The cheapest and most expensive states to start a business in the US

Texas is the least expensive state to run a business in the US.

The cheapest and most expensive states to start a business in the US
The cheapest and most expensive states to start a business in the US

Running your own business is always a challenge. Texas is the least expensive US state to run a business, according to new research from enterprise cloud software platform Approve.com.

The study took into consideration factors such as average annual wages, highest corporate tax rates, and average prices for utilities such as electricity and the internet. The study included Washington, D.C., but omitted Alaska and Hawaii due to "no data available."

According to the study, the 5 least expensive states to run a business in the US include: Texas; Oklahoma; Kentucky; Nevada and Georgia.

Texas tops the list thanks to its tax policies and utility costs. The state taxes businesses with annual sales over $1.18 million at a rate of 0.375 percent, but Texas' corporate tax law is considered one of the friendliest for businesses in the United States.

Perhaps that's why Tesla co-founder and CEO Elon Musk has announced that his company will be moving its headquarters from Palo Alto, California, to Austin. Besides Tesla, Oracle, Hewlett Packard Enterprise, Charles Schwab and many other companies have moved their headquarters to Texas in recent times.

However, some of those companies have faced criticism for moving operations to the state, following controversial political decisions by Texas lawmakers - including voting laws. new restrictions, a law banning abortion and a ban on Covid-19 vaccinations and mandatory wearing of masks.

Running your own business is always a challenge. Photo: Getty Images
Running your own business is always a challenge. Photo: Getty Images

The study also ranked the five most expensive states to run a business in the US, including: California; New Jersey; Vermont; Washington and Iowa capitals.

California employees have the 9th highest median annual salary in the country, at $47,290 per year. This state also has the highest electricity prices in the country, averaging 17.7 cents/kWh.

A February study by the Haas School of Business (UC Berkeley) found that customers of Pacific Gas and Electric Company (PG&E) - California's largest utility company - pay nearly 80% more per kWh compared with the national average, due to both the costs associated with wildfires and the fixed costs associated with state energy efficiency programs.

Vermont is the "unusual" name in this ranking. It is one of the least populous states in the US, which often correlates with lower start-up costs. However, Approve.com research notes that Vermont has the second-highest electricity costs in the country - and perhaps more notably, the ninth-highest corporate tax rate, at 8.5%.

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