Who Tops New York As Most Expensive For Business Startups?

The idea that New York is among the top 5 most expensive states to start a business shouldn't really be a surprise to anyone, should it?

A recent study identified the factors that have landed New York nearly at the top of the list of most expensive states to start a business this year.

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New Businesses By The Numbers

Surprisingly, the Census Bureau's Business Formation Statistics reports that 25.6 million Americans have started their own business since 2020, an 'unprecedented' number. To many, that number comes as a shock given the amount of businesses we have watched close their doors over the past five or so years.

While so many factors come into play when it comes to the success of a new business, this year in particular, startups are facing both higher operating expenses and historic inflation numbers.

Factors To Consider When Starting Businesses In 2025

Several factors were considered when looking at the states to compare the success of businesses in 2025. In this study, the rankings were determined by looking at areas like basic business costs, labor costs and availability, cost of space and utilities, healthy business environment, and finally, taxes and basic business costs.

Simplify LLC, who released the findings of this study, utilized data from agencies like the Bureau of Labor Statistics, Federal Reserve of St. Louis, Tax Foundation and the Energy Information Administration.

Due to the number of regulations in the state, California topped the list as the most expensive state in which to start a business. A total of 420,434 regulations in the state of California, when combined with the 'sky-high' electricity costs, average wages being incredibly high, rent per square foot, and corporate income have California coming in at number 1.

New York Ranks Second Most Expensive State To Start A Business

When it comes to New York, high wages and electricity costs are leading factors. Though NY is still 100,000 behind California when it comes to regulations, the state has an outrageous number at 300,095. New York also comes in on the higher end with wages ($91.428), and ranks high with an average of $907.999 in electricity costs. Corporate tax numbers and elevated LLC fees also contribute to making NY the number 2 most expensive state.

With California and New York at 1 and 2, rounding out the top 10 are Hawaii, Tennessee, Massachusetts, Alabama, New Jersey, Washington D.C., Illinois and West Virginia. A full breakdown of the factors, findings, and details about the least expensive states can be accessed here.