Everything That’s Small is Still Bigger in Texas

Todays top stocks to buyCities in Texas are magnets for America’s small businesses. Here’s what you need to know about investing in the Lone Star State…

It was a clean sweep for Texas, according to NerdWallet.com.

A few months back, the finance resource website published a list of the ten best US cities for small business.

The top three spots went to cities in Texas, while a fourth Texas town was ranked fifth.

Because Texas is better known for big oil and big steaks, investors might be pleasantly surprised to learn that the little guys can also thrive in the Lone Star State.

To come up with their list, NerdWallet calculated total scores for each city using data on local taxes, growth rates from the Milken Institute’s 2012 Best Performing City survey, and business owner opinions of the local regulatory environment from the 2013 Thumbtack Small Business Friendliness Survey.

The top ten were:

  1. Austin, TX
  2. San Antonio, TX
  3. Dallas-Fort Worth, TX
  4. Baltimore, MD
  5. Houston, TX
  6. San Jose, CA
  7. Charlotte, NC
  8. Indianapolis, IN
  9. Jacksonville, FL
  10.   10. Phoenix, AZ

So why is Texas such a haven for small business owners?

Let’s take a look at each of them in greater detail…

Austin, TX

  • Local income tax: 0% (sample median: 0%)
  • City property tax: 1.24% (sample median: 1.35%)
  • Growth rate rank: 2
  • License friendliness rank: 2

As the state capital, Austin is the 11th largest city in the US and the 4th largest in Texas.

Whole Foods Market calls Austin home, but the city also boasts a strong technology community (anchored by Dell), which is how the unofficial nickname of “Silicon Hills” came about.

With the strength of their tech industry, it’s no surprise that one of the country’s most popular events on innovation, South by Southwest (SXSW) takes place in Austin every year.

On the business front, Austin is tops on NerdWallet’s list as there are no state or local personal income taxes.

The Milken Institute survey ranked Austin second overall as it scored high for growth in technology, wages, and jobs.

Austin was also second on Thumbtack’s survey for the city’s hassle-free business licensing requirements.

Companies to consider: businesses in technology and software

San Antonio, TX

  • Local income tax: 0%
  • City property tax: 1.36%
  • Growth rate rank: 6
  • License friendliness rank: 1

The seventh most populous city in America first became a household name when it was ranked the second fastest growing of the 10 largest cities in the US from 1990-2000, according to the US Census.

San Antonio then solidified its clout when it took top honors between 2000-2010.

Since then, the Alamo City has remained one of the country’s beacons for economic growth and prosperity.

Though property taxes are above the national average of 1.12%, San Antonians do get to enjoy paying zero personal and state taxes by virtue of being in oil country.

It slid down the Milken rankings from being number one 2011, primarily as job prospects were weaker compared to other cities.

Meanwhile, Thumbtack gives Houston an A+ rating for overall business friendliness.

Companies to consider: businesses servicing the military and tourism sectors

Dallas-Forth Worth, TX

  • Local income tax: 0%
  • City property tax: 1.38%
  • Growth rate rank: 5
  • License friendliness rank: 5

Possibly the most iconic of all the cities in Texas, Dallas is home to the third largest concentration of Fortune 500 companies (12), behind New York (42) and Houston (24).

Since the days of being an oil and cotton production hub, Dallas has flourished with a myriad of prominent industries including finance, telecommunications, IT, and healthcare.

As a result, the region has long been an attractive place for smaller startups.

Both Dallas and Forth Worth received top marks for having a strong employment environment and ease of starting a business.

Property taxes are somewhat high compared to the rest of the list, but it’s still relatively low versus the Texas average of 1.80%.

Companies to consider: businesses in the medical and healthcare field

Honorable Mention: Houston, TX

  • Local income tax: 0%
  • City property tax: 1.15%
  • Growth rate rank: 3
  • License friendliness rank: 11

Rounding out the top five on NerdWallet’s list is Houston, which followed behind fourth place Baltimore.

Of the ten cities, Houston has the third lowest property tax rate and was third in growth prospects.

Milken also ranks Houston top ten in the nation for jobs and wages growth.

Where Houston slipped was in license friendliness. While the overall licensing process and regulations are quite painless down south, the other ten cities ahead of Houston just happen to be that much better.

Companies to consider: businesses and midstreams serving the oil and gas sector.

Yours in profits,
Todays top stocks to buy
John Holt
for Top Stock Millionaire
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