Starting a business is never easy, but new research shows that some states give entrepreneurs a stronger shot at success than others.
A new study from Patriot Software analyzed startup survival rates, LLC filing fees, and state tax climates to rank the most business-friendly locations for new companies. The results reveal that South Dakota, North Carolina, and Montana lead the nation in fostering successful startups.
South Dakota secured the top spot thanks to its strong tax climate (ranked second in the country) and a one-year startup survival rate of 78.5%. North Carolina followed closely with the highest survival rate among the top three (79.5%) and relatively low filing fees. Montana rounded out the list in third place, offering the lowest cost to file an LLC at just $35, paired with a favorable tax climate.
The study also surveyed business owners about today’s startup environment. Inflation and rising costs remain the biggest challenge, with 52.2% of entrepreneurs citing it as their top concern. Still, optimism is strong: 62.2% believe 2025 will be a good year to start a business.
Other findings reveal how entrepreneurs are adapting. More than two-thirds (68%) have relocated or plan to relocate in search of better business conditions. Over half (51%) are turning to AI tools, particularly for marketing and social media, while 33% have delayed hiring to keep expenses down.
Despite the hurdles, the study makes it clear that opportunity is still alive for entrepreneurs, especially in states that combine strong survival rates, low startup costs, and favorable tax policies. With more founders embracing technology, staying adaptable, and seeking out business-friendly environments, 2025 could prove to be a defining year for the next wave of successful startups in America.
The full report, including state-by-state rankings, can be found here.
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