The Best States for Small Businesses: A Comprehensive Guide

Starting a small business is a big decision, and the success of your venture depends on many factors. One of the most important is the state you choose to set up shop in. Each state has its own unique set of regulations, tax codes, and resources that can make or break your business. To help you make an informed decision, Thumbtack recently released its annual ranking of the top 50 states for small businesses.

The survey included more than 7,500 small business owners and covered eight categories: ease of starting a business, tax code, hiring facility, training and networking programs, government websites, general friendliness, employment and labor laws, and contracting facility. Let's take a look at some of the top-ranking states and what makes them so small business friendly.

Alaska

scored an A+ in six of the eight categories. The exceptions were hiring facility (C+) and training and networking programs (D).

Despite its remote location and small population, Alaska is a great place to start a business.

Michigan

earned an A+ for overall friendliness and scored well in factors related to hiring and starting a business. However, the tax code and government websites were in the C and C+ range.

Maine

performed surprisingly well with an A+ for hiring facility and a C- for tax code.

Could it be all the lobsters and B&Bs? Alabama scored A's and A+'s in five of the eight categories. Low ratings for ease of starting a business (D+), training and networking (F), and government websites (F) hurt their overall rankings.

Idaho

earned very good grades overall with the exception of ease of hiring (C-) and training and networking (F). Boise only got a C+, so keep that in mind if you're considering setting up shop there.

Montana

, also known as Treasure State, earned an A+ for ease of starting a business, zero state sales tax, and relaxed regulatory environment.

It also has excellent spending for consumers and a five-year business survival rate of nearly 50%.

Colorado

has seen expansion in industries such as gyms, party services, daycare services, and digital marketing, advertising, and copywriting agencies. It also has low taxes and free regulations.

Washington

earned a C+, despite five D's and one F in individual categories.

Seattle's C- probably didn't help either.

New Jersey

scored an A+ for ease of hiring but got F's for training and networking and government websites.

Connecticut

earned a B+ for overall friendliness but got an F for its tax code.

New York

got low grades across the board except for ease of starting a business (B+).

Kentucky

fell from an A- last year to a D this time. These are just some of the states that made Thumbtack's list this year. Before you decide where to start your small business, be sure to do your research on each state's regulations, tax codes, resources, and other factors that could affect your success.