Study: New York state second most expensive place to start a business
By Stefan Yablonski
An unprecedented 25.6 million Americans started their own businesses over the last five years, according to the Census Bureau’s Business Formation Statistics. Historically, about 20% of businesses will fail within the first year.
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 of a business.
The Empire State may not be high on the list for those looking to start a business.
A recent study found New York is the No. 2 most expensive state in which to start a business in 2025.
Simplify LLC 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.
Startups in 2025 are facing a unique challenge with higher operating expenses following historic inflation.
New York state is being dubbed as one of the most expensive US states — ranking second to the state of California — due to the following general reasons (as compared to the other states): High labor and operational costs, tax increases and budgetary pressures, complex legal and regulatory environment and selective incentives and infrastructure challenges
Sarfraz Mian, professor and chairman of the marketing and management department in the School of Business at SUNY Oswego, said he has studied New York state’s business startup and scaleup support system. According to him, the state “is considered the most advanced, with a developed network of business incubation and acceleration facilities, thanks to the efforts of the Empire State Development, our great universities and our generous business and financial community.”
However, he said, “the aforementioned reasons continue to put us at a disadvantage and need to be addressed by our state and regional policymakers.”
Among the key findings from the study:
New York struggles with 300,095 regulations (#50); high wages of $91,428 (#49); and a $200 LLC fee (#45 tied).
A $907.99 monthly commercial electricity bill (#44) and a 6.88% corporate tax (#35) also drive up expenses.
Labor force participation in New York is 61.2% (#37) and SBA lending is $7.2 million per 100,000 (#33).
