cost and the availability of workers, the average costs of commercial rent and public services, and the overall health of the overall health of commercial environment of each state.
The website has calculated its classification using data from the census office, the Bureau of Labor Statistics, the Federal Reserve, the National Association of Real Estate Agents, SBA and the Tax Foundation, according to the report.
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