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The Best Cities to Be Self-Employed


For many Americans, being your own boss is a long-held aspiration. But striking out on your own can be challenging and risky. There are many factors that can add potential roadblocks to people hoping to start their own businesses. Income tax rates, for example, come into play, as well as local costs of living. Below we analyze data on these and other metrics to find the best cities to be self-employed.

Thinking about buying a home? Check out how much home you can afford.

In order to find the best cities to be self-employed, we looked at data on six factors. We looked at the percent of self-employed workers, average earnings for self-employed workers, median housing costs, median housing costs as a percent of self-employed earnings, local tax burden and unemployment rate. For specifics on where we got this data, see the data and methodology section below.

Key Findings

  • Texas shines – If you’re thinking about becoming your own boss, you may want to head to the Lone Star State. Three of the top 10 cities are in Texas. In part this is due to the fact that there is no state income tax in Texas.
  • Avoid the Golden State? – If your dream is to open up your own business and be your own boss, you may want to avoid California. This state is known for high taxes, high costs of living and high housing costs. Seven of the lowest-ranked cities for self-employed workers are in California.
Best Cities to Be Self-Employed

1. Amarillo, Texas

Amarillo tops our list. Self-employed Amarillo residents earn some of the highest wages in the study. On average, they make about $89,000 per year. That income will go even further when you consider how affordable Amarillo is. The city is the second-least tax-burdened place in our study.

Homes in Amarillo are also affordable. According to our data, the median monthly housing cost is $841 per month. If the average self-employed worker was paying for the median home, it would cost them only 11% of their income. For that metric Amarillo ranks second.

2. Lubbock, Texas

Self-employment is a relatively lucrative gig in Lubbock, Texas. The average self-employed worker here earns just under $75,000 per year. Like Amarillo, Lubbock ranks highly because of its affordability. Affordability is an important concern for anyone trying to start their own business. Lubbock has the 16th-lowest local tax burden and the median home costs $866 per month.

It’s worth noting however, that not many people in Lubbock have taken the self-employment route. Only about 2.63% of working people are self-employed here, a below-average rate.

3. Shreveport, Louisiana

Shreveport is an affordable locale with lots of earning potential for self-employed workers. Our data shows that the average self-employed person in Shreveport earns around $77,000 per year. While $77,000 is a decent income in most places, in Shreveport it’s a significant sum.

The median home here costs $740 per month. That means average self-employed individuals would only need to spend 11% of their income to cover housing costs on the average home. For each of those metrics – housing costs, average earnings and housing cost as a percent of earnings – Shreveport ranks in the top 10.

4. Scottsdale, Arizona

Scottsdale is one of the pricier cities in our top 10. For example, the median home costs $1,237 per month. That’s the highest cost in our top 10, and one of the highest in the study.

Scottsdale shines when it comes to self-employed residents. Just under 8.5% of working residents in Scottsdale are self-employed, the second-highest rate in our study. There is also slightly less risk to being self-employed in Scottsdale. If your business fails here, there are still plenty of other opportunities. The unemployment rate in Scottsdale is only 3.4%.

5. Dallas, Texas

Self-employed workers in Dallas earn quite a bit on average. According to our data, the average self-employed person in Big D earns just shy of $85,000 per year. Thanks to low costs of living in Dallas, that $85,000 goes pretty far.

For example, to pay for the median Dallas home, the average self-employed person would only need to spend 13.5% of their income. Dallas also has a relatively low tax burden which means the average self-employed earners keeps more of what they earn.

6. Overland Park, Kansas

Overland Park is a great place for work, regardless of how you do it. The unemployment rate here is only 3.6%. But if you can manage owning your own business, it pays off in Overland Park. The average self-employed person earns over $75,000 per year.

It’s also not uncommon to find self-employed workers in Overland Park. Around 4.54% of workers are self-employed.

7. Salt Lake City, Utah

Salt Lake City takes seventh. One plus for anyone thinking about self-employment in Salt Lake City is the potential for high earnings. The average self-employed worker earns just over $67,000 per year.

One possible blight on The City of Saints’ score however is that self-employment does not seem like a very common employment path for residents to take. Only 2.86% of workers in Salt Lake City are self-employed.

8. Lexington, Kentucky

Data from the Census Bureau shows that the Lexington population has chosen self-employment at above-average rates. Around 3.8% of workers in Lexington are self-employed. For that metric Lexington ranks 27th.

Another great part about being self-employed in Lexington is the relatively low costs of living. The median housing cost in the area is only $907 per month.

9. (tie) Little Rock, Arkansas

Starting your own business is a big risk. Our data rated Little Rock highly because of how affordable it is, relative to other places we analyzed. Lower costs of living decrease the risk of starting your own business.

The monthly median housing cost, for example, is $882 per month. At the same time, the average self-employed person in Little Rock takes home $62,000 per year. That means Little Rock self-employed workers can get a head start on saving for retirement.

9. (tie) Knoxville, Tennessee

Self-employed workers in Knoxville earn quite a bit. According to data from the Census Bureau, the average self-employed worker in Knoxville earns over $70,000 per year. Combine that with the low tax burden in the city ($11,324 on average) and affordable housing costs ($783 on average), and you’ve got a great city for self-employed workers.

Best Cities to Be Self-Employed

Data and Methodology

In order to find the best cities to be self-employed, we looked at data on the 150 largest cities in the country. For the purposes of this study, we defined self-employed workers as those who own their own incorporated business. We compared them across the following six metrics:

  • Median housing cost. Data comes from the U.S. Census Bureau’s 1-Year 2015 American Community Survey.
  • Average earnings for self-employed workers. Data comes from the U.S. Census Bureau’s 1-Year 2015 American Community Survey.
  • Percent of self-employed residents. Data comes from the U.S. Census Bureau’s 1-Year 2015 American Community Survey.
  • Local tax burden. Data comes from SmartAsset’s income tax calculator. The local tax burden is measured at the county level. It estimates how much a married couple earning $53,000 per year could expect to pay in taxes every year. It includes income tax, sales tax, fuel tax and property tax data.
  • Housing cost as a percent of self-employed earnings. This is the median housing cost as a percent of the average earnings for self-employed workers. Data comes from the U.S. Census Bureau’s 1-Year 2015 American Community Survey.
  • Unemployment rate. Data comes from the U.S. Census Bureau’s 1-Year 2015 American Community Survey.

We ranked each city in each metric. We then found each city’s average ranking, giving an equal weighting to each metric. Using this average ranking, we created our final score. The city with the best average ranking received a 100. The city with the worst average score received a 0.

Tax Tips for Self-Employed Workers

Paying the tax man is often confusing when you’re self-employed. Here are some tips to help.

Self-employed people need to make sure they are paying enough taxes throughout the year. This means paying taxes each quarter. Self-employed workers also qualify for a variety of tax breaks. You will want to research which ones you qualify for to limit your tax exposure. For example, you can claim deductions for business equipment, travel expenses related to business and interest paid on business loans. Make sure you only deduct business-related expenses, in case you’re audited.

Although self-employed workers do not typically to have access to employer-sponsored retirement plans, it is still possible to save for retirement. Putting a portion of your profits away into an individual retirement account (IRA) can lower your taxes while helping you invest.

Questions about our study? Contact us at

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