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Beginner's handbook

The Best US States to Start an Online Business

The Best US States to Start an Online Business
Printful Team

By Printful Team

11 min read

In the US, the online business sector is thriving, with 2.8 million online retailers competing in this dynamic marketplace. With a staggering 2.77 billion online shoppers worldwide, establishing a strong online presence can be a game-changer for your business. But where in the US should you launch your new online venture to maximize success?

We set out to uncover which US states are the most prepared to give you the best chance of success at an online business. To do so, we analyzed several key metrics like business survival rates, cost of living, and corporate tax rates. Keep reading to learn what we found out.

The best states for starting an online business

Launching an online business is easier in some states than others. Below we ranked the top states where entrepreneurs have the best chance at success.

1. Virginia

Virginia comes out on top as the best state for an online business, thanks to a perfect blend of technology infrastructure and quality of life. 

Nearly half (48%) of Virginia’s businesses established in 2019 have survived the last 5 years, reflecting a success rate just 1% below the national average of 49.4%. However, it’s Virginia’s internet speed that gives the state a distinct edge for running an online business. With an average speed of 506 Mbps, the best of all 50 states, Virginia gives online businesses a critical advantage. A fast connection allows for seamless video calls or instant messages to your team, quick access to cloud-based tools, and efficient website management that enables real-time customer support. Coupled with a remarkable 488 data centers supporting its robust digital infrastructure—the highest of any state—it’s no surprise Virginia ranks as a leader in online business readiness.

Beyond its digital advantages, Virginia offers a compelling alternative for entrepreneurs compared to more traditional hotspots. While San Francisco draws startups with Silicon Valley’s tech ecosystem and Miami’s tech scene continues to expand, Virginia stands out for its affordability. For example, living in California means paying 35% more than the US average, but Virginia's cost of living is just 3% higher than the average. That difference gives you the flexibility to reinvest your savings into your business without straining your budget. 

a bridge over a river with a city in the background

Source: Unsplash

2. Colorado

Colorado secures the second spot as one of the best states to start an online business, with an impressive fourth place in business environment rankings. The business environment ranking encompasses business creation rate, the number of patents granted per million people, as well as venture capital investment and how many top businesses are headquartered in that state. The state also performs well concerning its corporate tax, ranking 10th nationwide with a 4.4% corporate income tax rate

Colorado also demonstrates reliable connectivity with 85% of residents being online, reflecting its strong digital infrastructure. This is further supported by its internet speed of 347 Mbps, which, while not the highest in the nation, still surpasses the national average of 242.38 Mbps.

3. Texas

Not only is Texas known for its cowboy culture, the southern state also fairs well for online businesses. While many may follow Apple’s lead and head to Austin to build their tech startups, the city’s 59 co-working spaces are outdone by Houston, which boasts over 100 options. With more than 500 co-working spaces across the state, new business owners in Texas are sure to find one that fits their needs.

The odds of your new online business thriving after 5 years are also encouraging in Texas. By 2024, 31,157 of the 58,840 private businesses created in 2019 were still running, with a solid survival rate of 53%. This secures Texas as joint fifth ranking for the best state for 5-year survival. Combined with a comfortable cost of living that’s 7% below the US average, Texans are given a brilliant footing to start an online business and sustain their new venture. 

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4. California

As the home of Silicon Valley, California has more co-working spaces than any other state—an impressive 856 options for your team. In Los Angeles alone, entrepreneurs can choose from 139 co-working locations.

The city of San Francisco has earned the nickname the “Hollywood of technology,” with Twitter, Square, Uber, Dropbox, Pinterest, and Zynga all choosing to build their HQ’s there. But, with a state average internet speed of 93 Mbps, online businesses in California may face challenges competing with states offering faster connectivity. Despite this, California compensates with its strong business environment, earning a second place ranking nationwide. 

a street with cars and palm trees

Source: Unsplash 

5. Georgia

Although Georgia offers just 36 co-working spaces, its affordability makes it an attractive option for entrepreneurs. Residents in Georgia enjoy living expenses that are 9% lower than the US average, allowing business owners greater flexibility to invest in their new online venture. A reliable internet speed of 412 Mbps also adds to Georgia’s appeal, helping new online businesses perform at peak efficiency. 

States that didn’t make the cut

Some states fall short of providing the infrastructure and business environment necessary for a thriving online venture. At the bottom of the list is Hawaii, where residents face living costs 79% higher than the national average and have access to just 17 co-working spaces. Maine poses similar challenges, offering only 12 co-working locations, while Montana lags behind with just 3. Adding to these challenges, all 3 of these states have fewer than 10 data centers, which likely contributes to their below-average internet speeds.

The best states for balancing technology with lifestyle

While business and technology infrastructures play a key role in the direction of a new business venture, the happiness and well-being of employees can be just as influential. 67% of workers feel more socially fulfilled working from a third space (like a co-working site) than working from home, but which states offer the most co-working options?

Co-working spaces can be a great alternative to traditional office space as they offer flexible membership options, which can be reassuring when starting a new business. The more options available, the greater the chance of finding a space that perfectly suits your needs, and leading the pack is California, with a staggering 856 co-working spots to choose from. Texas is hot on The Golden State’s heels, with an impressive 508 co-working spaces to choose from. In third comes New York, with 498 statewide (and 406 in New York City alone!).

a city street with tall buildings and smoke coming out of it

Source: Unsplash

The financial well-being of your staff is another critical factor that can affect the success of your new business. Rising costs have left 68% of employees feeling stressed, which could lead to a lack of concentration at work and poor mental health, so states with lower living expenses offer a significant advantage in mitigating financial stress. Mississippi takes the top spot, with the cost of living being 15% below the national average, followed closely by Oklahoma at 14% less, and Kansas at 12% less. 

