By Theresa Opeka
North Carolina ranks ninth in the country for starting a business, according to a report from personal finance website WalletHub.
The study compared the 50 states across 25 key indicators of startup success, including an educated population and labor costs, to determine the best places to launch and grow an enterprise.
The Tar Heel State also ranks 11th for average growth in the number of small businesses, cost of living, and labor costs; 15th in the average length of work week (in hours); and, 24th in industry variety.
Starting a business is never easy, the site acknowledges, as one-fifth of all startups don’t make it past the first year, according to the U.S. Bureau of Labor Statistics. Almost half never make it to their fifth anniversary. Such longevity can be even harder to achieve with current economic headwinds such as inflation and tightening labor markets.
A key factor that fits into the puzzle – location, location, location.
“Outside of the currently difficult economic conditions, there are plenty of other reasons that startups fail, with a “bad location” being among the most common,” said Adam McCann, WalletHub Financial Writer
“Choosing the right state for a business is therefore crucial to its success. A state that provides the ideal conditions for business creation — access to cash, skilled workers, and affordable office space, for instance — can help new ventures not only take off but also thrive.”
North Carolina checks all those boxes.
N.C. Secretary of State Elaine Marshall touted at the January Council of State meeting that about 172,000 new businesses were created in the state in 2023, surpassing 2022’s numbers and making it the second-highest year on record. The highest recorded year was 2021, which saw over 178,000. It also marks a 70% increase in new businesses since 2020, when 100,000 new businesses were created.
Florida saw the most gains with 399 small businesses moving to the Sunshine State, followed by North Carolina with 148, Nevada (103), Texas (103), and Tennessee (92). North Carolina is the only state among them with an income tax, which, at 4.75%, is still lower than many other states. Leaders in the state legislature have foreshadowed even lower income tax rates.
For two years in a row (2022 & 2023), CNBC named North Carolina as the best state to do business. The state has also been profiled in Pewtrusts.org as having one of the best rainy-day funds in the country.
North Carolina has also climbed to rank 9th in the nation in 2023 for its tax climate, according to a study conducted by the nonprofit Tax Foundation. The rise in the rankings can be attributed to significant tax reforms undertaken by the state over the past decade, making it an attractive destination for work, residence, investment, and job creation.
The state’s current 2.50% corporate tax rate will be lowered to 2.25% in 2025 and will be phased out completely in 2030, which may help extend the trend of attracting more businesses.
Numerous magazines, including Business Facilities magazine, have named North Carolina their State of the Year. Many large companies, like Google and Apple, have taken notice and are setting up shop.
Other reasons the state is so attractive to businesses are great infrastructure, including fiber internet; available land for expansion; an excellent transportation system, including four international airports, two seaports, and Amtrak train service; and, of course, great weather with a moderate climate.
Utah ranked No. 1 in the WalletHub study, followed by Georgia, Florida, Idaho, Nevada, Arizona, Colorado, Texas, North Carolina, and Tennessee rounding out the top ten.
Theresa Opeka is the Executive Branch reporter for the Carolina Journal.