Thinking of Starting New Business? Think About Golden State

Despite reports of an alleged an exodus of ultra-wealthy residents from California, the Golden state is still among one of the best states in which to start a business, according to WalletHub.

According to the site, California is the 10th best place to start a new business.

With more than 20% of new businesses failing within one year and inflation making entrepreneurship even more difficult, the personal-finance company WalletHub today released its report on 2026’s Best & Worst States to Start a Business.

WalletHub compared the 50 U.S. states across 25 key indicators of startup success. The data set ranges from financing accessibility to labor costs to office-space affordability.

Starting a Business in California (1=Best; 25=Avg.):

Overall Rank for California: 10th
13th – Avg. Growth in Number of Small Businesses
1st – Availability of Human Capital
7th – Industry Variety
9th – Number of Startup Firms per Capita
8th – Five-Year Establishment Survival Rate

“Around half of all new businesses don’t survive five years, so the idea of becoming a business owner can be daunting, especially with the current high cost of living. That’s why it’s crucial to establish your business in a state that will maximize your chances of success. The best states have low corporate tax rates, strong economies, an abundance of reliable workers, easy access to financing and affordable real estate. On top of that, you’ll need to make sure you start in a place with an engaged customer base, if you’re operating locally.”
—
“Florida is the best state for starting a business in 2026, boasting the third-most startups per capita and the highest percentage of adults who engage in entrepreneurship. The number of small businesses in the state grew by nearly 16% between 2017 and 2023, the fifth-highest percentage in the country. There are plenty of good reasons why so many people start businesses in Florida, including the fact that it has the 15th-lowest corporate taxes. In addition, Florida’s working-age population (age 16-64) is growing faster than in all but five other states, and the state has the third-highest percentage of workers who say they are enthusiastic about and committed to their work.”

– Chip Lupo, WalletHub Analyst
Expert Commentary

To what extent do state policies, such as corporate tax rates, influence decisions about whether and where to start a new business?

“State tax rates certainly matter, but the research shows that their influence becomes more important as companies age because it often takes years for new businesses to become profitable. Startups that have high capital costs, plan on scaling quickly, or plans to be acquired or do an IPO will care more about corporate tax rates. On the other hand, small companies that operate as LLCs or S-Corps will care more about personal tax rates, which vary less across states. At least initially, strong demand for their products, strong labor markets, and fair zoning and permitting rules tend to outweigh tax rates. That said, the subset of startups that do care about corporate tax rates often have an outsized economic impact through job creation, innovation, and taxable revenue. As a result, states frequently, and appropriately, design policies to attract these less common but higher-impact firms.”
— Dr. Brent B Clark – Professor, University of Nebraska at Omaha

“They impact somewhat, more over the long-term. If you’re looking at a California vs Texas or other state with zero income tax rate, it might be a deciding factor especially when attracting individual investors. However, there are other important issues that influence including the ecosystem with the talent pool available. Quality of life is important too – commute time, affordability (major issue).”
— Philip Greenwood – Senior Lecturer, University of Wisconsin–Madison
Which, in your opinion, are the best industries for starting a business in 2026, and what states are most likely to see an increase in start-up activity?

“I think startups that take non-tech industries and leverage tech to streamline operations will do well for the next few years. This applies to Main Street businesses like small retailers and restaurants, but is especially compelling for scalable models in sectors such as agriculture, construction, healthcare services, and real estate. There are a lot of efficiencies to be gained in these sorts of industries. As far as where this is most likely to happen, there are a few states/cities that have a great combination of startup culture, friendly policies, and that produce lots of skilled labor. Austin, Miami, SLC, Denver, and Charlotte are a few cities that come to mind, although there are others.”
— Dr. Brent B Clark – Professor, University of Nebraska at Omaha

“‘Predictions are risky, especially about the future.’ Today’s seemingly ‘hot’ industry is tomorrow’s over-populated ‘commodity’ business. Also, an ‘industry’ has never started a business; only individual entrepreneurs and their teams do. And good entrepreneurs start with identifying a real need and relevant value proposition as a solution to that need – not with an abstraction like ‘AI’ or some other industry or technology moniker.”
— Frank V. Cespedes – Senior Lecturer, Harvard Business School
What measures can state authorities undertake in order to encourage entrepreneurs to start new businesses in their state?

“Policy stability is a huge must if you want to attract the sorts of startups that scale quickly and make a real economic impact. These are also the ones most likely to shop around for an ideal location. If entrepreneurs cannot reasonably predict the tax and regulatory environment over the near to medium term, they are unlikely to start businesses there. Aside from stability, states always need to address the obvious but critical inputs that startups need. This includes supporting seed capital programs, investing in universities and workforce development, and streamlining business registration, licensing, and permitting processes. Some less obvious (and more challenging) plays can be states finding ways to separate insurance from employment, supporting ecosystem growth (e.g., incubators, mentorship networks, etc.), and carefully avoiding any policies that create major competition imbalances by favoring incumbents over new entrants.”
— Dr. Brent B Clark – Professor, University of Nebraska at Omaha

“Quality of life – schooling, commute, ecosystem, good education systems for their kids and for a pool of talent, provide strong networking opportunities. Encourage economically via competitive tax incentives.”
— Philip Greenwood – Senior Lecturer, University of Wisconsin–Madison

For the full report, please visit:
https://wallethub.com/edu/best-states-to-start-a-business/36934

The post Starting New Business? Consider California appeared first on Uken Report.

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