Iowa is the second best state to start a business, according to a new study from Akounto, an accounting software company.
Montana ranked first and Colorado third. The research considered the following factors in determining the best states to start businesses:
- Corporate tax rates
- Business filing fees
- Private sector establishment closure rate
- Monthly commercial energy bills
- Household income
- Number of workers aged 16-64 in each state’s workforce
The six metrics were scored and weighed according to their impact on a start-up business, with each state scoring a maximum of 75 points.
Iowa scored 62.01 out of 75 points. The state has a notably low business establishment death rate of 2.13%, 25% below the national average. Additionally, Iowa’s average business energy bill is $417.19, ranking fifth lowest in the nation. This allows companies to save and re-invest almost $200 extra each month compared to the national average.
Residents in Iowa have a median income of $102,220, $2,500 above the national average, and the state has the sixth highest employment rate in America, with 79.5% of citizens aged 16 to 64 in employment.
These combined factors indicate that people in Iowa may generally have more funds to spend or invest in local businesses.
Montana had a score of 63.47 while Colorado scored 60.63.
The next highest Midwestern state was Missouri, coming in at number five. Illinois was the lowest in the Midwest, coming in at 33. California came in last.
A spokesperson for Akounto said in a release that the data shows the top 10 states offer a great environment for new businesses to thrive, especially as entrepreneurship continues to rise.
“Aspiring entrepreneurs and business owners might want to consider these states when planning their next venture,” the spokesperson said. “Interestingly, Google searches for “how to start a business” have increased 28.9% from April 2020 to April 2023, suggesting a growing interest in entrepreneurship. As we have emerged from the COVID-19 pandemic, the overall interest in starting a business remains strong, highlighting the importance of choosing the right state for new businesses to succeed.”