A good rule of thumb is that if your company wants to have an office presence in a state other than its home state, it should either incorporate as a separate entity or qualify to do business as a "foreign" (meaning, out-of-state) corporation. In other words, if your "Gifts of Ohio, Inc." company wants to open a store in neighboring Indiana, it can either form a brand-new corporation in Indiana, or tell the Indiana Secretary of State that "Gifts of Ohio, Inc." wants to do business there. However, if by "expand" you simply mean solicit customers from out-of-state, you may not need to incorporate in that other state. However, you may be responsible for paying taxes in that other state. Best to check with an accountant who is familiar with these issues, as the tax and expense of doing multi-state business could adversely affect your bottom line.
The fall in new company starts does not necessarily mean that the American economy is less dynamic than it used to be, or that Americans are opening up new establishments at a lower rate than they did in the late 1970s.