10 Best States for Business
The United States is unique in that it is quite literally made up of 50 (more than that, actually) individual provinces, each with their own unique laws, taxation rates, and policies. This allows the flexibility for local governments to foster specific environments for economic prosperity, or to implement certain cultural or social rules that may not exist in other states. One big way that states separate themselves is through regulatory policies and taxation, making themselves more attractive for business, and in turn, helping improve employment rates and raise tax revenue.
Big businesses are constantly shifting from state to state, finding ways to maximize revenue by finding climates that blend low taxes with low labor costs. Startups are also popping up all over the country, but major hubs like Silicon Valley, New York City, Seattle, and Austin are some of the core players. These cities, and some states, have been able to make themselves attractive to entrepreneurs and investors, fostering growth and allowing for innovation to bloom where it may not otherwise have been able to.
By looking a at a variety of different factors, we’ve put together a list of the top ten best states for businesses. Some of the things taken into account are things like corporate tax rates supplied by The Tax Foundation, employment rates from the Bureau of Labor Statistics, and rankings from CNBC and Chief Executive that weigh factors like access to capital and CEO opinions.
Here are the results we came up with for choosing the top states, highlighting their strengths and some other large companies that reside in each. Read on to see the top ten states for business in America.
Colorado — and Denver in particular — has always been an alluring location for businesses to lay down some roots. A big opportunity has come about very recently, as Colorado is the first of two states to legalize marijuana to actually allow sales to the public, providing a multitude of opportunities for entrepreneurs. Businesses of all sizes can take advantage of a low corporate tax rate of 4.63 percent, and unemployment numbers have been falling, reaching a current level of 5.8 percent.
As for big companies that already call Colorado home, Coors (NASDAQ:TAP), Chipotle (NYSE:CMG), and Dish Network (NASDAQ:DISH) are a few of the bigger names. Denver is also home to a budding startup scene, along with neighboring Boulder. The University of Colorado turns out lots of graduates with exceptional talent, making towns like Boulder, Colorado Springs, and Fort Collins all alluring places for entrepreneurs.
Wisconsin is often lost in the shuffle in the northern Midwest, but along with Minnesota, the state has been able to create a very hospitable business climate. The University of Wisconsin supplies skilled graduates to companies working in cities like Madison and Milwaukee, and the unemployment rate has dropped down to 5.7 percent. The state also uses a flat corporate tax rate of 7.9 percent, edging out its neighbor to hold an advantage in the eyes of businesses.
Wisconsin calls companies like Harley-Davidson (NYSE:HOG), S.C. Johnson & Son, and Alliant Energy (NYSE:LNT) its own, as well as a vibrant and growing startup scene. Many people are surprised to learn so much comes out of the Badger State, not just cheese.
Nevermind the fact that half of the state could end up underwater in the next century due to unchecked climate change, Florida has really been ramping up efforts to attract business from all industries. Tourism has always been one of the backbones of the state’s economy, along with fast-food giant Burger King (NYSE:BKC) and Royal Caribbean (NYSE:RCL), with other food and hospitality companies.
Florida’s governor Rick Scott told Chief Executive that the state has made drastic changes to bring in more business, modeled after Texas. “We’ve learned from Texas how to tell our story better and it helps that we’ve cut taxes 25 times — about $400 million,” he said. The state’s unemployment rate has fallen to 6.3 percent, still lagging behind many others, and the corporate income tax is set at a flat 5.5 percent.
7. North Dakota
North Dakota, which has had the recent fortune of tapping into a vast formation of natural gas, leading to an energy boom that is paying off in job growth and tax revenues. The business climate is drastically different than you would find in California or New York, but companies are still finding it a fertile area to startup and grow. North Dakota boasts the country’s smallest unemployment rate at 2.6 percent, and has a maximum corporate tax rate of 4.53 percent, two very flashy figures.
While only a handful of companies actually call North Dakota home, several are making a fortune by conducting business within its borders. The Bakken Shale fields have brought on unprecedented oil and gas extraction, leading to big investments from companies like General Electric (NYSE:GE) and Statoil (NYSE:STO).
Tying with Colorado is the storied state of Virginia, which boasts several beautiful cities, as well as a close proximity to Washington D.C. Virginia is surrounded by talent factories, taking into account students coming out of the state’s numerous high-ranking colleges, as well as in nearby states like Maryland and North Carolina. Virginia holds a flat corporate tax rate of six percent, an alluring number for many big businesses. It also has a low unemployment rate of 5.1 percent.
