![](https://findbestfinances.com/wp-content/uploads/2022/08/Here-Are-the-5-Best-States-to-Start-a-Business.jpg)
![](https://findbestfinances.com/wp-content/uploads/2022/08/Here-Are-the-5-Best-States-to-Start-a-Business.jpg)
Which are the best states to start a business? Logo design company Looka decided to find out. Looka compared all 50 states on a set of six criteria: number of companies with fewer than five employees (likely startups); survival rate for new businesses; percentage of new businesses; affordable cost of living; payroll for smaller businesses; and median household income overall.
1. California
Needless to say, California scored low on affordable cost of living. But its powerful advantages outweigh its sky-high rents. “It has the highest number of businesses with fewer than five employees, highest annual payroll for employees, and the best survival rate for entrepreneurs,” Looka explains in its report. Thank Silicon Valley and Sand Hill Road.
2. Texas
With a decidedly business-friendly climate and Austin attracting legions of entrepreneurs and tech professionals, it’s not surprising that Texas came in second. It ranked second in payroll for small companies and fourth in number of small businesses, and boasts a lower cost of living than other startup centers such as New York or Massachusetts. Hosting SXSW every year doesn’t hurt, either.