Job creation is the lifeblood of the economy. Since 32.5 million small businesses make up 46.8% of U.S. employees, it is essential to understand how business-friendly the states are. Creating a business-friendly ecosystem means being the home to innovation and growth.

However, some states are much less competitive with small businesses. Therefore, we will take a deep dive into which state is the least business-friendly.

Some key things tend to be lacking in the least business-friendly states, including:

  • Access to resources for business owners
  • Favorable business costs that incentivize growth and investing
  • Policies that foster improvements in business
  • Lower tax burdens that allow business owners to get started without losing massive profits when tax time comes around
  • An easy time hiring a dedicated team of professionals

There are regions where business owners do not find their interests and concerns addressed in a friendly way. Let’s find out who tops the list as the least business friendly state.

Business Friendly Meets the Cost of Doing Business

Being a successful business owner can be an uphill challenge against things outside of your control as an owner. For example, government regulations and even high taxes can make entrepreneurship seem less rewarding. In addition, the cost of doing business can weigh heavily on how owners can grow.

In the case of Hawaii, the cost of raw materials reflects the impact of importing goods to the island. As a result, Hawaii is not only home to higher prices on goods but to an income tax rate as high as 11%. Additionally, a sales tax rate of 4% applies. In some cases, local governments may also collect a local options sales tax of up to 0.5%.

Beyond the lack of business friendly costs in places like Hawaii or Oregon, there are additional considerations. For example, infrastructure costs can make daily life for business owners and customers difficult.

How Business Friendly is Infrastructure Cost

Living in a place like Maine can be alluring, but it may be one of the least business friendly locations. Housing costs and infrastructure expenses are severe obstacles for businesses. Add to this fact that Maine has some of the worst infrastructure in the nation.

The U.S. Department of Energy even notes the condition of the power grid as being unreliable. Moreover, the average Maine energy customer spends north of fifteen hours without power annually. This unpredictable state of the grid adds to the utility costs of consumers and business owners.

Adding to the picture of an overall business friendly state is the cost of living, workforce, and the economy. Despite occasionally softer regulations on industry, the impact on consumers and business owners can be tremendous. In addition, traveling within the state or affording materials to conduct business can drain growth.

We will explore how Alaska takes the lead position as the least business friendly state, despite its favorable tax rates.

Why The Last Frontier State is the Least Business Friendly State

While regulations are not running rampant in Alaska, the state still manages to be the least business friendly. Even with zero sales tax, Alaska hosts a legal system that favors businesses, and still, the struggle is evident. 

The residents endure difficult times affording regular expenses, and the tourist economies of the state are also drier than usual. Similar to the case with Hawaii, the state of Alaska must import many things that also carry additional costs as a result. The cost of doing business is too burdensome. As a result, the state does not enjoy a higher placing among business friendly locales.

Adding no ease to the situation is a corporate tax rate of 9.4%. Goods coming in by ship also require fuel expenses that weigh heavy on Alaskans and the business people of the state.


The Last Frontier state sees its citizens battle utility costs and the price of transporting goods into the area. The landscape is not a business friendly one. Electricity is difficult to secure at an affordable rate, and the remote regions make that challenge even more daunting.

Retail, office, and industrial space come at a premium. The high wages are only matched by the cost of living. The regulations are not offset fully by these challenging conditions. Perhaps the future will see the rugged home of big bears regain an excellent place among business friendly locations.

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