Which are the best states to start a business? Logo design company Looka decided to find out. Looka compared all 50 states on a set of six criteria: number of companies with fewer than five employees (likely startups); survival rate for new businesses; percentage of new businesses; affordable cost of living; payroll for smaller businesses; and median household income overall.

Here are the top five. Although the winning state may be a no-brainer, some of the rest may surprise you. 

1. California

Needless to say, California scored low on affordable cost of living. But its powerful advantages outweigh its sky-high rents. "It has the highest number of businesses with fewer than five employees, highest annual payroll for employees, and the best survival rate for entrepreneurs," Looka explains in its report. Thank Silicon Valley and Sand Hill Road.

2. Texas

With a decidedly business-friendly climate and Austin attracting legions of entrepreneurs and tech professionals, it's not surprising that Texas came in second. It ranked second in payroll for small companies and fourth in number of small businesses, and boasts a lower cost of living than other startup centers such as New York or Massachusetts. Hosting SXSW every year doesn't hurt, either.

3. New Jersey

Were you expecting to see this state in the top five? I certainly wasn't. "New Jersey has a high annual income, ranking second behind California, and ranked eighth overall in businesses with fewer than five employees," the report explains. It also ranks seventh in  payroll for small businesses. You may not think of this state as an entrepreneurship center, but maybe you should.

4. Illinois

This state was another surprise on the top five list, at least for me. It ranked fifth for both number of small businesses and small-business payroll, perhaps thanks to the vibrant startup ecosystem in Chicago. It also ranks relatively high on the affordability scale, at 21, compared with 48 and 49 for California and New York, respectively. Illinois is the only midwestern state to make the top ten.

5. Georgia

I don't think I'd ever have guessed that this state would rank in the top five for starting a business. It made the top five in part because of its low cost of living--it's ranked ninth for affordability. At the same time, it ranked seventh for number of small businesses and eighth in small-business payroll, thanks to Atlanta's high-powered startup scene.

The worst state to start a business

Which state came in last? That would be Rhode Island, which ranked 41st for affordability, and 44th for both number of small businesses and small-business payroll. And lest you think the low number of startups is only due to the state's small size, it also ranked dead last for the proportion of startup businesses compared with businesses overall. It sounds like the state has some work to do if it wants to support and encourage new startups.