By Hank Russell
Starting a business in New York State has never been more difficult. There are expenses to consider, then regulatory burdens, bureaucratic red tape, employment laws and, of course, taxes. Is it any wonder many business owners have closed up shop and moved to more business-friendly states?
A recent study from WalletHub showed that New York is the 41st-best state overall to start a business. This means it is one of the 10 worst states to launch a startup. Rhode Island is the worst state for entrepreneurs, according to WalletHub, followed by Maryland, Hawaii, Connecticut, New Jersey, Pennsylvania, West Virginia, Alaska and New Hampshire. Florida was ranked the No. 1 state to start a business.
In addition, New York was 37th in business environment, according to WalletHub. (Texas had the best business environment, while Rhode Island had the worst). In addition, the state had the third-highest business costs in the nation, behind California and New Jersey and the highest office rents in the U.S., tied with Alaska and California.
Meanwhile, Long Island Life & Politics cited a study from the Mercatus Center at George Mason University which found that New York is the second most regulated state in the U.S. behind California. According to the Center, New York has 300,095 regulations on the books. Some examples of regulatory burdens include 26,218 state tax regulations — nearly four times the national average of 6,980. New York has 34,365 regulations on transportation, far more than the average of 6,317 nationwide. Labor and workforce development regulations totaled 16,627 in New York, 6,968 on average in the U.S.
HereIsNewYork also listed certain factors that come into play, especially for those looking to locate in New York City:
- Escalating real estate prices can put a strain on small businesses financially, which may disincentivize small businesses from establishing a brick-and-mortar location. “In addition, this obstacle impacts their ability to attract investors, as higher overheads imply greater risk and reduced profit potential,” the article states.
- Adhering to the byzantine regulatory process can also place a burden on small business owners. Then there is the licensing process and hiring a lawyer to identify which licenses match up to their business. “New York’s regulatory environment is constantly evolving, further complicating matters,” HereIsNow said. “Staying informed about updates or changes to licensing requirements is vital. Additionally, the time-consuming and often costly nature of acquiring the necessary licenses can delay business operations, posing a considerable challenge for new ventures.”
- As mentioned before, the prohibitive cost of living can put a dent into entrepreneurs’ wallets as they have to spend money on rent, transportation and basic necessities. In addition, they may face demands from employees to raise their salaries. “New York’s regulatory environment is constantly evolving, further complicating matters. Staying informed about updates or changes to licensing requirements is vital. Additionally, the time-consuming and often costly nature of acquiring the necessary licenses can delay business operations, posing a considerable challenge for new ventures,” according to the article. “Additionally, entrepreneurs may find it challenging to attract and retain talent, as employees also feel the pinch of high living costs.”
LILP also cited report from the Public Policy Institute of New York, which included a survey that found that more than seven out of 10 business owners believe the state is headed in the wrong direction and more than half feel the state’s elected officials do not understand or care about their business.
Before the state legislative session began this month, Assemblyman Keith Brown (R,C-Northport) said financial burdens need to be addressed, such as “rising property taxes, higher energy bills and the everyday cost of living, while Albany continues to push policies that make it harder for …small businesses to get by.”
WalletHub analyse Chip Lupo said “the best states” to start a business “have low corporate tax rates, strong economies, an abundance of reliable workers, easy access to financing and affordable real estate. On top of that, you’ll need to make sure you start in a place with an engaged customer base, if you’re operating locally.”