LEXINGTON, Ky. (August 16, 2016) – Low legal and accounting costs in Lexington along with cheap incorporation fees were cited as reasons it ranks among the 10 least expensive cities in the United States for starting a business, in a new ranking just out.
Lexington has the lowest legal and accounting fees among the 80 U.S. cities examined by smartasset.com, according to an article on the site. Lexington ranks eighth least expensive overall in smartasset.com’s 2016 study of cities with the lowest startup costs.
It was the only Kentucky in the top 10, which included three Tennessee cities. Chattanooga ranks first.
“Kentucky’s second largest city, Lexington is among the most well-educated cities in the United States,” said smartasset.com. “According to the U.S. Census Bureau, over 40 percent of the city’s population has a bachelor’s degree. That means new businesses have many options when looking for employees with the education and ideas to help their startup flourish.”
The list, though, is most concerned with costs, and business filing fees in Lexington are relatively low, the article states.
Lexington’s annual cost for a new startup business was estimated to be $235,000.
“You would only need to pay $95, on average, to file as an LLC or a corporation. Legal and accounting costs are also lower here than they are in any other city in our analysis,” smartasset.com found. “Small businesses who choose to move to Kentucky or expand there might be able to take advantage of some of the incentives offered by its economic development finance authority, like tax credits.”
The South dominated the cheapest startup costs list. Greensboro, N.C., is third; , Columbia, S.C., is fourth; Knoxville is fifth; Little Rock, Ark., sixth; Memphis seventh; Orlando ninth; and Winston-Salem, N.C., tenth.
This is the second year Smartasset.com conducted the lowest startup costs study and issued a list. Chattanooga has topped it both years.
Lexington ranked sixth in 2015, and Louisville was tenth but did not make the top 10 for 2016.
Smartasset said it made several assumptions: that a startup would need to lease a 1,000-s.f. office, provide it with electricity and gas, have five full-time employees making median salaries bases on city-level Bureau of Labor Statistics data, incur accounting and legal fees, and pay licensing fees for LLCs and corporations.
The most expensive cities were the usual suspects, with San Jose and San Francisco ranking one and two. They were followed by Washington, New York and Boston.
“While you may have access to a bigger network and more resources, you’ll need to be willing to pay the price if you want to launch a startup somewhere like Washington, D.C. or New York City,” the article said.
Annual costs for San Jose were calculated to be $439,000 while Chattanooga came in at $225,000.