Does the state you launch your business in impact its chances of success? If you want to limit your tax liability, reduce your labor costs, find affordable office space and access a large talent pool, then yes!
Different states have different regulations entrepreneurs are required to follow in order to get their startup off the ground. Some states have more favorable tax rates or more flexible employer laws, while others give certain industries additional benefits.
And certain states offer more favorable living conditions for both business owners and their employees — impacting your labor pool, budget and local demand for what you offer. In short, your state matters and can help mitigate the risks of entrepreneurship. So before you launch your business, take a look at the regulations and tax laws that govern the way you work.
While any business has the opportunity to be successful in any state, these four states offer extra perks that make launching your startup just a bit easier:
1. Any small business can flourish in Indiana
According to Forbes, Indiana offers the most favorable conditions for the average startup. Indiana has a low cost of living, a favorable flat income tax rate of just 3.23% and access to generous resources. Indiana also has a strong economy and an educated workforce with just 2.8% unemployment.
Compared to other states, in Indiana, it’s not hard to find skilled talent ready to jump into a new company. Additionally, Indiana has various grants and loan programs available for entrepreneurs who are looking for capital to launch their businesses.
In 2022, the Small Business Association reported that Indiana had over $13 million in funding available for local small businesses. For you and your employees, Indiana offers a low cost of living — a full 15% lower than the national average. That makes it even easier to find great talent, and more affordable to pay them a livable wage.
2. Financial service companies love sunny Florida
Small businesses in a variety of industries can benefit from Florida’s 5.5% corporate income tax, 0% income tax, and 0% estate, inheritance and gift tax. But financial services companies in particular are flocking to Florida.
Within the last few years, over 300 financial services firms have launched or relocated to Florida — earning it the nickname “The Wall Street of the South.” You may recognize a few of the state’s big financial services companies, like Citadel, Blackstone and Goldman Sachs.
Florida offers comparatively low office rental rates, at just $28 per square foot in Orlando. And additional business-friendly resources, like affordable housing, access to capital and favorable regulations are available in most counties across the state.
Another reason to move your business to Florida? Widespread access to an educated, enthusiastic workforce. There are 40 public colleges and universities across the state, graduating tens of thousands of students each year.
| Talk to us about how Escalon’s experienced, essential business services can help your startup scale faster. |
3. Corporations look toward Texas
Texas is quickly becoming a favorite destination for corporations looking to relocate to an area with more favorable corporate tax and income tax laws. In fact, more corporations have moved to Texas since 2020 than any other state in the country!
Many of Texas’ incoming corporations moved away from less cost-effective states like California and New York in search of a larger talent pool and stronger tax benefits. And Austin, in particular, has become a popular location for tech companies like Tesla, Digital Realty and Oracle.
Texas also offers both corporations and small businesses a strong economy with a low unemployment rate, low gas prices that make commuting more affordable, a low cost of living and one of the fastest-growing workforces in the country.
4. Tennessee offers strong benefits for health care companies
Among the states on this list, Tennessee offers the lowest overall cost of living — and one of the lowest in the entire country. That gives local businesses the opportunity to secure top talent and a lower tax rate, expand more quickly with affordable real estate and benefit from cheaper local goods and services. As a result, these companies can quickly increase their margins, especially if they sell their goods out of state.
From a tax standpoint, Tennessee’s business-friendly rates of 6.5% corporate tax, 0% income tax, and 0% estate and inheritance tax are particularly favorable for both businesses and employees. And the average cost of office space in major Tennessee cities like Knoxville and Memphis comes at an almost countrywide low of $20 per square foot.
Many major companies are already headquartered in Tennessee, including FedEx, Dollar General, AutoZone and Cracker Barrel. But health care companies in particular flock to this state.
Tennessee is home to major specialty hospitals including a breast health center, stroke care, cancer treatment center and cardiovascular hospital. Because five major health care companies call the state home, new and innovative healthcare businesses benefit from the concentrated pool of experienced workers and innovative colleges.
If you’re thinking of launching or relocating your business, state matters!
Before you start or relocate a business, take a look at the regulations and tax laws that will impact how you do business. Given the risks of being an entrepreneur, it’s important to do your research and discover which state best suits your needs before you make a business-shifting decision.
Want more? Since 2006, Escalon has helped thousands of startups get off the ground with our back-office solutions for accounting, taxes, HR, payroll, insurance, and recruiting — and we can help yours too. Talk to an expert today.
