News Summary
A recent study by Simplify LLC reveals that New York is ranked as the second most expensive state to start a business, following California. High labor costs, increased taxes, and a complex regulatory environment contribute to this challenging landscape for entrepreneurs. Despite the difficulty, New York offers a robust support network for startups. Effective policy changes are crucial for enhancing the business environment and ensuring sustainable growth for new ventures in the state.
New York has been ranked as the second most expensive state to start a business in 2025, according to a new study by Simplify LLC. This ranking comes just behind California, as the economic landscape presents unique challenges for entrepreneurs in the state. The growing trend of entrepreneurship is highlighted by the fact that an unprecedented 25.6 million Americans started their own businesses over the past five years, based on data from the Census Bureau’s Business Formation Statistics.
The study, titled “Most and Least Expensive States to Start a Business in 2025,” analyzed nine key factors, including taxes, business filing fees, commercial rent, utilities, labor costs, regulations, and small business lending. Due to higher operating costs linked to historic inflation, startups in New York are increasingly feeling the pressure of financial constraints.
Several contributing factors led to New York’s high ranking. Among these are high labor and operational costs, recent tax increases, and a complex regulatory environment. Additionally, selective incentives and infrastructure challenges continue to pose hurdles for entrepreneurs. The landscape has shifted significantly, and as a result, it has become necessary for state and regional policymakers to address these ongoing challenges to improve the business environment.
Among the key insights from the Simplify LLC study, New York ranks a disappointing 50th for the number of regulations, documenting a total of 300,095 regulations. In terms of labor costs, the state ranks 49th, with average wages now sitting at $91,428. The limited financial relief extends to business filing costs, where the LLC fee is pegged at $200, ranking the state 45th. Moreover, commercial electricity monthly bills are averaging $907.99, placing New York at 44th.
The corporate tax rate in New York is another concern, sitting at 6.88%, which ranks 35th nationally. Labor force participation is also struggling, with a rate of 61.2%, ranking the state 37th. The small business lending rate in New York comes in at $7.2 million per 100,000 people, which is a rank of 33rd. These metrics illustrate a challenging environment for businesses intending to start and operate in New York.
Despite these challenges, New York does boast an advanced network for startup and scaleup support, as pointed out by experts in the field. Sarfraz Mian, a professor and department chairman at SUNY Oswego, emphasizes that while the state has developed resources for business startups, significant challenges remain that need to be addressed by policymakers at various levels.
The implications of New York’s high costs for entrepreneurs cannot be understated. Historically, approximately 20% of new businesses fail within the first year, and with the current environment of high operating costs and complex regulations, this statistic might worsen if critical changes are not made. The importance of reasonable wages, affordable rent, utility costs, and manageable taxes cannot be ignored when considering the foundations of business success.
In conclusion, the landscape for starting a business in New York presents a series of challenges that could discourage potential entrepreneurs. With ongoing budgetary pressures, rising operational costs, and a need for regulatory reform, New York’s position as the second most expensive state for startups will require concerted efforts from policymakers to improve conditions for new businesses.
The Oswego County Business Magazine, established in 1992, is a significant resource for information on business and economic development in Oswego and Onondaga counties. It is the only business magazine in Central New York and has received numerous accolades for its contributions to covering local economic dynamics.
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Additional Resources
- U.S. Chamber of Commerce: Small Business Grants and Programs
- Wikipedia: Entrepreneurship
- The New York Times: Trump’s China Tariffs and Small Businesses
- Google Search: Business Regulations in New York
- Oswego County Business Magazine: Bad News for Start-Up Businesses
- Encyclopedia Britannica: Startup Company
- IBM News Room: WatsonX AI Labs
- Shopify: Small Business Grants
