Texas Best State for Business Startups, Says Study

A new study finds that Texas is the best U.S. state to start a business.

The Lone Star State was named the best place for startups in WalletHub’s “2018’s Best & Worst States to Start a Business” report released on Monday. The personal finance website compared all 50 states and ranked them across three categories: business environment, access to resources, and business costs. Then, they evaluated 25 subset metrics representing the most favorable conditions for startup creation, longevity, and success.

The study’s team of experts also factored in the Trump administration’s economic policies (i.e., Tax Cuts and Jobs Act of 2017), state corporate tax rates, tax breaks, and other incentives that may encourage an entrepreneur to start a new business. WalletHub noted that roughly one fifth of all U.S. startups fail within their first year of operation. Nearly half never reach five years.

Study analyst Jill Gonzalez told Breitbart Texas that the Lone Star State scored big when they examined “state and local tax rates.” The state’s low taxation, low regulation, and business-friendly policies have been attractive to innumerable companies relocating or expanding into Texas.

Utah (2), Georgia (3), Montana (4), and Oklahoma (5) followed Texas in the top five. Florida, North Dakota, California, Arizona, and Colorado rounded out the top 10, respectively. The worst states to create a new business, ranking 41-50, were Alabama, Maryland, Connecticut, New Jersey, West Virginia, Pennsylvania, Vermont, Rhode Island, New Hampshire, and Hawaii.

Although Texas offered the best overall business conditions for startups, it placed fourth in subset analysis for states with the highest average growth in their numbers of small businesses. North Dakota ranked first, followed by Utah (2), Florida (3), and Nevada (5). Conversely, the five states with the lowest small business growth were Ohio (46), Mississippi (47), New Mexico (48), Vermont (49), and West Virginia (50).

Other subset findings included the best and worst states for startup funding. North Dakota, Utah, Iowa, and South Dakota landed in a first place four-way tie for states where entrepreneurs had the most access to capital. Nebraska placed fifth. However, new business owners in Florida (46), California (47), Oregon (48), Nevada (49), and Arizona (50) had the least access to financing.

WalletHub identified the cheapest office spaces in Iowa (1), Maine (2), South Dakota (3), Montana (4), and Minnesota (5). Fledgling ventures in Maryland, Utah, California, Alaska, and New York encountered the most expensive office leases.

Texas entrepreneurs and employees ranked fourth among states where workers logged the longest work week hours. Alaska placed first followed by North Dakota (2), Wyoming (3), and Louisiana (5). Meanwhile, Michigan and Vermont tied (45) for states where newly established operations put in the shortest work weeks. Massachusetts (47), a tie between Oregon and Rhode Island (48), and Utah (50) followed.

The Texas Economic Development Corporation and the Governor’s Office of Economic Development say small businesses drive the state’s economy. More than 2.2 million small businesses operate in Texas. More than than 725,000 of these enterprises are female and minority owned. In April, WalletHub ranked four Texas cities, led by Laredo (1), among the 10 best U.S. cities for Hispanic entrepreneurs. The state incentivizes startups through numerous programs.

“Texas continues to demonstrate its attractiveness to entrepreneurs starting new businesses and companies continue to expand payrolls. We are committed to supporting these Texas businesses with a skilled workforce that is unmatched throughout the nation,” said Texas Workforce Employer Commissioner Ruth R. Hughs in response to the WalletHub study. She told Breitbart Texas by email, “This support, along with a continued positive business climate, has kept Texas as the number one state to do business year after year.”

In June, the Texas Workforce Commission revealed Texas led the nation in job creation from May 2017 to May 2018, adding more than 350,000 private sector jobs. This reflected an employment growth rate of 2.9 percent. Only months earlier, the Federal Reserve Bank of Dallas forecast the state would see job creation levels rise to 3 percent, up from 2.5 percent last year.

Likewise, 2018 marked the 14th consecutive year Chief Executive Magazine named Texas the best U.S. state for business. The publication also identified the Austin and San Antonio metropolitan areas among the nation’s fastest growing business regions. Recently, WalletHub ranked Austin as the second best large U.S. city to start a business.

Follow Merrill Hope, a member of the original Breitbart Texas team, on Twitter.