Not all states are equal when it comes to creating a business, but a partnership comes with easier regulations, making it less important where you register.

Fortunately, the laws for setting up a partnership do not vary as much as they do when it comes to corporations, so it isn’t nearly as important to choose the right place when setting up a partnership. You may find some slight variances from state to state, but in general, it’s easiest to set up your company in the state where it will do most of its business.

All that being said, some states are a little easier to work in than others, particularly if you intend to change the business model in the future.

What to Look for in a State

Some states are more business friendly than others and it isn’t always easy to tell which ones are best. While certain states like Texas and Virginia are considered the best areas to start up a business, you can look elsewhere, if you know what to check for.

First, check out what the income tax is like in the state you are considering. If you plan to incorporate, it’s a good idea to look at the corporate income tax, since this can affect your business greatly. In Virginia, for example, this is just 6% and hasn’t changed in decades.

Business resources can also be invaluable, so check to see if the state you are considering has any special offerings for those who are starting a company. Business incubators are an excellent example of a helpful resource. These are low cost rental spaces where those starting a business can set up in the first few months. A receptionist works for a variety of companies all in the same building and there are shared resource areas with copiers, computers, etc. This lets partnerships get off the ground without spending too much money and can be a great help in the beginning, though companies are expected to move on once they start making a profit.

Other resources include:

  • Right-to-work laws
  • Recruitment training programs
  • International sales programs

You will find that the economy has affected different areas of the country differently, so it’s worth checking to see which states have better economy. These are often the states that will have a higher quality of life, as well, which means more consumers and disposable income. That’s good news for any company looking to earn money.

Lower cost of business and cost of living should be considered, as well. If possible, stick to states where you won’t be paying a fortune to build up a business. While incubators can help offset costs in the beginning, it’s usually a good idea to look for a state that is fairly low cost for operational purposes. If you plan to live there, having a lower cost of living is also useful, as it will help you keep expenses down while in the start up phase.

Another thing to watch for is the availability of capital for startups. As a partnership, you have more resources at your fingertips than most companies, but that doesn’t mean you won’t need money to start the business. States with more resources geared toward business will also have more options for raising capital. Look for business friendly places to start the business and also keep an eye out for potential investors.

Being able to get permits and paperwork done quickly is also a big advantage, though not a necessary one, for businesses. Business friendly states will offer streamlined methods of getting your papers through. In most areas, it can take several weeks to finish filing all the proper paperwork, but states like Virginia, the process is streamlined and more efficient.

Top States for Business

Every year, the various states are checked and compared against each other in a variety of categories which include business friendliness, access to capital, economy, cost of living and many more.

CNBC offers an annual list of the best states under each category, as well as an overall winner. In 2010, the winning state was Texas, with its resources and business friendly rules. However, there are several other states that also rank very well.

  • California (Technology, Access to Capital)
  • Florida (Workforce)
  • Virginia (Business Friendliness)
  • Colorado (Business Friendliness, Quality of Life)
  • North Carolina (Workforce)
  • Massachusetts (Access to Capital, Education, Technology & Innovation)

Even in states where the rules are different, you can usually get around them with a simple change in the contract. Your partnership agreement sets the foundation for your business and since a partnership is a fairly simple business type, it’s possible to set your own rules as you please.