Washington worst state in the nation for starting a business: analysis

(The Center Square) – Looking to start a business? Washington is the worst state in the nation in which to do so, according to a recent analysis by Eton Venture Services.

The Austin, Texas-based financial planner analyzed data from the U.S. Bureau of Labor Statistics to find the number of business deaths recorded in June 2022 in each state, weighing those figures against the population to determine rankings.

Washington ranked dead last out of all 50 states, with 541.75 business deaths per 100,000 people.

The Center Square reached out to Patrick Connor, Washington state director for the National Federation of Independent Business, for his take on Washington’s last-place finish.

“It comes as no surprise to local small-business owners that Washington is a challenging state for startups and existing enterprises alike to succeed,” he emailed The Center Square. “Would-be entrepreneurs need to look closely at Washington state's particular costs and requirements before considering opening their doors for business.”

Connor went on to note, “While we've made some progress on state and municipal business licensing fees, Washington's tax and regulatory obligations place a crushing burden on its small businesses.”

Those tax and regulatory burdens include the highest state minimum wage in the nation; a business and occupation tax that equates to a more than 15% corporate income tax, the highest in the nation; workers’ compensation taxes 33% higher than the national average; unemployment insurance maximum weekly benefits and tax rates that are among the highest in the U.S.; and mandated paid sick leave.

Connor also noted Washington is one of the earliest states to implement a paid family and medical leave program, and remains the only state with a long-term care benefit, both of which are paid for via payroll taxes.

“With many of the nation's highest taxes on employers, and most generous government-mandated incentives for workers to stay home, it’s no wonder Washington state is a graveyard for startup small businesses,” he concluded.

While Washington didn’t fare well in Eton Venture Services analysis, the state has done better in some overall economic rankings over the last year.

In 2023, U.S. News & World Report ranked Washington’s economy No. 13 in the nation, and CNBC ranked Washington No. 7 for business.

Per Eton Venture Services, the 10 best states in which to start a business are:

1. Missouri
2. Arkansas
3. Pennsylvania
4. Alaska
5. Ohio
6. Kentucky
7. Massachusetts
8. Alabama
9. Michigan
10. Rhode Island

The 10 worst states in which to start a business are:

50. Washington
49. Idaho
48. Montana
47. Florida
46. California
45. New York
44. Wyoming
43. Delaware
42. Virginia
41. North Carolina