The 7 Worst States To Start a Business

So a new business in Maine isn't likely to be a national success story. It will also have to deal with high taxes. Maine has the second-highest property taxes in the country, and its personal income and individual capital gains taxes are almost as high.

5. Hawaii

At more than 15 percent, Hawaii's percentage of residents who are foreign-born is one of the highest in the country. So it might be surprising that Hawaii's economy is not more globalized. It ranks third-to-last among the states in terms of the export focus of its manufacturing and service sectors. That means that Hawaii is not very plugged in to the global markets that have been --and will continue to be--a boon for entrepreneurs. Another area where Hawaii is being left behind is with jobs at gazelle firms. It ranks third-to-last there, as well.

What might be restricting Hawaii's ability to adapt? It is the worst state in the country for high sales, gross receipts, and excise taxes, according to the SBEC.

6. Kentucky

Kentucky ranks poorly as a state to start a business because it suffers similar deficiencies in education as West Virginia. The Bluegrass State has the 46th least-educated workforce in the country. That means there's also a lack of technological innovation in the state--Kentucky ranks third-to-last in inventor patents. Kentucky fares better on the question of government interference with businesses. It has relatively low corporate taxes. It ranks, however, in the top half of states for high excise and personal income taxes.

7. Montana

Montana's people might be known for their rugged, don't-tread-on-me attitude. But the state's government does tread on people who want to start businesses. Montana has the highest worker's compensation costs in the country and is in the top ten of states for high unemployment taxes. In addition, Montana's individual tax rates are higher than average.

Among problems with Montana's economic landscape are the productivity of its manufacturing sector and foreign direct investment. It ranks dead last in both.