When starting your own business or acting as a freelancer/contractor, where you live and do business matters. Many entrepreneurs get their start in one of the seven states that doesn't have an income tax. They are (in alphabetical order): Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.

There are also some states with higher income taxes (hello, California). Why does this make such a difference? Consider this: Let's say you make $100,000 per year as a freelancer or business owner. In 2014, the California income tax was 9.3 percent (for that tax bracket), while the seven no-income-tax states were obviously zero percent. That means you could be paying an additional $9,300 just for the privilege of living and/or doing business in California.

Is it worth it? That's something only you can decide, but one thing's for sure. There's a lot more to these states than cost savings. Here are some of the best things about no- income-tax states beyond all that extra cash in your pocket come tax time.

1. Alaska

Our last frontier offers some of the best outdoor recreational activity in the world. From hunting to (sometimes ice) fishing, you have it all with a gorgeous landscape to boot. Many entrepreneurs and freelancers who have traveled all over the U.S. finally settle in Alaska partly because of these natural perks. Plus, you get a front row seat for the Northern Lights, incredibly low cost of living, and relatively fast and affordable travel access to parts of Canada and Asia not accessible to other Americans.

2. Florida

Endless beaches, some of the best amusement parks in the world, and balmy temperatures year-round make Florida a winner. Many companies around the U.S. contract freelancers or have remote employees who live in the state, from Jacksonville to Miami. Orlando is well known as a hot spot for conventions, because of Disney World and Universal Studios. As an added bonus, travel to Latin America is affordable and fast from Florida, though when you have a paradise like the Keys in your backyard, you might never make it. The southern portion of the state is also widely considered a foodie's paradise.

3. Nevada

Aside from the obvious entertainment, gaming, flash, and glitz of Las Vegas and Reno, Nevada is also one of the hottest startup hubs in the nation. It's ideal for smaller businesses, especially in the tech sector, and you'll be in good company. Much has been written about Tony Hseih's $350 million experiment in urban revival in the downtown area. This project has struggled at times, but there is still some fertile ground here for entrepreneurs craving action and a very affordable cost of living (off the Strip, of course). Vegas is also ripe with networking opportunities, as the host of the Consumer Electronics Show (CES) and dozens of other large conventions. Although it is several driving hours from any other big city of note, Vegas is very close to California and is an hourlong flight (or less) to any major city in the American Southwest. Keep in mind, you will spend at least three to four months dealing with temperatures close to or above 100 degrees Fahrenheit, so be prepared.

4. South Dakota

Outdoor recreationalists rejoice at the stunning vistas of South Dakota, all perfect for hiking, camping, biking, fishing, and other activities. With four distinct seasons and one of the lowest costs of living in the nation, it has everything necessary--especially for online businesses. You'll also find some of the most incredible national monuments around here, starting of course with Mount Rushmore.

5. Texas

Everything really is bigger here, including the opportunities for entrepreneurs. Whether you prefer a bustling metro like Houston (4th largest city in the U.S.), the indie charm of the capital Austin, or you're ready to fulfill your dreams of owning a small ranch in a more rural area, Texas has a town or city for everyone.

Austin has famously become one of America's great centers of technology and entrepreneurship, with its yearly South by Southwest Interactive (SXSWi) festival. Apple, Cisco, Intel, and Oracle among many others make the city home. You can also enjoy some of the most incredible food in the nation (the Tex-Mex and barbecue are my favorites) or take a short flight to tropical Mexico, and in some areas you'll never find a day below 70 degrees.

6. Washington

The Pacific Northwest has become one of the most highly rated places to live in the entire country. You've probably never seen green like this, and Washington offers some of the best skiing, water sports, and innovative foodie hot spots in the nation. No discussion of business in this state is complete without Seattle, the home of Amazon and Microsoft. If you really want to save on cash, though, consider Vancouver (not B.C.), which is just a few minutes from Oregon, the state that offers no sales tax.

7. Wyoming

Wyoming has very low population density, which could be an added bonus for introvert entrepreneurs, who may feel less stressed here. The state also has one of the lowest levels of chronic disease and enjoys very clean air. Like in Alaska, the beautiful scenery is a huge attraction. There are four distinct seasons to enjoy, and the cost of living is extremely hard to beat.

Which of these lucky seven are destined to be your new home (or vacation spot)? Dig a little deeper and you'll find that saving money on income taxes is just one part of their appeal. As a freelancer, entrepreneur, or business owner, it's crucial that you choose your location wisely. Doing so could save you money and peace of mind.

Published on: Mar 25, 2015