A new study found Virginia is the No. 21 most expensive state to start a business in 2025.
An unprecedented 25.6 million Americans have started their own businesses over the last five years according to the Census Bureau’s Business Formation Statistics. Historically, about 20% of businesses fail within the first year, but startups in 2025 are facing a unique challenge with higher operating expenses following historic inflation. The economic landscape has changed across the country and choosing a location where wages, rent, utilities, and taxes are reasonable could mean the difference between success and failure.
Simplify LLC today released a study on the Most and Least Expensive States to Start a Business in 2025 using the most recent data from the Bureau of Labor Statistics, Federal Reserve of St. Louis, Tax Foundation, Energy Information Administration, and others.
The rankings were determined by analyzing nine key factors such as taxes, business filing fees, commercial rent and utilities, labor costs, regulations, and small business lending.
Key Findings:
- No. 21 Virginia: Virginia business owners have to contend with high commercial electricity bills, with an average of $1,246.68 monthly (#48), Wages are relatively high ($74,253, #40), and so are regulations (145,818, #36) and corporate taxes (6%, #28). However, the LLC fee is only $100 (#18 tied), and labor force participation is at 66.0% (#11).
- 10 Least Expensive: Utah, South Dakota, Colorado, Wyoming, Montana, Idaho, Nebraska, Kansas, Nevada, and North Dakota.
- 10 Most Expensive: California, New York, Hawaii, Tennessee, Massachusetts, Alabama, New Jersey, D.C. Illinois, and West Virginia.
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EDITOR’S NOTE: SimplifyLLC is an independent publication that provides free guides for small business owners. The information you see here was sent to the Clinch Valley Times by them.
At the Clinch Valley Times, we make reasonable efforts to determine if information received from third parties is valid. If we have reason to believe something is not in the best interests of our readers, we don’t publish it. However, if you are thinking of starting a business, we encourage you to exercise due diligence regarding the pros and cons of what you are considering. For example, have others done what you hope/plan to do and subsequently failed? If so, why? Do you have sufficient resources to see you though until your startup costs are recovered and your business is profitable? These and other careful considerations can improve your chances of success, so GOOD LUCK 🙂