The 10 Best Cities and States for Small Business
Business + Economy

The 10 Best Cities and States for Small Business


Should the next wave of tech startups be in Idaho rather than California? How about Utah, Texas or Virginia? All of these states offer an overall friendlier small business climate than famously entrepreneurial California — the home of Silicon Valley — according to a new survey.

The 2014 Small Business Friendliness Survey tries to get at what makes a city or state a good place to start or run a small business by asking small business owners themselves. It was conducted in partnership with the Kauffman Foundation, a non-profit that supports education and entrepreneurship. For this year's survey, 13,000 responded, grading 38 states and 82 metropolitan areas on everything from ease of starting a business, to ease of hiring, to the local regulatory environment. 

Related: 10 Cities with Booming Job Growth

Perhaps the most important revelation involved taxes. Nearly two-thirds of those surveyed said they felt like they were neither under-paying nor over-paying their taxes — that they were paying their "fair share." For all the fuss made about taxes in this country, and the potential role they play in making or breaking the economy, the survey results suggest bureaucratic red tape is more troubling to small business owners than how much they do or don’t pay in taxes.

"Thousands of small business owners across the country told us that the keys to a pro-growth environment are ease of compliance with tax and regulatory systems and helpful training programs," says Jon Lieber, Thumbtack's chief economist.

Related: The 10 Richest Small Cities in America

While Idaho and Texas fared well in the rankings, California and Illinois fared the worst, in both cases dropping from a D in 2013 to an F this year. Sacramento, Calif. was rated the worst small business environment of the 82 cities across the country. Ironically, is a San Francisco based startup, and the City by the Bay only rates a C- for overall friendliness to small business. But if the company ever determines San Francisco isn't working out, there's always Boise.

Here are the 10 Best Cities for Small Business according to the survey. And here are the 10 Best States for Small Business.

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