Where you start your business affects everything: taxes, regulations, costs, and access to talent. We analyzed all 50 states across key factors to help you decide. Spoiler: there's no single "best" state—it depends on your business and priorities.
9
No Income Tax
5
No Sales Tax
$40-500
LLC Fee Range
How We Ranked States
Our ranking considers factors that matter most to small business owners:
Tax Burden
- • State income tax rate
- • Sales tax rate
- • Franchise/business taxes
Startup Costs
- • LLC filing fee
- • Annual report fees
- • Cost of living index
Business Climate
- • Regulatory burden
- • Ease of licensing
- • Labor market flexibility
Infrastructure
- • Access to capital
- • Talent availability
- • Market access
Top 10 Best States for Small Business
No income tax, large market, business-friendly regulations
No income tax, growing population, low cost of living
No income tax, privacy-friendly, lowest regulations
No income tax, strong LLC protections
No income tax, no business taxes, low costs
No income tax*, low cost of living, growing economy
$50 LLC fee, growing tech scene, educated workforce
Low taxes, young workforce, tech hub
$50 LLC fee, growing market, low regulations
Flat 5% income tax, growing economy, affordable
States with No Income Tax (9)
These states don't tax personal or business income, which can save thousands annually for profitable businesses:
Note: Tennessee and New Hampshire only exempt wage income—they still tax investment income. Washington has no income tax but has a business & occupation (B&O) tax.
10 Cheapest States to Form an LLC
* Filing fees only. Don't forget annual reports and registered agent costs if out-of-state.
Best States by Business Type
🍔 Food Trucks & Restaurants
Best: Texas, Florida, Arizona — Lower health permit costs, fewer regulations, year-round outdoor dining potential.
See food truck costs by state →💻 Tech Startups & Remote Businesses
Best: Delaware, Wyoming, Nevada — Delaware for VC funding, Wyoming/Nevada for privacy and low taxes.
🏠 Home Services (Cleaning, Lawn Care, Handyman)
Best: Texas, Florida, Tennessee — No income tax, lower licensing requirements, growing suburban markets.
See cleaning business costs by state →🛒 E-commerce & Retail
Best: Montana, Oregon, Delaware — No sales tax simplifies pricing. For physical stores, consider foot traffic over tax savings.
🏗️ Construction & Contractors
Best: Texas, Florida, Arizona — Construction booms, less restrictive licensing, no income tax.
Don't Choose a State Only for Tax Savings
If you physically operate in a state, you'll owe taxes there regardless of where your LLC is formed. "Nexus" rules mean you can't escape state taxes by incorporating elsewhere. Focus on where you'll actually do business.
See detailed costs for any state
Browse All 50 States