Entrepreneurship is the lifeblood of any economy, and the United States is home to some of the world's most innovative and dynamic entrepreneurs. Whether you are looking for a place to start your own business or want to learn from the best practices of others, you might be interested in knowing which cities offer the most opportunities and support for entrepreneurs.
In this article, we will rank the ten best cities for entrepreneurs in the US based on various factors such as sales tax, state income tax, GDP, real per capita personal income, unemployment rate and home cost. We will also highlight some success stories and challenges each city faces in fostering a vibrant entrepreneurial ecosystem.
The Top 10 Best Cities for SMEs in the United States
Small and medium-sized enterprises (SMEs) are vital for US economic growth and innovation. SMEs account for 99.9% of all US businesses and employ 47.1 % of the private workforce. Choosing the right city to start your business as an entrepreneur can significantly impact your success. Here are our 10 top cities for entrepreneurs:
Austin, Texas
These are some reasons why Austin is an attractive destination for SMEs looking for a dynamic and supportive environment to grow their businesses. It has a thriving tech scene with many startups and established businesses such as Dell, IBM, and Apple. The city also hosts events like SXSW and Austin Startup Week that foster innovation and networking.
Metro population
Austin has a metro population of about 2.2 million, making it the 24th largest metropolitan area in the United States. Its young, diverse, and well-educated population provides SMEs a large, skilled labour force.
Sales tax
It has a sales tax rate of 8.25%, the maximum combined rate of state and local taxes in Texas. Texas does not have an individual or corporate income tax, making it one of the most tax-friendly states for businesses and residents.
State income tax
Gross domestic product (GDP) was $194 billion in 2021, making it the 22nd-largest metropolitan economy in the U.S.
GDP
Austin's real per capita personal income was $71,372 in 2021, 111% of the national average per capita income.
Real per capita personal income
Its real per capita income grew 8.0% in 2021, the 11th-best gain among the top 50 metros.
Unemployment rate
The unemployment rate was 3.4% in June 2023, down from 9.1% in June 2020. Austin’s unemployment rate was lower than the state rate of 4.1% and the national rate of 5.4%
Average single-family home cost
Austin's average single-family home cost was $557,292 in July 2023, down 9.8% from July 2020. Home prices vary widely depending on the property's location, size, and features and sell in around 32 days.
Nashville, Tennessee
Nashville has a strong and diverse economy that supports many sectors, especially those related to music, entertainment, media, and arts. The city is home to many music labels, studios, publishers, venues, and other creative businesses such as advertising, design, and film. Nashville also has a vibrant and growing startup scene, with many resources and opportunities for entrepreneurs and innovators in the creative industries.
Metro population
Nashville has a population of about 1.3 million people, making it the 35th largest metropolitan area in the United States and the largest in Tennessee.
Sales tax
The sales tax rate in Nashville, Tennessee, is 9.25%, which consists of a 7% state sales tax and a 2.25% local sales tax.
State income tax
Tennessee does not have a state income tax on wages or salaries, making it one of the nine states in the United States that do not levy a personal income tax. However, Tennessee has a flat tax rate of 1% on interest and dividend income, called the Hall income tax.
GDP
Nashville's gross domestic product (GDP) was $163 billion in 2021, and its GDP grew by 8.4% in 2021.
Real per capita personal income
The real per capita personal income for Nashville was $63,642 in 2021. This was higher than the national average of $59,729 and the state average of $49,5744.
Unemployment rate
The unemployment rate in Nashville-Davidson–Murfreesboro, TN (MSA) was 2.9% in July 2023. This means that 2.9% of the labour force was unemployed in July 2023.
Average single-family home cost
The average Nashville home value is $429,027, down 1.7% over the past year.
Raleigh-Durham, North Carolina
Raleigh-Durham is a metropolitan area in the Piedmont region of North Carolina, also known as the Research Triangle. It consists of three major cities: Raleigh, Durham, and Chapel Hill, and their surrounding counties.
