What are the best and worst states in which to run a small business? The 2013 Thumbtack.com Small Business Survey, in partnership with the Kauffman Foundation, polled 7,766 small business owners nationwide to find out how supportive they felt their states were of small business.
Utah, Alabama, New Hampshire, Idaho and Texas rated as the top-five friendliest states for small business. Hawaii, Maine and Rhode Island earned an “F,” while California and Illinois rounded out the bottom five, with “D” grades.
Some of the survey’s key findings include:
- Texas had three of the top five cities (Austin, Houston and San Antonio), while California was home to three of the bottom five (Los Angeles, San Diego and Sacramento). Newark, NJ finished last in this year’s rankings.
- Professional licensing requirements were 30 percent more important than taxes in determining a state’s overall business-friendliness, confirming the findings from last year’s study. Furthermore, this year’s research revealed that 40 percent of U.S. small businesses are subject to licensing regulations by multiple jurisdictions or levels of government.
- Small businesses were relatively unconcerned with tax rates – more than half of small business owners felt they pay about the right share of taxes.
- African-American and Hispanic small business owners were significantly more likely than their white counterparts to encourage others to start a new business.
- North Carolina was the most improved state, making strides across multiple categories and rising from a “C+’” to a “B+” grade overall.
- The ease of obtaining health insurance was an important factor for many businesses. One-third of small business owners rated obtaining and keeping health insurance as “Very Difficult,” versus only 6 percent who rated it “Very Easy.”