Why Philadelphia is a Good Place to Start a Business

Why Philadelphia is a Good Place to Start a Business

In a previous article, we rounded up companies you might consider working for in Philadelphia. While it’s true that the city has a fantastic job environment, it also has a great business environment. The city is close to large markets, it has manageable tax rates, and there is strong local government support for early entrepreneurs.

Deciding to start a business now may be worth considering for that extra cash flow and the opportunity to do independent work. That being said, we are going to dive into the details as to why Philadelphia is a good city to start a business and why you should consider doing so.

Proximity to Large Markets

Philadelphia is a large city that is close to some of the biggest cities on the East Coast. The proximity to cities like New York, Boston and D.C. make it more convenient to tap into these cities’ markets, establish business partnerships, and even bring in potential investors. Many venture capitalists are based in New York, and the train ride from NYC to Philly takes just over an hour. This is a worthwhile trip especially for someone with a promising business model. For those launching online shops, the proximity to large cities allows for a wider customer base and is something to think about if your dream is to scale up.

Small Business Growth

Philadelphia, and the state of Pennsylvania as a whole, is home to many small businesses. It is the bedrock of local employment and economic growth. The state has 1 million small businesses which employ 2.5 million people.

According to the U.S. Small Business Administration, in 2018, small businesses accounted for 99.6% of all private sector businesses operations in the state, and employed 46.7% of the population. More than that, the state boasted the sixth largest economy in the US in 2019.

Although the Coronavirus pandemic in 2020 has derailed some of this small business growth, small businesses in Philadelphia are receiving support from the city in the form of grants. Potential entrepreneurs in Philadelphia will have a strong network of other firms to rely on in order to help their business survive and thrive.

Manageable Tax Rates

The tax situation in Philly is a mixed bag depending on your chosen business structure. For one, business taxes can be a bit pricey, meaning those who chose to incorporate may have to pay more. Corporate income tax in Pennsylvania is almost at 10%. However, Business News Daily explains that for pass-through entities such as LLCs, the rates improve since owners only need to pay personal income tax.

Personal income tax is relatively low at 3%. This guide to forming an LLC in Pennsylvania cites that the state-wide sales tax rate is 6% while Philadelphia has an additional 2% local sales tax. Property tax in Pennsylvania is also relatively low at 1.46% of property values. With these figures, given the right legal structure you can operate your business at relatively low tax rates.

Strong Local Government Support

The ease of doing business in a city relies heavily on a local government’s policies and overall support. Starting a business in Philadelphia is made easier by strong state support. The State of Pennsylvania has created a business one-stop shop as a resource platform for aspiring entrepreneurs and existing business owners. The guide walks entrepreneurs and business owners through the resources available to them to help them plan, register, operate and grow a business. There are even specific resources for women-owned businesses and veterans. The strong emphasis on inclusivity makes it even more reassuring for potential business owners from diverse backgrounds to try their hand at entrepreneurship.