Should I come to Buffalo and start a business? (loans, taxes)
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I think there's a lot more things like loans and the like available in NYS. I see them trying to revitalize Buffalo and I think I might try to catch in on some of the money. Plus the colleges I can recruit business partners, I also see a lot of incubator programs. My general observation has been that places like Buffalo will dole out a lot of handouts to businesses. It would make more sense to lower the rates and broaden the base but you need to take advantage of incentives. Starting capital is my main problem.
Also I feel like New York is not exactly a small business mecca. I feel like competition will be less, which is my thinking. Instead of going to Texas where everyone else is, go to the place people don't want to be. Yes taxes will be higher, and so will regulations, but as long as I stay small I can deal with that. My goal is to earn an average wage, not get rich. Rick Perry is trying to recruit businesses away from New York and I think this is good. My main goal is to defeat competition.
At the end of the day people will still choose to live in New York State for its quality of life versus Texas. Its population is not growing as much as Texas, but not shrinking. Buffalo's shrink is slowing and I think Erie County posted growth.
Plus the Buffalo area has a lower cost of living than big cities in Texas like Dallas, Austin and Houston, and if I went to Texas I'd only consider those areas, I'd never dream of going to some podunk little town.. I guess in the end I don't expect to hire more than a couple employees at my peak. My goal for business has always been to deliberately stay small. I'd like to hire a few people but not too many. Another benefit New York has it is it leading the way on implementing health exchanges, which will benefit my business in the starting out. In Texas 30% are uninsured.
Do I agree with NYS high taxes and regulations? No.
But even it is more taxes and regulations than Texas it isn't the Soviet Union in the end, or even France.
But I see the fact that so many businesses are going to Texas as essentially meaning I will have more competition. The tax free zone thing is dumb public policy, but sooner or later NYS is going to have to get its head together. No, it will never have as low of taxes or as little regulations as Texas. New York will never ever be a libertarian utopia, but eventually they will wake up somewhat, they have to. I think there are some rumblings that they may be. But it has such a bad reputation in the business community it will take a long time to shake it, and I am sort of coming in to jump ahead.
Texas is always going to have lower taxes and regulations, so businesses will flock there. But there are 50 other states and it isn't like there are no businesses in any of those 50. I see the Texas thing as more aimed at manufacturing business and the like, and if I were starting a manufacturing business I'd go to Texas over New York. But I'm not going into that.
Also culturally upstate New York is more similar to MI than Texas, and the Texas culture kind of gives me bad vibes. I'll always be inclined to the great lakes. Why come to Buffalo from MI? We don't have any good urban colleges and I feel like this will create more of an environment for startups to flourish. People here are not willing to take any risks. I've been looking for somebody to take care of the technical end of things while I take care of the business broader vision end but in the end they are all risk averse. Very conservative and frugal. Housing here (West MI) is more expensive than Buffalo (interesting how Buffalo has some of the cheapest housing in the nation and NYC has the most expensive housing in the USA). It isn't ridiculous, but still rent is going to be a good 100 per month more. Obviously it is cheaper in Detroit but Detroit is still sinking downhill. Buffalo is coming back. It is one of the dreams of my lifetime to see Detroit revitalized but I'm not sure it will happen. Buffalo and Pittsburgh, though they were smaller than Detroit, sort of represent my hopes for the direction Detroit can go in. Finally the legislature here is hobbling the health insurance exchange on purpose for political reasons (against the Republican governor's wishes). I want the health exchange for my business, but I'm not sure I'll get it here. I'm a fiscal conservative on most issues, but not on health care because I think universal health care benefits small business and entrepreneurs starting out, though I understand why big business is against it because it will tax them more and they can't lord the risk of losing health coverage over their employees to keep them obedient. If Obamacare had not gone through I'd go to Massachusetts to start my business, because I only intend to get a part time job while building it up.
