The pandemic has created more opportunities than ever for remote, self-employed and freelance work. Today, about 10 million Americans report working for themselves in some way.
The ability to work from anywhere is indeed appealing to many, and it raises an interesting question: if you could work from anywhere, where would it be?
To help you answer that question, we’ve compiled a list of the top 10 cities for freelancers in 2022. Our underlying analysis, which used recent US Census Bureau metro area data and city-level data the State of the Federation of State Tax Administrators. , finds signs of relatively affordable rent; these metropolitan areas also appear to have vibrant and growing independent cultures, as well as growing demand for goods and services. Here is the list.
TOP 10 SUBWAYS FOR INDEPENDENTS
1. Greenville-Anderson, SC
2. City of Boise, Idaho
4. Des Moines-West Des Moines, Iowa
5. Ogden-Clearfield, Utah
6. Raleigh-Cary, North Carolina
7. Worcester, Mass.-Conn.
8. Chattanooga, Tenn.-Ga.
9. Winston-Salem, North Carolina
10. Knoxville, Tenn.
— Many of the top 10 cities for freelancers had relatively low housing costs. According to data from the Census Bureau, 51.6% of US renters paid rent below the recommended threshold of 30% of gross monthly income.. And some metro areas were well above that average, meaning they had higher proportions of people with relatively manageable rent expenses. Rent can make or break some freelancers. “Your number one strategy should be to keep your overhead as low as possible when you startsays Lori Martinek, a Los Angeles-based Certified Mentor for SCORE, which is a national nonprofit organization that offers free resources to business owners.
— In the best cities for freelancers, unemployment was often relatively low and jobs were added. A good labor market and an influx of workers can signal a growing demand for goods and services from the self-employed. The top 10 metropolitan areas tended to perform very well in these areas, and all saw a net increase in the number of people hired in 2020.
— The size of the self-employed community is remarkable in many of the major metropolitan areas. Nationally, 5.8% of workers were self-employed in an unincorporated business, according to 2019 data from the U.S. Census Bureau. Several of the metro areas on our list exceeded this percentage, suggesting that they had rich and active environments for gig workers, independent contractors and freelancers.
— Minimum state tax rates are relatively low in most major cities. Although deductions, credits, filing status options and tax rules make it difficult to predict any freelancer’s tax burden sera, minimum state income tax rates can indicate whether self-employed tax bills might be higher or lower in certain locations.
DECIDE IF AND WHERE TO MOVE
Moving isn’t easy or cheap, so deciding when to move to another city can be tricky. Business experts say to keep three things in mind when considering a move.
1. UNDERSTAND THE TAX EFFECTS
The bigger the city, the more expensive it is to live, says Jonathan Medows, a certified public accountant with Medows CPA in New York. State income tax brackets and rates vary, and in some places there are even new or additional taxes to consider. Medows’ hometown of New York, for example, has a city-level income tax, in addition to state and federal taxes; freelancers moving there may need to consider raising their rates to offset the additional tax burden.
2. DON’T UPROOT YOUR LIFE
Medows recommends a preview trip. “Dip your toes. Go away for a few weeks. Work there. See if it’s something that’s viable. Moving is expensive, and I would love a pilot trip,” he says. It will also give you the opportunity to gather the tax and licensing information you need.
“So, number one, get an overview of the pitch; understand county, state and local taxes. Second, understand if you need commercial licenses,” he says. “Third, see if your good or service you are offering is subject to sales tax and register for sales tax.” Zoning laws should be another consideration, adds Medows.
Once you’ve moved, go to the local bank and open your account in person, says Martinek. “Go meet the people at the bank, tell them what you’re trying to do. And they’ll connect you with other organizations and small businesses. It happens over and over again,” she notes. “They want to help you because they want to see your business grow.”
3. KNOW WHEN LOCATION IS IMPORTANT – AND WHEN IT IS NOT
“One of the benefits of being a freelancer or independent contractor is that you can literally live and work anywhere that has a high-speed internet connection, nationally or internationally,” says Martinek.
Location can’t solve everything, though. “Things the location can’t fix include, for example, not having a business plan or having a valuable skill or service to offer.“says Martinek. Additionally, certain types of work may only be available in specific areas – freelance camera work opportunities in areas with lots of TV sets and movies, for example. “You may be in the busiest city in the world, but if you can’t find customers for what you do, then you’re in the wrong place,” says Medows.
To create the list, NerdWallet pulled data for major US metropolitan areas from the United States Census Bureau. We also pulled state tax rates from the Federation of State Tax Administrators. We weighted the impact of each factor based on how important we felt that factor was to a freelancer’s potential financial success. We excluded metropolitan areas for which there was negative or no census data on job flows.
NerdWallet’s analysis includes data from the following sources:
– Data from the 2019 U.S. Census American Community Survey for the unemployment rate, the percentage of people in census-designated metropolitan areas who identified as self-employed in unincorporated businesses, and the percentage of renters in a census-designated metropolitan area who spend less than 30% of their household income on rent.
– Fourth Quarter 2019 US Census Data and Fourth Quarter 2020 Job-to-Job Explorer.
— State tax rates for 2022 from the Federation of State Tax Administrators.
This article was provided to The Associated Press by personal finance website NerdWallet. Tina Orem is a writer at NerdWallet. Email: email@example.com.
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