Today most states are broke or close to it. At the same time they all want your business to get new tax revenues. Would be interesting to know about any company who has had to deal with multiple states regarding which state was the worst in terms of cost, red tape and a bad overall business environment. Would welcome your most terrible experiences!
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California is having a lot of problems at the time of incorporate a business. They are not only expensive ($350.00 to expedite a filing that, otherwhise, would take 2 months) but the state is not providing support to those that want to incorporate by themselves (instead of using an incorporating company). We have received several complains from people trying to call the state and nobody picking up the phone there. Beyond this particular moment that CA is going through, I wouldn't say that this state is better or worst than other. For an small business, the best choice is the state where you will be doing business, that is, your home state. Good or bad you will have to live with that (or to move to another state). Foreign qualifications are options when you are doing business in more than one state but not as an option to avoid your home state regulations, because you will have then anyway.
I would say that CA has to be in the toughest state for business. In addition to aggressive recruiting by their neighbor states and rust-belt states like Michigan, CA has higher workman's comp rates, higher cost-of-living, higher average salaries, and unique HR exclusions and inclusions that add a significant burden to the enterprise. In fairness, they do have a great pool of talented people, world-class university system, and an innovation-friendly environment that continues to shape the world. Maybe that could start work on how to clean up an oil spill.
Brian, States definitely do vary in terms of ease of filing, on-going expenses to operate a business, annual requirements and even customer service -- which has been negatively impacted in several states due to staffing cuts. All that said, a person's particular business need might mean that forming in their home state is best - regardless of their state. In other cases, forming elsewhere and qualifying a business in other states could be the appropriate route. Here's some information from Business Owner's Toolkit that you'll likely find quite helpful
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