Where to Start a Business in 2025? 12 Best States for Entrepreneurs

Have you considered starting your own business but are unsure about the best location to open it? Picking the right state can significantly affect your journey as a business owner. Each state offers different benefits, like tax breaks, regulatory environments, workforce availability, and market access, that can strongly influence how successful your business becomes.

We will explore 12 of the best states for starting a business and highlight what makes each one stand out. Whether you’re looking for strong startup support or a low cost of living, this list will help you identify the best place for your new venture.

Highlights

• 12 best states evaluated for entrepreneurs
• Examines tax benefits, business growth, workforce, and support programs
• Practical tips for new business owners

Texas

Texas is known for its business-friendly environment. It has no state income tax and a wide range of industries that support both new and established companies. Cities like Austin lead in innovation, making Texas a strong choice for entrepreneurs.

Texas ranks highly due to its strong economic climate. The lack of state income tax allows businesses and individuals to retain more of their earnings, which encourages reinvestment and growth. In addition, pro-business policies and supportive regulations foster innovation.

Benefits include:

• A strong network of organizations and meetups that connect business owners with investors and peers
• Access to a skilled workforce from local universities
• A culture of innovation, highlighted by events like South by Southwest (SXSW)

Florida

With its rapid population growth and vibrant tourism industry, Florida presents numerous opportunities for new businesses. The absence of personal income tax is also a strong incentive for entrepreneurs aiming to boost profits.

Florida’s economy benefits from consistent tourist activity and a diverse consumer base, which fuel demand in sectors such as hospitality, retail, and entertainment.

Additional advantages include:

• A trained and competitive workforce
• Opportunities in healthcare, technology, real estate, and agriculture
• Startup resources including mentorship and funding programs

Utah

Utah is often recognized for its thriving tech scene in Salt Lake City and Provo. The state combines low taxes with a supportive business community, making it ideal for startups. A young, motivated workforce adds further appeal.

The business climate is strengthened by organizations like the Salt Lake Chamber of Commerce and local incubators that offer funding, mentorship, and business development programs.

Highlights include:

• A tech-forward, innovative workforce
• Frequent networking and community events
• Accessible startup support and capital

North Carolina

North Carolina features strong industries in technology and finance and offers a lower cost of living than many other East Coast states. Cities such as Raleigh are recognized startup hubs, supported by local universities.

Business owners benefit from:

• Affordable housing and overall living costs
• Strong partnerships between universities and local businesses
• Industry diversity, including biotechnology, pharmaceuticals, and tourism

This combination supports innovation and sustainable business growth.

Nevada

Though known for Las Vegas, Nevada offers more than entertainment. Its tax structure—including no corporate income tax—makes it a strategic choice for entrepreneurs looking to minimize expenses.

Advantages include:

• No corporate income tax
• No franchise tax
• Competitive sales tax rates

Beyond gaming and hospitality, Nevada is growing in sectors like renewable energy, technology, and healthcare. Its supportive environment enables startups to thrive with fewer financial barriers.

Colorado

Colorado offers a compelling mix of quality living and economic opportunity. It attracts people looking for both rewarding jobs and vibrant communities. This makes it an excellent location for startups in outdoor recreation, health tech, and sustainability.

Reasons to consider Colorado:

• Access to scenic natural environments and outdoor activities
• Health-conscious communities ideal for wellness innovation
• A diverse economy covering technology, tourism, agriculture, and clean energy

Colorado’s balance of work and lifestyle helps companies attract top talent and spark creativity.

Massachusetts

Despite its high cost of living, Massachusetts is resource-rich, particularly for biotech and healthcare startups. Its world-renowned academic institutions contribute to a strong culture of innovation.

Entrepreneurs benefit from:

• Proximity to elite schools like Harvard and MIT
• Access to incubators such as Boston’s BioLabs
• A dense concentration of venture capital opportunities

The collaboration between academia and business strengthens Massachusetts’ position as a national innovation leader.

Georgia

Atlanta is one of the fastest-growing metro areas in the U.S., offering opportunities in technology, film, aerospace, and more. Georgia’s economy is diverse and cost-effective, making it a strong environment for business growth.

Strengths include:

• A booming tech industry in Atlanta
• A thriving film sector backed by tax incentives
• Expanding aerospace and defense industries

With top institutions like Georgia Tech and access to affordable real estate, Georgia is ideal for scaling new businesses.

Washington

Seattle anchors Washington’s reputation as a tech powerhouse, thanks to companies like Amazon and Microsoft. But Washington also supports solopreneurs and small businesses with dedicated funding and training programs.

Entrepreneurs benefit from:

• Grants, loans, and micro-financing options
• Networking opportunities through incubators and co-working spaces
• Expert mentorship from groups like SCORE Pacific Northwest
• Emerging innovation hubs in biotechnology and clean energy

This ecosystem makes Washington a strong choice for both independent ventures and high-growth startups.

Illinois

Centrally located, Illinois provides exceptional logistics for nationwide and coastal business access. Chicago’s infrastructure and the state’s support network make it a prime location for entrepreneurs.

Resources include:

• SCORE Illinois mentoring and workshop programs
• Grants and incentives from the Illinois Department of Commerce & Economic Opportunity
• Small Business Development Centers (SBDCs) offering guidance and consulting
• Regular networking events with investors and business partners

Illinois combines access, affordability, and strategic growth support.

Hawaii

Hawaii’s scenic beauty and cultural richness give businesses an edge in the tourism and hospitality industries. Entrepreneurs can create unique experiences that blend culture, service, and innovation.

