Montana may be most famous for its natural beauty and wildlife — it's the only state in the lower 48 with a grizzly bear population — but did you know it's also the best state in America to start a new business?
According to a study by accounting software provider Akounto.com, Montana boasts the highest savings for startups. The state's average commercial energy bill of $382.07 is the fourth lowest in the country, meaning business owners save more than $2,600 in their first year compared to the national average.
The state's LLC filing fee, required to register a business, is just $35 — 93% below the national average. Its annual LLC fee, which is as high as $800 in other states, is $20.
In addition, 75.6% of Montana residents between ages 16 and 64 are employed, closely mirroring the national average of 75.2%, indicating a health recruitment pool for new businesses.
"The data shows that the top 10 states in this study offer a great environment for new businesses to thrive, with lower commercial energy bills, high workforce participation and stable private sectors," an Akounto.com spokesperson said. "Aspiring entrepreneurs and business owners might want to consider these states when planning their next venture."
In compiling the ranking, Akounto.com considered corporate tax rates, business filing fees, private sector establishment closure rate, monthly commercial energy bills, household income and the number of workers ages 16 to 64 in each state's workforce.
The six metrics were scored and weighted according to their impact on startup businesses, with each state scoring a maximum of 75 points. Montana scored 63.47.
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Iowa ranked as the second-best state to start a business, scoring 62.01. The state boasts a low business failure rate of 2.13% — 25% below the national average. At $417.19, Iowa's average business energy bill is the fifth lowest in the country, allowing companies to save and reinvest nearly $200 per month.
Colorado ranked third with a score of 60.63 points. The state has the sixth-highest median household income, which at $119.663 is more than 20% higher than the national average. The state's corporate tax rate of 4.4% means businesses pay 30% less in taxes compared to the national average of 6.44%.
Rounding out the top 10 best states for startups are Mississippi, Missouri, Kentucky, New Mexico, Arizona, Idaho and Pennsylvania.
People appear to be more interested in entrepreneurship since the onset of the COVID-19 pandemic. Google searches for "how to start a business" have increased 28.9% from April 2020 to April 2023.
"As we have emerged from the COVID-19 pandemic, the overall interest in starting a business remains strong, highlighting the importance of choosing the right state for new businesses to succeed," the Akounto spokesperson said.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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