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Starting a business can be a daunting task, and choosing the right city to set up shop can be just as challenging. The good news is that there are many cities in the the United States that offer great opportunities for entrepreneurs.

We've created this guide with the help of organizations that study and rank the top cities for new small businesses. Our rankings exclude important personal considerations, such as the quality of public schools or crime rates, to focus solely on the most business-friendly cities to start your business. So if you're thinking of starting a business in the coming year, continue reading to discover which city is best for you.  

What Makes a Good City for Small Businesses? 

Many elements – both concrete and intangible – make a city a good place to start a small business. This includes the spirit of the city and whether an entrepreneurial culture has been cultivated.

The answers to the following questions will help you decide which city is right for your upcoming business.

  • Is there space for new businesses? 
  • Is the population interested in trying new things and working with small businesses? 
  • Do city officials make a concerted effort to welcome new businesses by creating business-friendly conditions? 

Many cities establish policies to attract new businesses, including financial incentives or reducing the barriers to entry by easing regulations. Cities more amenable to small businesses will also make licensing simple and easy, and there won’t be as many complicated regulations to grapple with as you find your footing. 

Top 10 Cities for Small Business

These are the top 10 cities to establish a business in 2023. These rankings are based on many considerations, including overall tax friendliness, access to local resources such as a thriving labor force, and a robust business survival rate. 

1) Scottsdale, AZ

Scottsdale’s large workforce and tax friendliness make it one of the best cities in America to start a new business. Its high rate of self-employment, combined with triple the average annual business applications, is evidence that it’s a great place for ambitious entrepreneurs to succeed with new ventures. 

  • Population: 242,753
  • Labor force: 141,869
  • Business applications: 66,607
  • Business survival rate: 68.9% 
  • Self-employment 6.5%

2) Nashville, TN

Nashville enjoys a low unemployment rate and a cost of living that’s 5.6% below average. It's a top city for new businesses due to its healthy business survival rate and helpful resources like the Nashville Entrepreneur Center. 

  • Population: 692,587
  • Labor force: 396,278
  • Business applications: 12,753 
  • Business survival rate: 71.6%
  • Self-employment: 6.2%

3) Charlotte, NC

Over 70% of new businesses in Charlotte survive beyond the first three years. It’s a tax-friendly city with a robust workforce of over half a million, meaning small business owners have a wide pool of potential employees to draw from. 

  • Population: 879,709
  • Labor force: 507,586
  • Business applications: 27,064
  • Business survival rate: 70.6%
  • Self-employment: 4.1%

4) Louisville, KY

Louisville is rated as a small business-friendly city due to its low unemployment (3.4%) and well-educated workforce (35.2% of the labor force holds a bachelor’s degree). Additionally, its cost of living is 10.5% below the national average, making it an affordable place for an entrepreneur's latest venture. 

  • Population: 628,594
  • Labor force: 320,515
  • Business applications: 10,573
  • Business survival rate: 68.8%
  • Self-employment: 5.1%

5) Atlanta, GA

Entrepreneurs looking for big-city living will fare well in Atlanta. It’s the biggest metro area to make the cut on our list due to its tax-friendliness and slightly lower cost of living (2.1% below average). 

  • Population: 496,461
  • Labor force: 276,677
  • Business applications: 51,935
  • Business survival rate: 66.6%
  • Self-employment: 5.0%

6) Oklahoma City, OK

OKC boasts a low unemployment rate (2.6%) and a corporate tax rate of 4% (one point lower than the national average). It also has the second-lowest incorporation fee of $52!

  • Population: 687,725 
  • Labor force: 336,220
  • Business applications: 12,724
  • Business survival rate: 69.2%
  • Self-employment: 4.6%

7) Austin, TX

Many recognize Austin as the Live Music Capital of the World, but few know it outranks San Francisco as a top city for tech startups. An above-average business survival rate combined with no personal income taxes makes Austin desirable for new business owners. 

  • Population: 964,177
  • Labor force: 598,430
  • Business applications: 23,042
  • Business survival rate: 70.7%
  • Self-employment: 6.8%

8) Orlando, FL

Orlando earns a spot on the list thanks to its relatively low cost of living (1 point below the national average) and its location in the tax-friendly state of Florida. 

  • Population: 309,154
  • Labor force: 166,573
  • Business applications: 40,053
  • Business survival rate: 68.7%
  • Self-employment: 4.5%

9) Raleigh, NC

Raleigh offers a strong labor force, high quality of life, city-sponsored business support programs, and new business grants, making it an attractive landing spot. 

  • Population: 469,124
  • Labor force: 267,593
  • Business applications: 18,600 
  • Business survival rate: 70.6%
  • Self-employment: 4.4%

10) Cary, NC

A healthy economy and strong business survival rate, along with proximity to Raleigh, another business-friendly location, earn a spot on the top ten list for Cary. 

  • Population: 176,987
  • Labor force: 92,926
  • Business applications: 18,600
  • Business survival rate: 70.6%
  • Self-employment: 4.7%

How Do I Know Which City is Right for My Situation? 

Determining the right city for your unique situation can be complicated and extends beyond its business-friendliness. There are your own personal considerations to weigh, along with your family's needs, before deciding which city to move to. There is always an element of risk when you uproot your life or start anything new, which entrepreneurs and small business owners should be familiar with.   

Is It Difficult to Relocate a Business? 

Perhaps you're interested in relocating to a more tax-friendly city, but you've already established your business. Establishing your existing business in a new city won't be the most difficult task, but you will have to repeat many of the steps you took when you started. This includes licensing and incorporation, so you can legally operate in your new city.

While you'll be saying goodbye to your current city or town, you don't have to let go of good employees. Breakthroughs in remote work and technology allow companies to cast a wider net across the country or, in your case, bring your best people with you virtually.

Partner with a Small Business Expert to Get Started

No matter where you decide to move, 1-800Accountant, America's leading virtual accounting firm, has your back. We operate in all 50 states with experts experienced in your industry. Schedule a quick consultation – usually 30 minutes or less – to learn how our suite of professional business services can minimize your tax burden.

Whether it's entity formation, EIN tax ID filing, small business tax advisory, or something else, the service, support, and savings you'll enjoy with 1-800Accountant will move you.  

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.