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Texas regularly ranks highly among business-friendly states, earning the No. 3 spot in WalletHub's recent annual report and the No. 5 spot in a February study of the best states for female entrepreneurs. Now, new research shows the Lone Star State stands out as one of the best places to start a small business, specifically.
Business credit card experts Capital on Tap determined Texas is the second best state to start a small business, right after Florida. They retrieved their data from the U.S. Bureau of Labor Statistics based on several factors, including new firm survival rates, corporate tax rates, the number of entrepreneurs per state, and more.
Texas has very friendly tax frameworks when it comes to small businesses; it is one of five total states that don’t impose any income tax. Furthermore, all Texas businesses that make less than $1.08 million in revenue don’t owe any franchise tax. That also includes all businesses that have less than $1,000 in tax liability.
If a small business owner in Texas needed to take out a loan, they’d be able to secure $4,811 per employee, which is the fifth-highest average loan amount in a calculation of all 50 states.
Capital on Tap COO Damian Brychcy says in a release that the decision to start a small business involves assessing several factors and risks, but he hopes his team’s research can provide future guidance for businesses and entrepreneurs no matter where they reside.
“Entrepreneurship is driven by the desire for independence,” he says. “This includes the freedom to pursue your passion, choose your workplace and working hours, and foster personal growth.”
Florida earned its top spot in the report due to its strong support of local economies with the highest number of jobs created by start-ups per 1,000 residents in the state. However, unlike Texas, Florida small businesses have to pay a 5.5 percent corporate tax rate.
The top states that are the best places to start a small business include:
- No. 1 – Florida
- No. 2 – Texas
- No. 3 – Idaho
- No. 4 – Nevada
- No. 5 – North Carolina
- No. 6 – Colorado
- No. 7 – Washington
- No. 8 – Georgia
- No. 9 – California and Montana (tied)
- No. 10 – Utah