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On July 31, Massachusetts implemented a new software services tax that solution providers say requires them to collect a 6.25 percent levy on a wide variety of tech services, everything from building websites to updating software on a client's computer.
The tax has the state's channel community up in arms, with some having second thoughts about plans to move into or expand their operations in Massachusetts. "If this tax had passed on Jan. 1, I would have strongly considered moving 20 minutes over the border to Rhode Island," said Allen Falcon, CEO of Cumulus Global, a cloud solution provider in Westborough, Mass., who earlier this year expanded his business.
The controversy over the new Massachusetts tax puts a spotlight on the question of which states are the most attractive -- and which states are not -- for entrepreneurs to start a solution provider business and for existing solution providers to expand.
Taxes, of course, are just one of many criteria entrepreneurs should consider when deciding where to start or expand a business. A state's labor costs, regulations, available pool of educated workers, cost of living, telecommunications infrastructure, business opportunities, and track record for innovation all come into play.
CRN researchers and editors undertook a detailed analysis of the business climate in all 50 states to offer readers guidance about what makes some states better than others when starting or expanding a solution provider business.
The CRN analysis covers a broad range of criteria including a state's labor and energy costs, taxes (including tax incentives, corporate income taxes and property taxes), workforce education levels and pool of experienced workers, regulatory environment, level of innovation (as measured by exports and awarded patents), business opportunity and economic strength rankings, and even lifestyle criteria such as crime rates and percentage of the population with access to the Internet.
In addition, CRN surveyed solution providers earlier this year to learn what criteria were most important to them. Those results were used to weigh the criteria in the state-by-state analysis.
A detailed description of the criteria and methodology of the analysis can be found in the accompanying sidebar to this package.
CRN also cross-referenced its analysis of the 50 states with some of its annual lists, including the 2013 Solution Provider 500, which ranks North American solution providers by annual revenue; the 2013 Next-Gen 250 listing of solution providers focused on leading-edge technologies; the 2013 Tech Elite 250 listing of solution providers with a broad range of vendor certifications; and the 2012 Fast Growth 100 and 50 Up-And-Comers, which ranks the fastest-growing North American solution providers. The 2013 Fast Growth list was being finalized at press time and an update will be added to the interactive map at a future date.
For the complete ranking of all 50 states, see the slide show included in this package.
This report originally ran in September exclusively on the CRN Tech News App, available in the iTunes App Store or the Windows Store.