The state is home to AOL (NYSE:AOL), Dollar Tree (NASDAQ:DLTR), and Capital One (NYSE:CAF). Its proximity to the nation’s capital also makes it attractive for lobbying professionals, lawyers, and legislators, as well as home to a large tourism industry.
Seattle has been one of the big players on the tech map, housing companies like Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) — based in nearby Redmond, most notably — and others populating the suburbs like T-Mobile (NYSE:TMUS) and Expedia (NASDAQ:EXPE). Plenty of other companies are sprouting up in cities like Spokane and Vancouver, Washington, a suburb of Portland, Oregon. Despite it’s corporate-heavy business population, the startup scene is exploding.
Startups making noise recently include Rover, Zulily and Redfin. While the main Seattle corridor is oozing tech talent from the bigger companies, as well as schools like the University of Washington and Washington State University, some big progressive moves may have an effect on whether the city can remain a business hotbed. The highest minimum wage in the country recently passed, and regulators may be looking to clamp down after Boeing (NYSE:BA) pulled a fast one with some tax shenanigans.
The Twin Cities are the most alluring place in Minnesota for companies to set up shop, as the city and its surrounding suburbs have become the state’s nerve center for commerce. Minnesota has a long history of agriculture, and as many people know, is the home to the Mall of America, which has since been surpassed as the biggest mall in the world. The state has a low unemployment rate of 4.6 percent, but does take a hit with a tax rate of 9.8 percent, well above states like Georgia and North Carolina.
Minnesota is anchored by big companies like Target (NYSE:TGT), General Mills (NYSE:GIS), and UnitedHealth Group Inc (NYSE:UNH). Minneapolis in particular is emerging as a tech startup hub. The city’s close proximity to several great universities, like the University of Minnesota, University of Michigan, and schools in Chicago are churning out young talent fast, and companies in the Land of Ten Thousand Lakes are taking advantage.
3. North Carolina
A state possessing many identities, North Carolina can be an alluring location for beach lovers, city dwellers, or even nature fans who can’t get enough of the Appalachian mountains in the western part of the state. Cities like Raleigh and Charlotte provide large populations to help sustain business growth, and plenty of talent continually pours out of top-notch schools like the University of North Carolina and Duke University to supply them with a potent pool of employees.
Corporate stalwarts calling North Carolina home include Bank of America (NYSE:BAC), Duke Energy (NYSE:DUK), and Lowe’s (NYSE:LOW). Startups are finding the state a great place to secure capital, as the National Venture Capital Association ranked North Carolina fifth in capital commitments in 2012. Like Georgia, North Carolina also has a 6 percent flat corporate income tax, making it appealing to high-revenue businesses.
According to the CNBC study, Georgia is the best state in country for business. There are some knocks against it, like a relatively high unemployment rate of 7.2 percent. Georgia is also home to plenty of cities for business to get started in, most notably the sprawling metropolis of Atlanta, but also smaller boroughs like Savannah and Athens. As one of the original colonies admitted to the Union, Georgia has had plenty of time to fine-tune their economic structure to provide a safe haven for industry.
Some notable residents of the state include Coca-Cola (NYSE:KO), Delta Airlines (NYSE:DAL), and Home Depot (NYSE:HD). Atlanta is starting to emerge as the startup hub of the south, attracting entrepreneurs with its downtown core, proximity to venture capital, and famous nightlife. A flat corporate tax rate of six percent is lower than many other states, another attractive quality for businesses.
Coming as no surprise, Texas ranks very highly as one of the most business friendly states. As governor Rick Perry likes to brag, the state has low corporate tax rates, light regulatory structure, and large amount of that make for potent potential employee pools. Austin is one of the hottest startup communities in the nation, and is also home to perhaps the country’s most prestigious festival, SXSW. Texas has an unemployment rate hovering right around 5 percent, one of the lowest figures in the country.
Startups like Indeed and The Chive are based in Texas, along with corporate behemoths like Exxon Mobil (NYSE:XOM), AT&T (NYSE:T), and Dell. The state is rich with natural resources, and has an extensive history of entrepreneurship. There’s also something about the thought of wearing (or imagining to, at least) a cowboy hat and getting to work that has to be inspiring on some level to many when they wake up in the morning.
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