Starting up a new business is always a risky and formidable endeavor, but some states make it easier for entrepreneurs to set up shop than others.

In December 2013, The Small Business & Entrepreneurship Council released a report that ranked states based on one major criteria- how helpful they are to small business owners.

The study evaluated the cost of running a small business within each state’s borders and ranked the states accordingly. Forty-seven factors were considered, but the rankings were largely determined by looking at capital gains, corporate, property, personal income tax and sales tax rates to determine if states fostered a tax friendly environment.

Other factors considered were how much regulation the state imposes on industries as well as state minimum wages, paid family leave laws, whether it is a right-to-work state, and trends in state and local government spending.

Best States to Do Business

The report determined the top 3 entrepreneur friendly states to be:

1) South Dakota

97 percent of businesses in South Dakota are small businesses.

Unlike in many other states, businesses in South Dakota enjoy competitive advantages such as no corporate, personal, personal property, business and inheritance taxes.

South Dakota’s Small Business Association also provides businesses with programs such as assisting with drafting a business plan, guidance on obtaining a government contract and distributing microloans to small businesses.

2) Nevada

The Nevada Small Business Development Center (SBDC) is one of the largest management networks in the country.

Nevada’s SBDC offers specialized services that emphasize green business technology, international trade assistance and disaster recovery. The SBDC is also popular –over 80 percent of people polled believed that the assistance provided by their SBDC counselor was helpful.

3) Texas

When it comes to how helpful the climate is for businesses in The Lone Star State, almost everything boils down taxes.

In 2008, Texas reformed its tax code by replacing its franchise tax with a margins tax to lower rates and provide a level playing field for all businesses. Under the reformed tax code, every time an employee is hired, the employer’s tax liability decreases. Texas also has no state property tax.

Additionally, Texas has set up the Governor’s Small Business Forums that provide seminars that provide information to entrepreneurs to assist in the growth of small businesses.

Another business incentive is labor costs in Texas. The state has one of the lowest workers compensation rates America.

Notable Mentions

6) Washington

7) Alabama

8) Indiana

9) Ohio

10) Utah

Worst States to Do Business

In comparison to the top 10 states to do business in, the worst five states include

46) Hawaii

47) New York

48) Vermont

49) New Jersey

50) California

Start Your LLC Today!

1. Head on over to Where to Form an LLC? An Interactive Map
2. Choose the state you want to form your LLC in.
3. The state-specific information (fees, rules, and forms) will be provided to start and run your LLC!

Yep, that’s it. It’s legal made simple.