This affordability not only eases the burden on employees but also allows businesses to build a more resilient and productive workforce, fostering an environment where both can thrive.

The best states for technology infrastructure

From building a social media presence to using AI tools for automating tasks, technology plays a role in virtually every type of business. But for online businesses, a strong tech infrastructure is essential for success.

From real-time customer support to seamless ecommerce transactions, high internet speeds support smooth business operations, giving online businesses the infrastructure they need to thrive. Maryland has the fastest connection, with an internet speed of 507 Mbps. Close behind are Virginia at 506 Mbps and Delaware with 470 Mbps, all ideal for supporting online operations.

Reliable internet access is also vital for the success of any online business. Idaho leads the way, with 89% of its residents online, followed closely by Illinois and Wisconsin at 88% and Oregon at 87%.

Another key indicator of robust digital infrastructure is the presence of data centers. These specialized hubs allow businesses to store and analyze mass amounts of data securely and efficiently. Data centers are the cornerstone of modern online businesses, but which states are investing in their potential the most?

The state of Virginia hosts 488 of these data centers, and is also home to the densest data center hub in the world known as “Data Center Alley.” Texas follows in second place with 298 data centers, while California takes third with 287. This concentration of data centers highlights the robust digital infrastructure of these states, making them prime locations for businesses that need secure, efficient, and scalable online operations.

The best states for success in business survival, innovation, and taxation

Starting a new business comes with its challenges, including the risk of joining the 23% of companies in the US that fail within their first year. However, some states provide a more favorable environment for achieving long-term success. 

West Virginia and Connecticut come out on top for business survival, both with a 5-year survival rate of 58%. For the state of West Virginia, this meant that of the 2,663 businesses that emerged in 2019, an impressive 1,534 still remained in 2024. And for Connecticut, 4,184 businesses out of the 7,272 founded 5 years prior are still thriving today. In joint second are the states of Alaska and Pennsylvania with 5-year survival rates of 56%, followed by Ohio, Illinois, South Dakota, and California, all with 55%.  

When it comes to the general business environment of each state, Massachusetts is ranked as number 1 in the US. The business environment ranking considers the number of top companies headquartered in the state, venture capital investments, the rate of business creation, and the number of patents issued per million residents. Massachusetts’ success is partly due to its dedication to innovation: for every $1,000 of the state’s GDP, $22.1 is invested in venture capital. As a result, launching an online business in this state is highly supported. 

a city with many tall buildings

Source: Unsplash

Corporate income tax is another factor to consider for new businesses, as high rates can limit reinvestment, especially when operating on tight margins. So new entrepreneurs may feel a pull towards states like Wyoming or South Dakota, where they do not impose a corporate income tax. For the states that do impose it, new business owners are safe in the hands of North Carolina, with a low corporate tax rate of 2.5%, or Missouri with a rate of 4%

Expert tips on starting your online business

With fierce competition and evolving expectations from consumers, online businesses can struggle to get off the ground without careful consideration. Yet starting an online business has never felt more accessible, and success is definitely still within reach with careful planning and strategic execution. 

With that in mind, here are our top insights to help you navigate the journey to online success.

Find your niche

Before you even begin to create your business, choosing the right niche sets you up for success. Your niche defines your audience and lays the foundation for how you differentiate yourself in a competitive market. By aligning your niche with your passions, skills, and expertise, you can create a unique business that resonates with your customers. How do you find the right niche? Start with thorough market research. Doing your research will reveal trends, identify gaps, and ensure profitability.

Prioritize website optimization

Customers expect seamless performance across various devices when shopping online, so it’s important to optimize your website both visually and on a performance level. Simplify navigation so users can find what they need without frustration, and use consistent branding to avoid confusion from customers. You can also increase website loading speed by optimizing site images, reducing plugins, and using as few redirects as possible.

Use automation

Automation can be a game-changer for online businesses by streamlining repetitive tasks and freeing up valuable time for growth-focused activities. Start by identifying areas to automate, like customer service, marketing, inventory management, and order fulfillment. Just be sure to regularly review and fine-tune these tools to ensure they continue to meet your business needs.

Learn about online business laws

Online businesses face unique legal considerations that may differ from traditional brick-and-mortar businesses. While both need to register their business, pay taxes, and comply with consumer protection laws, ecommerce businesses also have to navigate data privacy regulations like GDPR, and implement secure payment systems compliant with the Payment Card Industry Data Security Standard (PCI DSS). However, some states set certain laws concerning online business that others don’t, so it’s important to check your regional regulations.

Choosing the right state for your online business

Starting an online business comes with many opportunities and challenges, and where you launch can make a big difference. From fast internet speeds to a thriving business environment, the best states offer strong infrastructure, affordability, and growth potential. No matter where you start, success comes down to strategy, adaptability, and making the most of the resources available to you.

Sources

To find out which states are the best for an online business, Printful analyzed the following sources for each of the 50 states: 

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By Printful Team on Feb. 4, 2025

Printful Team

Guest Author

Printful is an on-demand printing and fulfillment service that helps businesses create and ship custom products.

Printful is an on-demand printing and fulfillment service that helps businesses create and ship custom products.