Advantages include:

• High tourism appeal supporting hospitality-focused ventures
• Cultural engagement through Hawaiian traditions and events
• Specialty local products like crafts and foods that attract both tourists and residents

Hawaii’s distinctive environment allows businesses to stand out by offering immersive and memorable services.

Oregon

Portland leads Oregon’s identity as a hub for creative, purpose-driven, and eco-conscious businesses. The state appeals to entrepreneurs seeking meaningful work and strong community ties.

Highlights:

• Community-driven incubators and co-working spaces
• Emphasis on sustainability and green practices
• A variety of industries including arts, wellness, and retail
• A renowned food and beverage scene with local producers

Oregon’s values-driven business culture supports innovation and consumer connection.

What Makes a State Business-Friendly?

A business-friendly state provides access to resources, reasonable regulations, strong infrastructure, and support networks. States like Illinois offer well-established business development programs and networking opportunities. Hawaii supports experience-based offerings through tourism, while Oregon emphasizes community and sustainability—appealing to purpose-driven entrepreneurs.

Taxation

Understanding tax policy is essential for entrepreneurs. States like Texas, Florida, and Nevada offer significant tax advantages, while Oregon and Hawaii offer unique business models that support niche markets. Favorable tax policies can help startups allocate more funds toward innovation and growth.

Labor Laws

Labor laws shape the work environment and impact employee retention. Flexible labor laws, such as those in California, help businesses stay adaptable. Strong worker protections, like in New York, promote stability. Entrepreneurs should understand each state’s labor laws to maintain compliance and foster workplace trust.

Infrastructure

States with advanced infrastructure—like Texas and Washington—support fast, reliable logistics and communication. This improves supply chains, reduces costs, and enables market expansion. Strong infrastructure is vital for any growing business.

Education and Skills of the Local Population

Educated workforces drive innovation. Areas like Silicon Valley benefit from tech-savvy talent, while cities like Boston offer access to research-driven academic institutions. These factors are critical for businesses seeking skilled employees and collaborative growth.

Ease of Business Setup

States like Delaware and Nevada simplify incorporation and reduce red tape. Fast, straightforward processes allow entrepreneurs to focus on building and scaling rather than navigating complex bureaucracies.

Cost of Doing Business

Startups benefit from operating in states with lower costs for rent, wages, and taxes. This allows founders to invest more into growth. Choosing a cost-effective location can improve both financial sustainability and long-term success.

Methodology

The rankings and analysis are based on the following weighted criteria:

• Business Costs – 30%
• Business Climate – 20%
• Financial Accessibility – 20%
• Economy – 15%
• Workforce – 15%

These categories help assess each state’s overall environment for launching and sustaining a business.

Final Thoughts

Choosing the right state to start your business can significantly influence your company’s long-term success. Whether you prioritize tax savings, innovation hubs, lifestyle quality, or access to skilled workers, there are options tailored to every entrepreneur’s vision.

From the tax advantages of Texas and Florida to the innovation ecosystems of Massachusetts and Washington, the states highlighted in this guide offer diverse opportunities for first-time business owners. Each brings its own strengths—some rooted in infrastructure and regulation, others in culture and community.

The most successful businesses often emerge from environments that align with their values, strategies, and operational needs. By evaluating the cost of doing business, workforce availability, support programs, and market potential, you can make an informed decision that sets the foundation for sustainable growth.

Where you start matters—but how you grow and adapt will define your path forward.

Frequently Asked Questions

Which US cities are frequently mentioned as good places for entrepreneurs, and why?

Several US cities are highlighted, often for different reasons. San Francisco (Bay Area) and New York City are frequently mentioned as hubs with a high concentration of talent and business opportunities, particularly in tech. Austin and Atlanta are also noted, with Austin being seen as having a growing tech scene and a more favorable tax system, while Atlanta has incubator programs and walkable neighborhoods depending on the area. Miami is mentioned as another potential hub, depending on the business. Access to a younger millennial demographic is cited as a benefit of SFO, NY, Austin, and Atlanta.

What role do financial factors, like taxes and cost of living, play in choosing a location for entrepreneurship in the US?

Financial factors are significant. Texas, with cities like Austin and Houston, is mentioned for its lack of state income tax and generally lower cost of living (though this is debated for Houston). The Bay Area and NYC, while offering many opportunities, are also noted for their very high cost of living. Smaller cities or towns might offer a lower cost of doing business and a longer runway for experimentation. Tax incentives and grant programs, like those mentioned in British Columbia and Colorado, can also be attractive. The decision often involves a trade-off between access to resources and talent in expensive hubs versus lower costs and potentially more community support in other locations.

How important is community and networking for entrepreneurs, based on this discussion?

Community and networking appear to be very important. The initial poster felt a lack of openness to testing ideas even among friends in Toronto, highlighting the importance of a receptive community. The discussion mentions the value of being in cities where you can easily access people. Furthermore, the idea of “entrepreneur houses” suggests the benefit of living and working alongside like-minded individuals. Finding supportive communities, such as tech accelerators, is seen as crucial for fostering a startup’s growth and receiving positive feedback.

Are there different location preferences depending on the type or stage of business?

Yes, the discussion suggests that the ideal location can depend on the business niche. For tech-oriented businesses, Silicon Valley is still considered “king.” B2B and enterprise businesses are mentioned as potentially succeeding in Atlanta. The need to be where a vibrant community of potential partners and customers exists within a specific industry is emphasized. For very early-stage testing, a smaller, more community-oriented environment like Owosso, Michigan, is proposed as advantageous due to lower costs and a supportive local culture.

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Reviewed and edited by Albert Fang.

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Article Title: Where to Start a Business in 2025? 12 Best States for Entrepreneurs

https://fangwallet.com/2025/05/27/start-a-business-in-2025/

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