Honolulu is the most expensive U.S. city to do business, according to a new study by KPMG LLP.

The New York-based audit, tax and advisory firm ranked Honolulu most costly among 37 smaller North American cities with a population below 1 million. It had a cost index of 107.3, or 7.3 percent above the U.S. national baseline.

“Selecting the best site for a business operation requires balanced consideration of many factors, including business costs, business environment, personnel costs and quality-of-life issues,” said Hartley Powell, national leader for KPMG’s Global Location and Expansion Services practice.

KPMG’s report was based on 26 significant cost components including labor, taxes, real estate and utilities in 17 industries.

Following Honolulu was Anchorage, Alaska, with a cost index of 106.3.

Among larger cities, San Francisco ranked the most expensive place to do business in North America, with a cost index of 104.1, while Tampa, Fla., was the least-expensive place to do business in U.S. cities with populations of more than 2 million. It had a cost index of 96, representing business costs 4 percent below the U.S. national baseline.

The report evaluated business-operating costs in 112 cities in 10 countries. The benchmark cost index is the average of business costs in the four largest U.S. metropolitan areas: New York, Los Angeles, Chicago and Dallas-Fort Worth.