The Triangle has a vibrant and diverse entrepreneurial ecosystem, with many resources and opportunities for startups and innovators. The region has a high concentration of venture capital firms, angel investors, incubators, accelerators, coworking spaces, and networking events that help startups grow and succeed.
Metro population
The estimated population of the Raleigh, Durham, and Cary combined statistical area was 2,144,608 in 2021.
Sales tax
The state sales tax rate for North Carolina is 4.75%. However, each county also adds its own sales tax rate. The Durham County sales tax rate is 2.25%, while the Wake County sales tax rate is 0.5%. Therefore, Raleigh's total sales tax rate is 7.5%.
State income tax
North Carolina's income is taxed at a flat rate of 5.99%, regardless of income level. North Carolina has no standard deductions or personal exemptions, but some tax credits and adjustments to federal adjusted gross income may reduce the tax liability.
GDP
The GDP of Raleigh, NC, was $108,288 million in 2021. The real GDP, which is adjusted for inflation, was $91,958 million in 2021.
Real per capita personal income
The per capita personal income in Raleigh was $66,428 in 2021. The real per capita personal income, which is adjusted for inflation and regional price differences, was $57,321 in 2021.
Unemployment rate
The unemployment rate was 3.3% in July 2023, which was lower than the national average of 5.4%.
Average single-family home cost
The average single-family home cost in Raleigh, NC, was $431,344 in June 2023. This was down 2.0% from June 2022.
Salt Lake City, Utah
Salt Lake City is home to many startups and tech companies developing cutting-edge solutions in various fields, such as software, biotechnology, clean energy, and aerospace. Some well-known ones are Qualtrics, Pluralsight, Domo, and Lucid. It has a supportive and collaborative environment for entrepreneurs and innovators, with many organisations and events that provide mentorship, networking, and funding opportunities.
Metro population
The largest metropolitan area in Utah is Salt Lake, with a population of about 202,272 in 2023. It is the core of a larger metro area that stretches along the Wasatch Front and has a population of over 1.2 million.
Sales tax
The combined sales tax rate for Salt Lake City is 7.75%. This is the total of state, county and city sales tax rates.
State income tax
Utah has a single-rate individual income tax system, which means that all taxable income is subject to the same 4.95% rate, regardless of filing status or income level.
GDP
Its GDP was $251.9 billion in just the first quarter of 2023, ranking 30th in economy size among states.
Real per capita personal income
The real per capita personal income of Salt Lake City was $55,533 in 2022. This measure adjusts for inflation and regional price differences.
Unemployment rate
The unemployment rate of Salt Lake City was 2.90% in July 2023, lower than the national average of 3.5%.
Average single-family home cost
The average Utah home value is $509,383, down 5.1% from the past year and goes to pending in around 15 days.
Portland, Oregon
Portland has a reputation for being one of the most environmentally friendly and progressive cities in the US. It is also a hub for innovation and entrepreneurship, with many startups and tech companies based in the city. Some well-known ones are Nike, Intel, and Columbia Sportswear.
Metro population
Portland's current metro area population is 2,220,000, a 1.05% increase from 2022. It is part of a metropolitan area that includes about 2.5 million people, or half of Oregon's population.
Sales tax
Portland does not have a sales tax. The state of Oregon has no sales tax either, making it one of the few states in the country that does not impose a sales tax. However, it has a vehicle use tax that applies to new vehicles purchased outside of the state.
State income tax
Oregon has a progressive individual income tax system, which implies that the tax rate increases as the taxable income increases. There are four tax brackets, ranging from 4.75% to 9.9%. The highest rate applies to income over $125,000 for single filers and over $250,000 for joint filers.
GDP
The GDP of Portland was $186 billion in 2021, which is driven by a diverse range of industries, including technology, manufacturing, and healthcare.
Real per capita personal income
Portland's real per capita personal income was $68,374 in 2021. Its real per capita personal income growth rate was 3.8%.
Unemployment rate
Portland's unemployment rate is at 3.70%, compared to 3.40% last month and 3.90% last year. This is lower than the long-term average of 5.96%.
