Report: California 4th Most Expensive State for Business Owners, Washington No. 2

California ranks fourth for high business startup and maintenance costs, following No. 1 ranked New York as as the most expensive state for entrepreneurs, with high commercial rent costs, weekly wages, and LLC filing costs, according to a new report

The report, from Business consulting firm Venture Smarter, ranks Washington second and Massachusetts third as the most expensive states for entrepreneurs. Mississippi was the most affordable state to set up and maintain a business, the report shows.

Venture Smarter’s report examined eight metrics that could influence the cost of setting up and running a business in each state, including each state’s corporate tax rate, average LLC filing fees, average commercial rent costs, and the hourly minimum wage.

These metrics were gathered for all 50 states. with each scored out of 100 to show the most and least expensive states to be an entrepreneur.

New York’s total score was 79.07 out of 100, with the highest yearly commercial rent cost per square foot at $38.92, and the highest average weekly wage at $2,015. It costs $200 on average to file an LLC in New York, which is the fourth most expensive in the country alongside Alabama, the report shows. The state also has the fourth-highest average sales tax rate at 4.5% and the fourth-highest hourly minimum wage at $14.20.

Washington was the second most expensive state to start a business, scoring 76.54 out of 100. The state has the highest hourly minimum wage in the U.S. at $15.74 and the fifth-highest LLC filing cost of $190. Washington also has the eighth-highest sales tax rate alongside Arizona, at 2.8%.

California scored 69.79 out of 100, with the second-highest hourly minimum wage at $15.50, the second-highest average commercial rent costs per square foot ($32.99), and the fifth-highest corporate tax rate at 8.8%. However, the state does have the seventh lowest LLC filing costs on average, at just $70, the report shows.

Data was gathered for eight factors that could influence the cost of setting up and running a business in each US state. Each of the factors were then ranked using a 10-point scale, with the 10-point scales representing a relative index, ranking each state based on its position relative to the variable range in other states.

The following factors were included for each state: