How to Start a Business in the Top Cities for Growth Entrepreneurship

Updated on September 2, 2020
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Earlier this year, the Kauffman Index released the 2016 Growth Entrepreneurship Index study, an in-depth look at understanding growth business activity.[1] If you’re not familiar with growth entrepreneurship, it’s what helps drive job creation, innovation, and vibrancy in the U.S. economy. Tracking high and slow growth allows for understanding the best practices companies on the rise are utilizing, and how new jobs provide immediate economic benefits.

For the 10 metropolitan areas ranked in this study, 3 indicators were examined for job growth and business revenue. They included the rate of startup growth, share of scaleups, and high-growth company density. However, even though these areas are growing now, what are the lasting effects for entrepreneurs who decide to incorporate with each city?

We’re revisiting the top 5 cities featured and highlighting what each one can bring to the table for small business.

1. Washington, D.C.

As the capital of the U.S. federal government, the District of Columbia is ranked in first place for high-growth companies in the IT services industry and fifth place for business products and services and software.

D.C. makes up for a challenging tax climate by offering plenty of financing options for startups. PricewaterhouseCoopers reported that in 2015, more than $700 million was funded into D.C.-area tech startups by venture capital firms. Post-incorporation, small business owners need to maintain good standing with the District government. advises all active businesses to do the following:

  • File 2-year reports with DCRA’s Corporation Division.
  • Renew your business license.
  • Report your income.
  • Pay your taxes.

2. Austin, Texas

The sky’s the limit for Austin’s high-growth companies in major industries. Within the top 5 industries of high-growth firms, Austin swept 4, including advertising and marketing (#3), business products and services (#4), health (#2), and software (#3).

Loaded with tech firms, Austin’s small business friendliness includes offering no income tax as well as access to loans with low business taxes. After deciding on a legal structure, recommends startups tackle the following areas for starting a business:

  • Comply with tax responsibilities at a federal, state, Austin, and employment level.
  • Acquire necessary licenses and permits. (Though the State of Texas doesn’t have a general “business” license.)
  • Comply with federal and state employer requirements.

3. San Jose, California

Part of Silicon Valley, San Jose (unsurprisingly!) ranks in first place for the software industry. The city also holds the unique distinction of being the number one metropolitan area for emerging growth IPOs.

For entrepreneurs ready to open up shop, the City of San Jose provides a 3 phase plan:

  • Begin: This section lists out possible business types in a toolbar including restaurant, auto, professional services, retail, and specialty businesses. All you have to do is click to find more information pertaining to anything from zoning laws to registering your business.
  • Coaching: Get help obtaining necessary permits and inspections.
  • Launch: Information on staying in compliance including submitting annual reports, along with additional small business resources.

4. Columbus, Ohio

Ranked number one for high-growth in the advertising and marketing industry and holding fourth place in IT Services, Columbus also holds a 2.7 percent share of scaleups. The U.S. national average, according to the Kauffman Index, is 1.1%.

“Behind every good business is a solid business plan.” One of the opening sentences on The City of Columbus Small Business Builder site, the city has plenty of free resources to assist entrepreneurs. Here’s a look at what you can expect to find:

  • Tips for developing a standard business plan.
  • A specific roadmap with a step-by-step guide for your designated business.
  • Links to the Department of Building and Zoning Services, OH Secretary of State, OH Development Agency, and OH Department of Taxation.

5. Nashville, Tennessee

Nashville comes in at first place for the health and business products and services industries. Small businesses make up the majority of all companies in Tennessee, and the State of Tennessee expresses great pride in how these startups make up the “backbone” of the state economy.

For entrepreneurs that want to start up in Nashville, provides an easy, 6-step guide to starting a business:

  • Choose a name: Make sure yours is available through the Tennessee Secretary of State’s office.
  • Choose a legal structure: Determine your business entity.
  • Tax obligations: This includes taxpayer ID numbers like EINs and tax registration information.
  • Employment yes/no: The state needs to know if you plan on employing any staff.
  • Registration requirements: This determines if your business needs licenses or permits.
  • You’re done! Check out the infographic of the process and download free guides.

For a complete guide to all 10 metropolitan areas with the highest growth entrepreneurship activity, visit the Kauffman Index 2016 Growth Entrepreneurship Index report.

Article Sources:

  1. “Historical Kauffman Index Reports
Deborah Sweeney
CEO at MyCorporation

Deborah Sweeney

Deborah Sweeney  is a contributing writer for Fundera. 

Deborah is the CEO of MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Deborah primarily focuses on legal and incorporation topics and considerations for Fundera.

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