If you want to start a business, you’ll need to have a good idea of the requirements of your state and local area. Each state has its own rules for licensing, and individual cities have zoning laws. Knowing what you need to do in order to get started on the right side of the law is a must if you want to succeed.

The reality is that some states are better than others when it comes to opening a business. Recently, Thumbtack.com, in partnership with the Ewing Marion Kauffman Foundation, conducted a survey to determine which are the more business friendly states.

Where You Live Matters

Cost of living always matters when you make decisions about where you live. When it comes to your business, cost can make a big difference as well. From obtaining the proper licenses, to paying for permits (if you need to do building or make modifications to a structure), to paying taxes, your state can make a big difference. All of these are costs of doing business, and need to be taken into account as you get started up.

It’s not surprising to me that Utah — where I live — is among the friendliest of states to small businesses. The cost for me to set up my business initially was about $150 (this was a few years ago, though, so it’s probably gone higher). Additionally, my business license renewal costs my $15 a year. One of my friends who lives in California (rated in the bottom five) pays much, much more than that.

Taxes are also relatively low, and Utah is fairly flexible about a number of items when it comes to running a small business. It can make good sense to start a small business in a state like Utah.

Finding Out if Your States is Friendly to Small Business

If you want to find out if your state is friendly to small businesses, you can use an interactive map provided by Thumbtack. You can see, at a glance, which states are most friendly toward small businesses. The data collected incudes information on how easy it is start a business, as well as regulations related to taxes, licensing, environment, zoning, and safety. You can also see the ease of hiring with each state.

The information is also broken down to include major metro areas as well. With a few clicks of the mouse, you can get a pretty good idea of where your state stands.

Of course, if you are determined to start a small business, it doesn’t matter what state you live in; you’ll start one up regardless. However, if you want to move to a friendlier state before you take the leap, it can be helpful to look at the data. And, even if you aren’t planning on moving, at the very least the interactive tool can give you an idea of what you’ll have to face as you start your small business.

How does your state stack up? Do you think it would be easy to start a small business in your state?



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.