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The Independent UK
The Independent UK
National
Via AP news wire

2022 best cities for freelancers

Copyright 2022 The Associated Press. All rights reserved.

The pandemic has created more opportunities for remote, self-directed and freelance work than ever. Today, around 10 million Americans say they’re working for themselves in some capacity.

The opportunity to work from anywhere is indeed enticing to many, and it begs an interesting question: If you could work from anywhere, where would it be?

To help you answer that question, we put together a list of the 10 best cities for freelancers in 2022. Our underlying analysis, which used recent metro-area data from the U.S. Census Bureau and state-level data from the Federation of State Tax Administrators, finds signs of relatively affordable rent; these metro areas also seem to have vibrant and growing freelancer cultures, as well as growing demand for goods and services. Here’s the list.

TOP 10 METRO AREAS FOR FREELANCERS

1. Greenville-Anderson, S.C.

2. Boise City, Idaho

3. Columbus, Ohio

4. Des Moines-West Des Moines, Iowa

5. Ogden-Clearfield, Utah

6. Raleigh-Cary, N.C.

7. Worcester, Mass.-Conn.

8. Chattanooga, Tenn.-Ga.

9. Winston-Salem, N.C.

10. Knoxville, Tenn.

KEY FINDINGS

— Many of the top 10 cities for freelancers had relatively low housing costs. According to the Census Bureau data, 51.6% of U.S. renters paid rent that was less than the recommended threshold of 30% of gross monthly income. And some metro areas were well over that average, meaning they had higher proportions of people with relatively feasible rent expenses. Rent can make or break some freelancers. “Your number one strategy should be to keep your overhead costs as low as possible when you’re starting out,” says Lori Martinek, a Los Angeles-based certified mentor for SCORE, which is a national nonprofit that offers free resources to business owners.

— In top cities for freelancers, unemployment was often relatively low and jobs were being added. A good job market and inflow of workers can signal growing demand for goods and services from freelancers. The top 10 metro areas tended to be high performers in these areas, and all saw net increases in the number of people hired there in 2020.

— The size of the self-employed community is notable in many of the top metro areas. Nationally, 5.8% of workers were self-employed in a nonincorporated business , according to 2019 data from the U.S. Census Bureau. Several of the metro areas on our list exceeded this percentage, suggesting they had rich, active environments for gig workers, independent contractors and freelancers.

— Minimum state tax rates are relatively low in many of the top cities. Though deductions, credits, filing status options and tax rules make it hard to predict what any freelancer’s tax burden will be, minimum state income tax rates can hint at whether freelancer tax bills could be higher or lower in certain locations.

DECIDING WHETHER AND WHERE TO MOVE

Moving isn’t easy or cheap, so deciding when to take your freelancing life to another town can be tricky. Business experts say to keep three things in mind when contemplating a move.

1. UNDERSTAND THE TAX EFFECTS

The bigger the city, the more it costs to live, says Jonathan Medows, a certified public accountant at Medows CPA in New York City. State income tax brackets and rates vary, and in some places there are even new or extra taxes to consider. Medows’ hometown of New York City, for example, has a city-level income tax, in addition to state and federal taxes; freelancers moving there may have to consider raising their rates to compensate for the additional tax expense.

2. DON’T JUST UPROOT YOUR LIFE

Medows recommends a preview trip. “Dip your toes. Go for a couple of weeks. Work there. See if it’s something that’s viable. Moving’s expensive, and I would do like a pilot trip,” he says. That will also give you a chance to gather the tax and licensing information you need.

“So number one, get a lay of the land; understand the county, state and local taxes. Number two, understand if you need any business licenses,” he says. “Number three, see if your good or service that you’re offering is subject to sales tax and register for sales tax.” Zoning laws should be another consideration, Medows adds.

Once you’ve moved, go into the local bank and set up your account in person, Martinek says. “Go meet the people at the bank, tell them what you’re trying to do. And they will put you in touch with other organizations and other small businesses. It happens time and time 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’S NOT

One of the best things about being a freelancer or an independent contractor is that you literally can live and work anywhere that has a high-speed internet connection, domestically or internationally,” Martinek says.

Location can’t solve everything, though. “The things that location can’t fix include, for instance, a lack of a business plan or having a valuable skill or service to offer,” Martinek says. Also, certain types of work may only be available in specific areas — freelance camera-work opportunities in areas with a lot of TV and film sets, for example. “You can be in the busiest city in the world, but if you can’t get any business for what you’re doing, then you’re in the wrong place,” says Medows.

METHODOLOGY

To create the list, NerdWallet pulled data for major U.S. 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 depending on how important we felt that factor would be in the potential financial success of a freelancer. We excluded metro areas for which there was negative or no Job-to-Job Flows Census data.

NerdWallet’s analysis includes data from the following sources:

— U.S. Census 2019 American Community Survey data for the unemployment rate, percentage of people in Census-designated metro areas who identified as self-employed in nonincorporated businesses, and percentage of renters in a Census-designated metro area who spend less than 30% of their household income on rent.

— U.S. Census Q4 2019 and Q4 2020 Job-to-Job Explorer data.

— State tax rates for 2022 from the Federation of State Tax Administrators.

______________________________________

This article was provided to The Associated Press by the personal finance website NerdWallet. Tina Orem is a writer at NerdWallet. Email: torem@nerdwallet.com.

RELATED LINKS:

NerdWallet: How much should I spend on rent? https://bit.ly/nerdwallet-how-much-should-I-spend-on-rent

NerdWallet: How to start a business in 13 steps https://bit.ly/nerdwallet-how-to-start-a-business-in-13-steps

NerdWallet: Freelancer taxes: A guide for filing with a side hustle https://bit.ly/nerdwallet-freelance-taxes

NerdWallet: The 23 most profitable businesses in 2022 https://bit.ly/nerdwallet-most-profitable-businesses

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