Factors to consider when choosing where to register your business.
Depending on the type of business you are opening, different factors can help you narrow down which state you should register your business in.
For example, if you are wanting to open an in-person business such as a retail store or practice, the most obvious thing to do would be to open your business in the state in which you reside. A lot of stress can be eliminated by having easy access to your physical business space.
If your business can be operated remotely or you want to expand into different locations across the U.S., it is important to look into what each state offers for business owners.
One of the biggest considerations when choosing where to locate your business is the state taxes required in that area. Taxfoundation.org put together a ranking based on their state business tax climate index. The state business tax climate index is "designed to show how well states structure their tax systems and provide a road map for improvement." It is not exactly a representation of which state requires the least amount of tax for businesses but which states have the best overall tax structure.
The 10 best states in this year's Index according to taxfoundation.org are:
The states listed above might be good options to consider for housing your new business. Several of the highest ranking states do not require some major taxes that other states do. For example, Wyoming, South Dakota, and Nevada do not impose corporate or individual income tax. To dive deeper into the process behind the ranking system used above please visit: https://taxfoundation.org/2023-state-business-tax-climate-index/.
Beside considering the tax implications in each state there are some other factors you can consider:
Formation fees as well as annual fees and filings that vary state to state
Legal and court systems of each state.
Some states such as Delaware have specific business court systems that are ruled by judges instead of juries, which can be an upside to housing your business there.
State specific grants and benefits are another factor to consider that are put in place to benefit business owners and new businesses.
There is so much information out there on all of the pros and cons of operating your business in each state across the U.S. Put in the time to really figure out which state will benefit you and your business to the fullest extent!
