Study: North Carolina is 9th best state to start a business

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by Jason Parker

In a new study, WalletHub compared all 50 U.S. states, scoring each state on 28 different indicators important to startup success, and North Carolina ranked ninth.

The study comes after another report recently ranked Durham as the No. 2 city to start a business. Raleigh came in seventh. And the number of new businesses across the state is at a record-setting pace, as WRAL TechWire reported in March.

However, North Carolina ranked only 25th for industry variety and 29th for recent COVID-19 data.

“It is always popular among legislators to talk about ‘lowering corporate taxes’ in hopes of attracting business,” said Dr. Kelly G. Shaver, professor of entrepreneurial studies at the College of Charleston School of Business.  “That said, it may be time to take a more nuanced view of what entrepreneurs consider to be important.”

The WalletHub study methodology compared states across three key dimensions, and 28 metrics.  The dimensions were business environment, access to resources, and business costs.  North Carolina ranked 10th for business environment, and 21st for each of the other two dimensions.

The state also ranked 11th in labor costs, 12th in the average length of a work week and in cost of living.

North Dakota finished one spot ahead of North Carolina, which also is the ninth largest state in terms of population. Texas, Georgia, California, Florida, Idaho, Utah, and Colorado were the top seven states ranked by the study, in that order.

True corporate tax rates, meaning the rates applied to business organizations that are founded as C-corporations, may be important considerations when a state’s goal is to entice an existing company to move to a new location, said Shaver.

However, data from the National Association of Small Business cited by Shaver estimates that 35% of small businesses are LLCs and another 33% are S-corporations.  “In both of those instances, there are no corporate taxes,” said Shaver.  “Business profits flow through to the owners, who are then taxed on their income.”

Still, state policies can make a difference for the growth of small businesses, and to attract small businesses, or those who may choose to start a businesses with growth in mind, said Shaver.  “For new companies seeking to grow quickly, state regulations on angel investment are important,” noted Shaver.  Also important: sustainability and environmental policy, progressive treatment of women and minorities, and support for education and the arts, said Shaver.

Original Source: WRAL TechWire