Average single-family home cost
The listing home price in Portland was $559.5K, trending up 3.6% year-over-year. The average median listing home price per square foot was $330.
Kansas City, Missouri
Kansas City has a strong industrial heritage, especially in the fields of livestock, oil, automobiles, and railroads. The city was also home to many famous figures and innovators, such as President Harry S. Truman, writer Ernest Hemingway, animator Walt Disney, and musician Charlie Parker.
Metro population
The population of the Kansas City metropolitan area was approximately 1,725,000. This was a 0.82% increase from the previous year's population.
Sales tax
Kansas City, Missouri's minimum combined 2023 sales tax rate is 8.99%. This is the sum of the sales tax rates in the state, county, and city. The current Missouri sales tax rate is 4.23%. The sales tax rate in the county is 1.38%. The sales tax in Kansas City is 3.25%.
State income tax
Kansas' income tax rates are 3.10%, 5.25%, and 5.70%. There are no local income taxes on wages in the state, but if you receive income from other sources, such as interest or dividends, you may be subject to local taxes.
GDP
The last measured GDP of Kansas City was $154.3 billion in 2021, a 3.6% decrease from 2019. The economic effects of the pandemic (COVID-19) caused a substantial GDP decline from 2019 to 2020.
Real per capita personal income
The real per capita personal income of Kansas City was $56,925 in 2021. This makes it slightly higher than the national average of $53,7129.
Unemployment rate
The unemployment rate of the Kansas City metropolitan area was 2.2% in 2022. This is lower than the national average of 6%.
Average single-family home cost
The sale price of a single-family home in Kansas City was $270K. This is a decrease of 1.8% from the previous year. The average selling price per square foot was $158, up 6.8% since last year.
Buffalo, New York
Buffalo has a strong industrial heritage, especially in steel production, grain milling, and automobile manufacturing. The city was also home to many prominent figures and innovators, such as President Millard Fillmore, President Grover Cleveland, inventor Nikola Tesla, architect Frank Lloyd Wright, and musician Rick James.
Metro population
Buffalo is the second most populous city in New York after New York City. The city has a population of 278,349 as of the 2020 Census, and the Buffalo–Cheektowaga–Olean Combined Statistical Area is home to 1,215,826 residents.
Sales tax
The current total local sales tax rate in Buffalo, NY, is 8.750%. The 2020 total local sales tax rate was also 8.750%.
State income tax
The state income tax rate in New York ranges from 4% to 10.9%, depending on the income bracket. The state and local income tax rate for Buffalo residents is 8.8%.
GDP
The total GDP of Buffalo-Niagara Falls was $62.3 billion in 2021. This ranked it as the 50th largest metropolitan area by GDP in the United States.
Real per capita personal income
The real per capita personal income for Buffalo-Cheektowaga-Niagara Falls, NY (MSA) was $51,857 in 2021. This is a decrease of 0.33% from 2020, when it was $52,029.
Unemployment rate
The unemployment rate for Buffalo fell 0.0 percentage points in May 2023 to 3.3%. The metro unemployment rate was 0.6% point lower than the New York rate in the same month.
Average single-family home cost
Buffalo's average single-family home cost was $208,000, a 4.0% increase compared to last year. The average sale price per square foot is $125,00.
Oklahoma City, Oklahoma
Oklahoma City has one of the world's largest livestock markets. Its economy's largest sectors are oil, natural gas, petroleum, and related industries. The city of Oklahoma is known for oil wells and is the only state capitol grounds in the US with active oil rigs.
Metro population
The Oklahoma City metropolitan area has a population of about 1.44 million people. The metro area includes seven counties: Canadian, Cleveland, Grady, Lincoln, Logan, McClain, and Oklahoma.
Sales tax
The combined 2023 sales tax rate for Oklahoma City is 8.63%, which is the total of state, county and city sales tax rates. The current sales tax rate in the city of Oklahoma is 4.5%. The county's sales tax is 0.0%. The sales tax in Oklahoma City is 4.13%.
