Best And Worst States For Small Business
NEW YORK ( TheStreet) -- Location, location, location. It's the mantra real estate agents live by, but can also be vital for small businesses.
States differ wildly on various tax and business-specific programs that can make or break a business, especially a small start-up.
Whether it's because of the startlingly high numbers of workers out of jobs or just a tactic to bring revenue to suffering state fiscal budgets, many states are increasingly courting small businesses and start-ups. The conventional wisdom says small businesses create two-thirds all jobs.
"The climate for a start-up almost anywhere frankly is about as positive as I have ever seen it," says Dr. Charles "Chuck" Morrissey, an associate professor at Pepperdine University's Graziadio School of Business and Management.In Rhode Island, for instance, state Rep. Donna Walsh (D-36), who is on the state's House Committee on Small Business, introduced a bill Jan. 19 to eliminate the corporate tax for many small businesses. The legislation would eliminate Rhode Island's minimum corporate tax, now $500 for firms grossing less than $250,000 annually, and set up a graduated tax system based on gross receipts. "Besides equity, its greatest benefit is to provide tax relief for small businesses and start-ups to whom every dollar counts," Walsh said in a statement. Ideally for small businesses, states could compete to be known to be as welcoming to them as Delaware is to larger firms. Delaware claims to be where more than 50% of all U.S. publicly-traded companies and 60% of Fortune 500 companies are incorporated. The state is pro-business and shareholder friendly, with modern corporation statutes and well-developed case law that facilitates business planning; a helpful state legislature; and a nonjuried Court of Chancery dealing specifically with corporate issues. Once firms get beyond $20 million to $25 million in annual revenue, they should consider changing to a corporation, says Mariano Sori, a state taxation expert at True Partners, but small businesses that intend to expand can also take advantage of the environment. Morrissey, who led Pepperdine B-school's entrepreneurship program, notes that many student business plan lack "location strategy," which could be detrimental to a start-up's success. "In many cases the business models assumed they would be in a location that would be
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