All logos, product names, and company names mentioned on this site are the property of their respective owners and are used for identification purposes only. Their use does not indicate any partnership, endorsement, or approval by these owners.

Ranked: The 5 Best States To Start A Business

By Jodie Price | Updated September 15, 2025

Starting a business in the right location can provide a significant edge. These states presented in this list combine affordable operating costs, favorable tax policies, and strong job growth to create a supportive business environment. They provide skilled labor, stable economies, and regulations that support entrepreneurship, creating the ideal environment for long-term success.

North Dakota

North Dakota continues to hold the top spot for starting a business, maintaining its first-place ranking from the past few years. Its business environment is highly welcoming, with an LLC formation fee of just $135, keeping startup costs low for new entrepreneurs.

The state’s strong business survival rate of 77% reflects a supportive and resilient environment where businesses have a greater chance of long-term success. Adding to its appeal, North Dakota offers a cost of living index of 0.94, lower than the national average, and a workforce where 64% of the population is within working age.

With a perfect scaled score of 100, the state balances economic affordability with a strong labor market. Beyond financial incentives, North Dakota invests in workforce development, ensuring access to skilled and capable employees for growing businesses.

Small Business Statistics For North Dakota

Metric	North Dakota Value
Formation Fee	$135
Business Survival Rate	55%
Average Funding Per Small Business	$72,000
Cost of Living Index	89.9
Working Age Population (%)	62%
Scaled Score (Out of 100)	83

Indiana

Indiana ranks second in this list as a top state for starting a business, thanks to its business-friendly climate and modest LLC formation fee of $100, which keeps startup costs low. The state’s 77% business survival rate indicates a stable growth environment, and the average small business funding of $24,502 shows strong financial support for entrepreneurs.

These factors make Indiana an appealing place to launch and sustain a company. The state’s economic advantages go beyond its business statistics. With a cost of living index of 0.91, well below the national average, Indiana offers affordability for both owners and employees.

A large labor pool, with 64% of the population in the working-age bracket, adds to its appeal. Combined, these elements give Indiana a high scaled score of 98 out of 100, reinforcing its position as an excellent choice for business ventures.

Small Business Statistics For Indiana

Metric	Indiana Value
Formation Fee	$95
Business Survival Rate	79%
Average Funding per Small Business	$52,000
Cost of Living Index	90.6
Working Age Population (%)	62%
Scaled Score (Out of 100)	84

Arkansas

Arkansas is an attractive state for starting a business, thanks to its exceptionally low LLC formation fee of just $45, one of the lowest in the country. This affordability eases the initial financial burden for entrepreneurs, while the state’s strong business survival rate of 78% reflects a supportive environment for sustaining growth.

These factors make Arkansas a favorable location for launching new ventures. Small businesses benefit from an average of $23,463 in funding through grants and other programs, underscoring the state’s commitment to entrepreneurial success.

With a cost of living index of 0.89, Arkansas offers an economical environment for both business owners and employees. Coupled with a workforce where 64% is of working age, the state’s balanced mix of affordability and available talent earns it a strong scaled score of 93 out of 100.

Small Business Statistics For Arkansas

Metric	Arkansas Value
Formation Fee	$50
Business Survival Rate	49%
Average Funding Per Small Business	$42,000
Cost of Living Index	85
Working Age Population (%)	61%
Scaled Score (Out of 100)	78

South Dakota

South Dakota offers a strong appeal for entrepreneurs with a balance of affordability and resources that support business growth. The state’s LLC formation fee is $150, making it accessible for new businesses while providing a range of services.

With a business survival rate of 74%, South Dakota fosters a supportive environment for sustaining and expanding enterprises. Financial backing for small businesses is notable, averaging $32,477 per business through grants and programs.

The cost of living index is 0.92, below the national average, offering economic benefits for both business owners and employees. Additionally, with 62% of its population in the working-age bracket, South Dakota ensures a dependable labor force, earning it a strong scaled score of 85 out of 100.

Small Business Statistics For South Dakota

Metric	South Dakota Value
Formation Fee	$150
Business Survival Rate	52%
Average Funding Per Small Business	$45,000
Cost of Living Index	92.5
Working Age Population (%)	61%
Scaled Score (Out of 100)	87

North Carolina

North Carolina combines accessibility with quality service, creating a supportive environment for businesses. The state’s LLC formation fee is $125, offering affordability while maintaining value. With a 77% business survival rate, North Carolina shows strong potential for fostering stable and growing startups.

Small businesses benefit from an average of $22,019 in funding through grants and incentives, highlighting the state’s commitment to entrepreneurial success. The cost of living index of 0.96 is close to the national average, ensuring reasonable expenses for both employers and employees.

With 65% of the population in the working-age range, North Carolina provides a robust labor pool, earning a scaled score of 84 out of 100 as a promising location for new ventures.

Small Business Statistics For North Carolina

Metric	North Carolina Value
Formation Fee	$125
Business Survival Rate	50%
Average Funding Per Small Business	$58,000
Cost of Living Index	94.9
Working Age Population (%)	62%
Scaled Score (Out of 100)	91