State income tax
Oklahoma's state income tax rate ranges from 0.25% to 4.75%, depending on the taxpayer's taxable income level and filing status. The income tax brackets are updated for inflation each year.
GDP
The GDP of Oklahoma City was $86.7 billion in 2021, making it the 35th largest metro economy in the nation. The GDP per capita was $50,594 in 2021.
Real per capita personal income
The real per capita personal income in Oklahoma City was $57,150 in 2021, which was lower than the national average of $59,729. Real per capita personal income measures the purchasing power of income after adjusting for inflation.
Unemployment rate
The unemployment rate in Oklahoma City was 2.7% in 2023, which was lower than the long-term average of 4.68%. The OKC metro's yearly unemployment rate of 2.7% was the lowest in modern history (1990 to 2022).
Average single-family home cost
In July 2023, Oklahoma City home prices were up 5.1% from the previous year, with a median price of $279K. The median sale price per square foot is $156, up 4.7% from the prior year.
Albuquerque, New Mexico
Albuquerque has a strong presence in high-tech industries, especially in the fields of aerospace, defence, energy, and biotechnology. Some of the major employers in the city are Sandia National Laboratories, Kirtland Air Force Base, Intel Corporation, and Los Alamos National Laboratory.
Metro population
The population of the Albuquerque metropolitan area was 955,000, a 1.38% increase from 2022. The metro area covers more than 9,000 square miles and has a population density of about 100 people per square mile.
Sales tax
The sales tax rate in Albuquerque consists of 5% New Mexico state sales tax and 2.75% Albuquerque tax. There is no applicable county tax or special tax. The total sales tax rate in Albuquerque is 7.75%.
State income tax
New Mexico state income tax rates range from 1.7% - 5.9% within four income brackets. It has a progressive income tax with rates that rank among the 20-lowest in the country. If you earn $70,000 per year, you will be taxed $10,684. Your average tax rate is 11.67%, while your marginal tax rate is 22%.
GDP
The GDP of the Albuquerque metro area was $49,480 million in 2021, ranking it 63rd among all US metro areas.
Real per capita personal income
The real per capita personal income for the Albuquerque area was $52,263 in 2021. The city's real per capita personal income can vary from year to year and is influenced by factors such as employment opportunities, wage levels, and economic conditions in the region.
Unemployment rate
The unemployment rate for the Albuquerque metro area was 3.4% in July 2023, down from 10.0% in May 2020. The national unemployment rate in July 2023 was 5.4%.
Average single-family home cost
The sale price of a single-family home in Albuquerque was $347,000 in 2023, an increase of 10.9% from last year. The average selling price per square foot in Albuquerque was $205, up 10.5% since last year.
Boise, Idaho
Boise is also a hub for innovation and entrepreneurship, with many startups and tech companies based in the city. Some well-known ones are Micron Technology, Clearwater Analytics, Cradlepoint, and TSheets.
Metro population
Boise is Idaho's capital and largest city, with a population of about 240,713 as of 2023. Boise continues to grow at a pace of 0.69% each year, and its population has grown by 2.07% since the last census, which reported a population of 235,829 in 2020.
Sales tax
The sales tax rate in Boise is 6%, which is the same as the state average. There is no local sales tax in Boise or Idaho.
State income tax
When compared to the rest of the country, Idaho has the highest marginal income tax rates. It is a progressive income tax system with seven brackets ranging from 1.125% to 6.925%.
GDP
Idaho's real GDP was 84 billion US dollars in 2022. This represents an increase over the previous year.
Real per capita personal income
The per capita personal income for Boise was $55,487 in 2021. This is the personal income divided by midyear population without adjusting for inflation. The per capita income for the city was higher than the median Idaho per capita income of $52,276 in 2021.
Unemployment rate
The unemployment rate of Boise was 3.2% in 2023. The unemployment rate in the city peaked in April 2020 at 12.2% and is now 9.7% points lower.
Average single-family home cost
Boise home prices were up 0.3% in 2023 from last year, selling for a median price of $515K. The average selling price per square foot in Boise is down 0.65% since last year.
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