Entrepreneurs are flocking to Delaware to start their businesses.
The state – often referred to as a tax haven – came in at No. 1 on the Shopify Entrepreneurship Index because it had the greatest economic contribution from Shopify entrepreneurs compared to all other states in 2022.
Wyoming came in second, followed by California, Montana and Utah, according to the data.
Shopify, in partnership with Deloitte, looked at several metrics, including the number of jobs supported, gross domestic product (GDP) impact and business activity of Shopify merchants to calculate the states where entrepreneurs have the biggest overall impact, according to Shopify President Harley Finkelstein.
AMERICA’S TOP SMALL BUSINESS COULD WIN $25,000 TO EXPAND
It might come as no surprise that Delaware is No. 1 given that it’s “widely considered to be one of the most business-friendly states in the U.S., due to factors like favorable tax policies toward entrepreneurs, with no sales tax and lower state taxes overall,” Finkelstein told FOX Business.
Additionally, the state is close in proximity to several East Coast metropolitan areas, including Philadelphia, Washington, D.C., and New York,” which could be adding to its allure for entrepreneurs, Finkelstein added.
According to the index data, Delaware’s business activity was upward of 20% in 2022 on an annual basis. There was also a 23.6% growth in the number of jobs created directly by a business. On a macro level, real GDP rose by 2.1% in 2022 on an annual basis, which Finkelstein said is on par with the U.S. growth rate for GDP in that year.
Similar to Delaware, Wyoming also “offers enticing benefits for small business owners,” according to Finkelstein. For one, there is no state corporate income tax and there are lower fees. This means that forming a Wyoming limited liability company (LLC) is cheaper than in many other states.
STARTUPS IN THE US BOOM
Wyoming saw double-digit growth across all metrics, including a 31.7% increase in exports growth year over year and a 12.1% increase in the total number of jobs supported. National data showed that employment in the state increased by 2.1% and personal income by 2.9%, on average.
California ranked third and showed steady growth in most metrics given that the state “offers many networking opportunities.” “It’s also home to many investors for those entrepreneurs looking for capital, and it offers a diverse range of industries,” Finkelstein added.
The data showed that there was an 8% increase in direct jobs created in 2022 on an annual basis as well as a 9.2% increase in business activity growth. Employment in the state increased by 2.1% and personal income by 0.4%, on average, according to Finkelstein.
On a macro level, real GDP rose by 0.4% in 2022 on an annual basis.
The index underscored the resiliency of such individuals despite facing an onslaught of macroeconomic challenges, including persisting inflation.
BEST LARGE US CITIES TO START A BUSINESS IN 2023
“Despite a challenging economic environment, entrepreneurship is having a renaissance moment in the U.S. as more people are trying their hand at starting a business,” Finkelstein said, adding that it’s easier for people to start a business today than ever before.
“If you’ve got an idea, the cost of failure to start a business has never been lower,” he said.
Fears of a recession aren’t holding entrepreneurs back, according to Frank Vella, CEO of online marketing company Constant Contact.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“In slower economic periods, new business inceptions skyrocket,” he said. “Our research shows that Americans are ready to use a recession as an opportunity, and they are confident that they can be successful.”
He noted that “there are more opportunities to be successful” and resources to get a business off the ground from funding to marketing.