The Best States to Start a Business

The Most Entrepreneur-Friendly States

The Small Business and Entrepreneurship Council released its 14th annual Small Business Survival Index this month, looking at public policy climates across the United States. The group ranked the states and the District of Columbia considering 36 criteria such as income tax, corporate tax rates, crime rates and other factors that make a state an attractive place to set up shop. The measures are added together for an overall rating. Raymond Keating, chief economist at the council who analyzed the data, noted that states have been confronted by huge budget shortfalls since the state’s last report, and that may be why 11 states this year have higher personal income tax rates and 10 have a higher top capital gains tax rate on individuals. Keating says small firms are following the opportunities. From 2000 to 2008, the top 25 states on the 2009 Index experienced population growth of 10.3%, while among the bottom 26 (including the District of Columbia), population growth registered 5.6%.  In terms of raw numbers, the top 25 added 15.1 million in population, while the bottom 26 added 7.5 million. Following are the top 10 and bottom 10 states — along with the District of Columbia — that the council has found have the best and worst policy environments for entrepreneurship. took a sample of SBE Council’s 36 criteria and compared the top 10 and bottom 10 states on their tax rates on personal income, capital gains, corporate income, corporate capital gains and gas as well as crime rates. Photo Credit: Getty Images