Texas Ranked Best State to Start a Business

When it comes to picking the best place to do business, Texas consistently ranks at the top. But that may not come as a surprise to Texas entrepreneurs, since the state has a long history of supporting new businesses.

#1 Business Environment for Startups

Wallethub’s 2019 “Best & Worst States to Start a Business” report gave Texas top billing as the best business environment in the entire country. That was based on more than 25 key indicators of startup success. Forbes Magazine also recently awarded Texas with accolades as the top state for business growth prospects, and listed it among the top three states for its economic climate and low cost of doing business.

A History of Top Rankings

Last year, Texas became the first 4-time winner of CNBC’s annual Top States for Business ranking top slot, and has always been in that ranking’s Top 5. A recent Kaufman Foundation report also confirmed that Texas was the most hospitable place for startups and entrepreneurs. According to the report, Texas has one of the best survival rates for new businesses. Increased hiring is a telltale sign of new business success, and the research also shows that startups in Texas have a robust track record for hiring during their first year.

Jobs, Growth, and Investment

Part of the reason is that Lone Star State startups have access to one of the biggest pools of skilled labor in the nation. Texas is the #1 state for jobs created by military veterans, and has been named the #1 state for business for 14 consecutive years by Chief Executive Magazine. Texas also led the nation in commercial real estate development in 2018. IBM’s Global Location Report continues to rank TX highest for job creation through capital investment.

No State Taxes and Zero Merchant Fees

Startups can reinvest more of their profits, too, since there is no corporate or individual state income tax in Texas. Because 75 percent of small businesses structures in the USA are sole proprietorships, that individual tax relief is a huge benefit to startups. Credit card surcharging is also legal in the Lone Star State. That means businesses can pay zero state tax while also paying zero credit card merchant fees, to save in two powerful ways.


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Partnerships and Infrastructure

New businesses in Texas enjoy an uncommon advantage, too, from other companies focused on helping them to succeed. The professional and business services sector in Texas grew by nearly three percent in 2017, while consulting and business support services expanded more than five percent. Startups thrive when they can enter into partnerships with larger, more established companies, and that kind of business community networking has been a tradition in the Lone Star State for generations. Approximately 10 percent of all Fortune 500s are based in Texas.

A Diversified, Sustainable Economy

A strong and sustainable economic infrastructure also helps to ensure the profitability of new Texas businesses. In the wake of the downturn in the local oil patch sector in 2016, Texas still recorded a 2.5 percent rise in employment the following year, which was the fifth highest in the nation. The local economy is fiercely competitive due to its strategic diversification. In fact, if Texas were a nation it would boast the 10th largest economy of any country in the world.