South Dakota, Nevada, and Wyoming are the nation's most entrepreneur-friendly states, according to the Small Business and Entrepreneurship Council.
The least friendly are California, New Jersey, and the District of Columbia, based on the Washington-based advocacy group's annual ranking of state public policy climates for entrepreneurs, small-business owners, and investors.
This year's list considers 31 major government initiatives affecting small businesses, including taxes, regulatory costs, government spending, property rights, health care, and energy costs.
"We're in a period of questions and uncertainty when it comes to the economy," Raymond Keating, the group's chief economist, said in a statement. "It is critical for elected officials in the states to understand that their policies affect the decisions of entrepreneurs, businesses, and investors, the bottom lines of small businesses, and the lives of employees."