Mention Missouri and commerce in the same sentence and thoughts will likely drift to St. Louis, Kansas City, Springfield and other large metropolitan areas. A recent study released by Smart Asset, a financial technology company featured in Forbes, US News, CNN, Fortune Magazine and the New York Times, paints a different picture however when it comes to small businesses.
The study highlights Scotland County as the #1 spot in the Show Me State for small business owners based on three key factors, the percentage of people in a county with small business income, the proportion of that income to overall income and taxes paid by small business owners.
“According to the study, Scotland County is one of the top places in Missouri for small business owners,” said Steve Sabato of Smart Asset. “Which places are best for owners of small businesses? To answer this question, we considered three factors: the proportion of people in a county with small business income, how much business income those people reported and the amount of tax a potential resident must pay on their income.”
Scotland County ranks #1 in the state for small business returns as measured by the company.
“To determine how attractive a region is for small business owners, we compared the number of people reporting small business income compared to the total tax-filing population of the region,” said Sabato.
Scotland County was tops in the state with a 39% small business return as measured by Smart Asset. Knox County was second at 33% followed by Davies County at 31%, Shannon County at 30% and Chariton County at 29%. Putnam County came in seventh in the state at 28%.
Scotland County then grabbed the top spot as well in the second ranking factor, the small business income measurement.
“Next we compared the total amount of small business income to the total amount of income reported in each region,” said Sabato.
Scotland County again topped the rankings with a 16% mark on the smart Asset index followed by Scott County and Greene County (Springfield) at 14%. Saint Louis County headed a long list of regions at 12% along with Boone County (Columbia).
Finally the study measured income taxes where Scotland County ranked 100th in the state.
“Small businesses are typically incorporated as pass-through entities, meaning that the businesses’ owners pay income taxes on the company profits rather than the company itself paying income tax. Because of this, income taxes can have a large effect on a small business’s success,” said Sabato. “To determine income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes for each location.”
St. Louis City ranked #1 in the income tax index followed by Adair County, Andrew, Atchison and Audrain counties rounding out the top 100.
Smart Asset then created an overall small business index ranking from the three factors.
“These three factors were then indexed and equally weighted to yield our small business index,” said Sabato. “Places with a higher small business index are better for small business owners.”
Scotland County topped the rankings with a 62.34 score. Knox County was second with a 47.88 score. Schuyler County ranked 23rd overall while Adair County was 60th and Clark County was 95th.