Starting a business is hard no matter where you try it. Still, it can help to set up shop someplace where costs — from rent and labor costs to corporate taxes — are lower. If you currently live on either of the U.S. coasts, that might mean going farther inland, according to a recent ranking from online small business advisor SimplifyLLC.
The cheapest U.S. state for starting a new business in 2025 is Utah, according to SimplifyLLC, which ranked every state based on affordability for businesses. The range of factors it considered included basic business costs, like corporate income tax rates and business filing fees, along with the cost and availability of workers, average costs of commercial rent and utilities, and the overall health of each state’s business environment.
The “Beehive State” boasts some of the lowest corporate taxes in the U.S., with a top rate of 4.65%, as well as low utility costs and one of the lowest average annual wages at just under $64,000, SimplifyLLC said last month, citing data from the U.S. Bureau of Labor Statistics.
Those statistics helped Utah score well on CNBC’s 2024 ranking of the Top States for Business, where the state ranked 13th overall.
Each of the next nine states on the ranking are either Western or Midwestern. None is located on a coast.
Here are the 10 cheapest states for starting a business, according to SimplifyLLC:
- Utah
- South Dakota
- Colorado
- Wyoming
- Montana
- Idaho
- Nebraska
- Kansas
- Nevada
- North Dakota
In many cases, entrepreneurs need a loan to get started on a new business. Residents of Utah received $15.4 million in business loans per 100,000 residents from the Small Business Administration, the second-highest total in the nation. Colorado led that category, with $15.7 million in loans per 100,000 residents.
North Dakota ranked second-cheapest on SimplifyLLC’s list. Its status was bolstered by the fact that it has one of the country’s lowest corporate tax rates, ranging between 1.4% and 4.3%, and one of the highest labor participation rates, at 68.8%, according to data from the Federal Reserve of St. Louis.
SimplifyLLC calculated its ranking using data from the Census Bureau, the Bureau of Labor Statistics, the Federal Reserve, the National Association of Realtors, the SBA and the Tax Foundation to rate the country’s 50 states in eight categories:
- Corporate income tax rates
- Business filing fees
- Average annual income
- Labor force participation rate
- Percentage of adults with at least a bachelor’s degree
- Average monthly commercial electric bills
- Average rent, by square footage, for commercial real estate
- Amount of small-business lending per capita
A lack of money is typically the biggest obstacle facing most prospective entrepreneurs thinking about launching a new business. It’s also the most common reason businesses end up failing. That’s why it’s so important for entrepreneurs to do a thorough accounting of their finances — both how much money they have to spend, and how far their funds can get them — before deciding when and where to start a business, experts say.
“For entrepreneurs who have the ability to pick and choose where they want to start their business, it’s clear that certain states will allow you to save money in various business-related areas, which could help propel your business to the next level,” SimplifyLLC noted.
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