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The top 5 U.S. states for quitting your job and starting your own company

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The top 5 U.S. states for quitting your job and starting your own company
  • 6 months ago

Quitting your job and giving your business idea an opportunity is an exciting but risky option. If you’re in the correct position, it can give you just a bit of an advantage to be successful.

Since your company’s location will play an essential role in determining the kind of customers and employees you can attract, as well as costs such as payroll and taxes, for help in narrowing your options, — a website that provides designing and branding tools to businesses in the early stages — has announced an updated list of the top U.S. States for entrepreneurs.

As per Looka, California is the ideal place to live should you decide to leave your job and begin your own business. This is despite an extremely high cost of living and one of the most tax-efficient taxes on corporations in the United States.

Here are the five states that are on the top of the list:

  • California
  • Texas
  • New Jersey
  • Illinois
  • Georgia

California has been for a long time an ideal location for startups, particularly in the tech industry; however, this year, the Golden State has recently seen large numbers of prominent companies moving out of the state in pursuit of lower costs and, often, tax savings. Tesla, Oracle, and Hewlett Packard are among the most prominent names to relocate to California in 2020.

But Looka points to California’s large number of small companies and startups with less than five employees. It also has one of the highest survival rates for newly established businesses nationwide. California is also first in terms of the annual salary for companies with less than five employees. “Those entrepreneurs have, on average, capable of paying themselves and their staff more effectively,” a Looka spokesperson says to CNBC Make It.

The report cites research conducted by the non-profit Kauffman Foundation showing that in 2021, 82.56% of California’s new companies continued to operate after they had completed their initial year. Nationally, the average was 81.7 percent. With the many challenges new companies face, they typically require every assistance they can get to succeed.

Following state California, just behind California is Texas which has the fourth-highest percentage of companies that employ less than five people. The Lone Star State also offers the second highest annual salary for companies with less than five employees. It also has the lowest cost of living, thanks to the state’s absence of personal income taxes.

Rhode Island sits at the lowest of the list and has the nation’s lowest percentage of new companies and the lowest survival rates for new businesses at just over 77% by 2021. West Virginia sits in the 49th spot, coming in second in household median income and the number of new companies launched between 2020 and 2021.

The top 5 U.S. states for quitting your job and starting your own company

To compile their rankings, Looka declares that the states are assessed based on six elements:

  • Businesses that employ less than five people
  • Median household income
  • The survival rate of new businesses
  • Cost of living
  • Payroll for companies with less than five employees
  • The percentage of new businesses in each state between 2020 and 2021.

The company relied on information from the U.S. Census Bureau, World Population Review 2022, and the Kauffman Foundation’s Indicators of Entrepreneurship.

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