NASHVILLE, Tenn. (WKRN) -To be one of the few entrepreneurs that survive long term in the Volunteer State, a new study shows that it’s important Tennesseans factor in how much it would cost to operate a business.
According to a study by Simplify LLC, Tennessee is ranked the tenth most expensive state to start a business in. The study found that despite economic uncertainty, an unprecedented number of businesses have formed in recent years — including 429,800 reported nationwide in February 2023.
Over the past two decades, about one in five businesses failed in the first two years, according to data by the U.S. Bureau of Labor Statistics. On the bright side, around 22% of businesses are still operating 20 years later.
The data analyzed cost of labor, corporate tax rates, available commercial real estate, commercial electric bills and the health of the business environment of each state. According to data, numbers show that future business owners in Tennessee may have to dig deep into their pockets to start a business from the ground up.
According to the study, Tennessee business owners spend an annual average of $51,929 to pay workers. Other regions, D.C. for example, pay at least $92,595 a year in pay for workers alone.
Numbers also show that keeping the lights on will cost business owners in Tennessee at least $607.58 worth in electric bills a month. Meanwhile, business owners in Idaho pay a little over half of that, spending around $369.97 a month in commercial electric bills.
The data also took corporate tax rates into consideration. In Tennessee, the average corporate income tax rate is 6.5%. According to the study, Minnesota has the worst tax rates with rates almost reaching a whopping 10%.
Simplify LLC found that Minnesota, New York, Louisiana, Alabama, and Alaska are the top five most expensive states to start a business in.
To see how expensive it will be to start a business in your state, click here.
