The Best & Worst States for a Small Biz

NEW YORK (TheStreet) -- Location, location, location. It's the mantra real estate agents live by, but can also be vital for small businesses.

States differ wildly on various tax and business-specific programs that can make or break a business, especially a small start-up.

Whether it's because of the startlingly high numbers of workers out of jobs or just a tactic to bring revenue to suffering state fiscal budgets, many states are increasingly courting small businesses and start-ups. The conventional wisdom says small businesses create two-thirds all jobs.

"The climate for a start-up almost anywhere frankly is about as positive as I have ever seen it," says Dr. Charles "Chuck" Morrissey, an associate professor at Pepperdine University's Graziadio School of Business and Management.

In Rhode Island, for instance, state Rep. Donna Walsh (D-36), who is on the state's House Committee on Small Business, introduced a bill Jan. 19 to eliminate the corporate tax for many small businesses.

The legislation would eliminate Rhode Island's minimum corporate tax, now $500 for firms grossing less than $250,000 annually, and set up a graduated tax system based on gross receipts. "Besides equity, its greatest benefit is to provide tax relief for small businesses and start-ups to whom every dollar counts," Walsh said in a statement.

Ideally for small businesses, states could compete to be known to be as welcoming to them as Delaware is to larger firms. Delaware claims to be where more than 50% of all U.S. publicly-traded companies and 60% of Fortune 500 companies are incorporated.

The state is pro-business and shareholder friendly, with modern corporation statutes and well-developed case law that facilitates business planning; a helpful state legislature; and a nonjuried Court of Chancery dealing specifically with corporate issues.