I have a unique way of looking at things, I admit. I see a lot of advantages in Buffalo that are not apparent on the surface. Too many people just up and go to Texas thinking low taxes are automatically going to make their business successful, while in the end they forget it is customers and finding an untapped market that makes it work. If anything, Texas is not untapped.
In a nutshell, I might be the first person ever to come to New York for business because it was rated the worst state for business.
Most of the "worst state for business" sort of discussion refers to big corporations, not mom and pop independent businesses. The small businesses I know have never said that taxes and regulations are their biggest problems. Their big day-to-day issues are simply keeping cash flow positive, making payroll, attracting new customers, etc. You only pay taxes on your profits, and most small businesses are not making huge profits. Most small businesses pay taxes at their personal income tax rate (whether that be sole proprietorship, LLC, or an S-corp), anyway. Lots of regulations don't even kick in until you have a fairly large number of employees, and many regulations are simply things you would want to be doing anyway for good business reasons.
I am not sure that Buffalo is flush with venture capital. This has been cited as a significant issue for startups. We have lots of incubators, but few venture capitalists who will fund promising startups. But if you're opening a restaurant or retail shop, you're probably not going to be looking for venture capital, but rather just taking loans from banks or friends and family or simply investing your own savings. Overhead costs can be pretty cheap in many parts of Buffalo, and it's still very possible to start a small shop here on a shoestring budget.
There is a very active and energetic local business association in Buffalo called Buffalo First, that promotes and encourages independent, locally-owned businesses. And there are quite a few businesses here that have opened up in what were considered rough neighborhoods and are thriving in defiance of what I have to assume any bank loan officer must have thought of their business plan. I would talk to some of those people, find out what has worked and what the true difficulties have been. I think it's a pretty generous community, and people are usually very willing to help others get a good start.
Okay. I'm looking at your city, as well as a Pittsburgh and Toledo. I'd like Buffalo better because it is a bigger metro, but Ohio also has no corporate tax (only a gross receipts tax) and only comes into effect after 150k. I plan on forming a corporation. I know I want an urban college town because I am trying to recruit an employee or partner. I need them to take care of the technical side of the business as I have the vision and business knowledge due to my college training and independent study as well as experience starting a lawncare company. Unfortunately this failed but at least I've been to the rodeo before. I will relocate to the area before doing any of this though.
All three of these cities are working to reinvent themselves as urban college towns. Toledo has UToledo, Lourdes, Mercy and Bowling Green nearby. Buffalo has SUNY Amherst, UBuffalo, Canisius and several others. Pittsburgh has Pitt, Point Park, and Mellon. Toledo is obviously a smaller metro but is closer to home and more tax friendly.
Originally I planned on going to Omaha but decided low overhead was more important than low unemployment for an entrepreneur. Besides Omaha's growth is actually stagnant whereas Buff, Toledo, and Pittsburgh have nowhere to go but up.
Grand Rapids has potential but unfortunately doesn't have a solid urban college scene and the overwhelming in your face social conservatism of the region gets tiring after a while. There aren't a lot of freethinkers, risk takers, or open minded people around here. I'm somebody who is culturally liberal, although financially conservative.
I'm not sure there is a need to form a C-corp for a small restaurant or retail shop. I would expect a sole proprietorship or an LLC (where the taxes pass through to your person tax return) would be sufficient for those. The social media company, maybe, if you are taking venture capital right from the start and need to sell stock in the company.
Even with a C-corp, I honestly wouldn't worry too much about corporate taxes. You aren't going to be making much taxable profit for a long while, since you will reinvesting your profits back into the company or taking them as salary.
Again, best of luck in your venture. I think you could do very well in Buffalo (low overhead, lots of local community support), but of course I am biased!
