10 Of the Best US States to Form a Company

Planning to start a business soon? Here’s a list of the best US states to form a company. Find out which ones are offering the best perks for your startup.

Share This Post

Thinking of establishing your own startup in the US? Picking the right location for it may just be as crucial as your business concept. As a prospective entrepreneur, knowing about the best US states to form a company can contribute to your long-term success.

Different states offer different benefits for business owners. In fact, some states are more business-friendly than others.

Sure, it’s important to have a great product or service. Plus you want to make sure that you pick the right legal structure for your company. In addition to all that, it’s also a wise move to look into where to best set up shop.

The best US states to form a company

Of course, it’s possible to establish your company in your home state. Alternatively, you may also incorporate in a different state if you so prefer. At the end of the day, you want to go with one that offers the best tax incentives and legal requirements.

To give you an idea, here are some of the highly-recommended US states when it comes to business formation.

10. Oklahoma

Image source: Unsplash

According to a CNBC study, the Sooner State ranks as America’s #1 state in terms of the cost of doing business. As such, the place is perfect for startup owners trying to get their enterprises running with limited funding.

The Oklahoma Department of Commerce has likewise pointed out that:

“Oklahoma has removed the barriers and streamlined the process to make it easier for companies to develop and grow.”

Furthermore, the website tells us that:

“Businesses can choose between a cash incentive or a tax credit package… In some cases, qualifying businesses can take advantage of both programs.”

Go check out the Oklahoma Secretary of State website to download PDF versions of required business forms in the state.

9. California

Next, California is also one of the great US states to form a company, especially for tech-focused enterprises. Besides, the Golden State is home to Silicon Valley – which is a global hub for technology and innovation.  

“Forming a California corporation provides entrepreneurs with a number of benefits,” a Forbes article reads. “Incorporation can provide a business with credibility and brand recognition, and can facilitate a future sale of the company. Corporations can also have shares that are easily transferable.”

To file business forms online, interested entrepreneurs need to create an account with the official California Secretary of State website.

8. Florida

Image source: Unsplash

The Sunshine State ranks as the country’s fourth largest economy, according to the Bureau of Economic Analysis. Additionally, it has also become a favorite state for small businesses.

A report by the US Small Business Administration shows that small businesses make up about 99.8% of Florida businesses. Overall, the state has 2.8 million small businesses, which employs 3.6 million individuals.  

Entrepreneurs in the state likewise enjoy low taxes and easier access to capital investments.

To learn more about Florida’s different forms and fees for businesses, head over to the Division of Corporations website.

7. Montana

Montana “supports innovative industries to grow businesses” in the state. This, in turn, helps “strengthen (the) economy and creates job opportunities.” As a result, the Treasure State has gained a reputation as one of the most business-friendly US states to form a company.

Moreover, the Montana Department of Commerce offers qualified startups with business technical and financial assistance. This includes:

  • the Big Sky Economic Development Trust Fund program
  • the MicroBusiness Finance Program
  •  the Export Montana program
  • others

For additional information about this topic, click the state’s official website.

6. Utah

Image source: Unsplash

Utah is considered as “a top state for entrepreneurs, income growth and prosperity, and quality of life.” Go Utah’s Business Services team works hard to support businesses to “grow and prosper in the global marketplace.”

Various initiatives make sure that companies of different sizes get the help they need to flourish in the Beehive State. For example, the Economic Development Zone Increment Financing (EDTIF) and the Recycle Market Development Zone (RMDZ) incentives are in place for those who qualify.

5. South Dakota

In South Dakota, being an entrepreneur in the state means enjoying “reasonable regulations, a balanced budget, and limited taxes.”

According to the Governor’s Office of Economic Development, business owners in the Mount Rushmore State can expect:

  • 0% corporate tax
  • 0% individual state income tax
  • 0% business inventory tax
  • 0% personal property tax

On top of that, the filing process is relatively easy and can entirely be done online.

Clearly, South Dakota deserves a spot on our list of the best US states to form a company. Go visit their official site for general information about starting your own business.

4. Alaska

us states to form a company
Image source: Unsplash

While Alaska is primarily known for its freezing weather, it’s also among the great US states to form a company. The Last Frontier is one of the country’s most tax-friendly states with no sales tax and state income tax.

Plus small business owners who need funding can take advantage of different loan programs such as:  

  •  Alaska Commercial Fishing and Agriculture Bank Loan 
  • Alaska Industrial Development and Export Authority Loan Participation Program
  • Spruce Root Loan Program
  • State of Alaska Loan Programs
  • U.S. Small Business Administration Funding Programs

For detailed info on business loans and other matters, entrepreneurs may refer to the Department of Commerce, Community, and Economic Development site.

3. Wyoming

As with the other states mentioned here, Wyoming does not collect state income or personal income taxes. Furthermore, the Equality State doesn’t impose franchise tax and has the best asset protection laws out there.

Compared with Nevada and Delaware, Wyoming also has lower administrative costs. Citizenship isn’t even a requirement for business owners.  

To learn about how to start a business and for other useful online business resources, go to Wyoming’s Secretary of State site.  

2. Nevada

us states to form a company
Image source: Unsplash

Nevada consistently ranks among the best US states to form a company for many reasons. The  Governor’s Office of Economic Development site describes the Battle Born State as:

“A business-friendly state with a very low-regulation environment, a streamlined licensing and approval processes, and a favorable tax environment.”

To illustrate, Nevada implements 0% taxes on the following:

  • corporate income
  • corporate shares
  • estate tax
  • franchise tax
  • franchise tax on income
  • personal income tax
  • others

1. Delaware

Last but by no means least, we have Delaware. The First State is known for being corporate-friendly because of its favorable tax policies. State laws allow business owners to establish their headquarters there while operating anywhere in the country – or even abroad. You do not need to have a physical office there, as long as you have a Delaware-based registered agent.

That being the case, it’s no surprise that around 68% of Fortune 500 companies pick the state as their legal home.  

Meanwhile, the state also has the Court of Chancery, a dedicated court that specifically handles business-related cases.

If you need help in forming a new business entity, the Delaware Division of Corporations website is the place to go.

*Featured image source: Unsplash

More To Explore

close-up photograph of a person with a file of essential business documents
Business Ideas & Tips

Essential Business Documents Every Business Needs

Want to set your business up for success? You’ll need to secure some essential business documents to do it right. Here are some of the most important ones:.

© 2021 Registate All rights reserved