10 Great Cities for Starting a Business

If you're hoping to start your own business, finding the right place to set up shop is a critical first step.

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If you're hoping to start your own business, finding the right place to set up shop is a critical first step. We identified 10 cities that are hot spots for budding entrepreneurs. Each offers attractive qualities you should look for in a home base: a strong community of existing small businesses; low living costs, specifically for self-employed people; and a well-educated workforce to ensure you'll have plenty of promising job applicants when you're ready to hire. They also all have low unemployment rates, indicating a healthy local economy.

Despite their popularity among venture capitalists and start-up hopefuls, some cities, such as San Francisco and New York City, didn't make the cut. Not only are they among the most expensive U.S. cities to live in, but California and New York state offer two of the three worst business tax climates in the country, according to the Tax Foundation. (The third state is New Jersey.)

Take a look at our list of the 10 best cities for starting a business.

Metropolitan-area data for population, number of small businesses, and percentage of adults 25 and older with at least a bachelor's degree is from the U.S. Census Bureau. Small businesses are defined as having one to four employees. Self-employed living costs are from the Council for Community and Economic Research. Projected metropolitan-area unemployment rates for September 2014 (the latest available; not seasonally adjusted) are from the U.S. Bureau of Labor Statistics. We screened out metro areas with population below 500,000, as well as cities in states that appeared in our ranking of the 10 least-friendly states for taxes.

Stacy Rapacon
Online Editor, Kiplinger.com

Rapacon joined Kiplinger in October 2007 as a reporter with Kiplinger's Personal Finance magazine and became an online editor for Kiplinger.com in June 2010. She previously served as editor of the "Starting Out" column, focusing on personal finance advice for people in their twenties and thirties.

Before joining Kiplinger, Rapacon worked as a senior research associate at b2b publishing house Judy Diamond Associates. She holds a B.A. degree in English from the George Washington University.