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Top 10 Best States to Start Your Small Business in 2021

Posted on March 18, 2021 by Becca Quackenbush

Montana ranked number one in a top 10 list of best states to start your small business in 2021. It comes as no surprise to most of us here, as we all recognize the perfect little slice of heaven we have between our vast hiking trails, fishing accesses, and ski hills. If anyone asks, we’ll deny it as a last-ditch effort to keep it all to ourselves as long as we can! In truth, we love our state and we love the potential it offers everyone from near or far.

The information provided was analyzed by accounting and economy specialists for The Blueprint, your go-to source for business and tech expertise for sole proprietors. Being analyzed between six essential factors scaled from 1-10 that make or break small businesses, our humble home was the victor overall. 

Each business is different, and business owners will likely use additional indicators that are more relevant to their own individual preferences and those relevant to their specific industry.

  1. Tax climate helps small business owners understand which states have favorable taxes for small business owners. This measurement includes factors such as individual income tax, sales tax, corporate tax, property tax, and unemployment insurance tax, all of which contribute to the tax climate in which small businesses operate.
  2. Consumer spending in the state is an indicator of small business owners' market potential. Although this varies by industry, this macro view shows the market potential for each state.
  3. Rate of new entrepreneurs indicates the favorability of the environment for entrepreneurship.
  4. Business survival rate over five years can be an indicator of the overall business climate in a state. On average, 50% of businesses fail within the first five years, though some states have better long-term rates of business survival. This data point looks at businesses that have survived from 2015 to 2020.
  5. Labor costs are based on the median household income of each state. Small business owners can expect to pay more for labor in states with higher median household incomes.
  6. Climate is an indicator of how climate change is affecting a state. This number is based on the average number of FEMA-designated disasters per square mile of each state. As climate change continues to impact and exaggerate natural disasters, this number will continue to grow. Biological events are also included in the data to indicate the impact of COVID-19 on this area.

Montana’s Department of Commerce welcomes small businesses, offering a variety of resources for new business owners. The best state to open a business in 2021, Montana scores high in several areas, including the number of new businesses calling Montana home. A five-year business survival rate of 53.4% puts the odds of success in your favor.

With a median annual income of $57,153, labor costs should be reasonable, and geographically, Montana holds little risk of natural disasters, with forest fires the major culprit in 2020.

Montana’s corporate tax climate is not as optimal as it could be, with a corporate tax rate of 6.75%, while the individual income tax rate tops out at 6.9%. Montana does not currently have a state sales tax. Consumer spending is also on the rise, going from $41.4 million in 2017 to $45.3 million in 2019, a 9.2% increase, with the state on an upward trend.”

-Mary Girsch-Bock, Accounting Specialist, The Blueprint

If you find yourself joining the other 3.2 million new businesses in America or are looking for that perfect space to call headquarters for your existing business, reach out to our sister company NAI Landmark Real Estate to connect with a commercial real estate specialist. Find our current listings available here.


 

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 Top 10 Best States to Start Your Small Business in 2021

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