I've actually changed my mind and decided to form an S corp after some thoughts. The reason I want to relocate form my state (MI) is two fold. One there isn't any decent cheap overhead. Yes there is cheap overhead in Detroit and Flint but they are like warzones. Grand Rapids and West Michigan are doing better, but real estate is at a premium. I guess there aren't many "medium" areas of MI anymore. Everything is either taken up (GR, Oakland county) and too expensive for overhead, completely dilapidated and getting worse (Flint, Detroit, Saginaw). There isn't a good urban area in Michigan with low rents. Obviously Buffalo has some bad areas but it isn't like the entire city is a giant bad area.
Also Michigan, in spite of having lower income taxes than NY has the personal property tax. This is a killer, regressive tax where you have to assess all your inventory, all your property including furniture and computers for business every year and pay a tax on it. It isn't a high tax, but it is a very complicated one. People say NY is bad for business because on paper it has higher taxes, but Michigan's are more complicated. OTOH we do have a flat income tax whereas NY is progressive, but PA (one of my target states) does as well. Ohio's downside is the gross receipts tax, which is only .27% but affects you even if you make no profit. But this personal property tax is a deal breaker for me. I will not start a business in any state that has it. So far several states do not, (NY, PA, OH, IA, IL) but most actually do.
Michigan passed legislation to exempt 40k in 2014 (but you still have to fill out the complicate forms) and is eliminating it on manufacturing over the course of ten years. Snyder wants to get rid of it all together in 2024 but I'm not sitting around waiting ten years to start my business until this wretched tax is phased out. IT is the real reason Michigan has done so bad compared to nationwide (which itself is bad) because it has killed manufacturers and other businesses. Every year paying the same tax on equipment they already paid sales tax on! It may be phasing out but it is too little too late. 2024 is 11 years away, and also it is contingent on a state referendum passing next year. Already special interest groups are trying to keep it in place.
They boast about how "right to work" is going to be the magical savior for the state but it will not matter one iota. Sure some employers may think Michigan is more attractive but this is only in heavily unionized industries like manufacturing. It isn't going to do a thing for mom and pops. I don't really care about it but there are plenty of other right to work states, with better tax incentives than MI will ever be able to give.
In examining the taxes I'm leaning to PA more now because of its simplicity, either Erie or Pitt. But as long as I can escape tangible property tax I'm good. OH, PA, and NY don't. I'm not going to be making a lot of money starting out and the last I need is some regressive tax torturing me.
I am 23 years old and a burgeoning entrepreneur.
I'd like to either start a small restaurant, retail shop, or social media marketing company.
Do you have a business plan?
Have you ever run a business before?
Got capital?
Also, realize there are benefits to starting a business in your existing community. You already "know" your community; you know its vibe, the direction its going, and the "feel". Moving to a totally new place presents a completely new set of unknowns. Unless your analysis concludes the tangible benefits (taxes, subsidies, etc) of starting a business in a new, unknown place significantly outweighs the drawbacks of the unfamiliarity, you're taking a big chance.
Don't get fooled by this Texas nonsense. I've been living in Houston for the past 11 years and it IS a crap hole. If your looking to hire cheap uneducated manufacturing labor to help you start your business then Texas is the place to go. However, if you are looking for highly educated people that think outside the box it may prove to be more difficult, depending what your business is. Don't come here this boom is not going to last and when the last bust happened in the 1980's you couldn't sell a home for a dollar.
Trust me on this the Christo-Facists and the Texas-Taliban are alive and well down here and I am personally looking to move back up North to the Buffalo area to get away from these nuts.
I believe that you have done your homework here dig deeper to see what other gimmes you can get from NYS.
I can see you've put some thought into where you want to move to and establish you business. In one of your posts you mentioned about there being more incubators in Buffalo than some of the other locations you are scouting. I'd like to mention two which may be able to offer assistance: nxtARROW Business Development and Home
I spent a few months there ia while ago and I would have stayed if I had been able to find a suitable home to purchase. I needed something that would double as a place to work from home and I was unable to find something that was devoid of a couple of obstacles that would impact my project. Did a test from the home I rented and confirmed that the power lines were a major problem and unfortunately they seem to run high voltage lines in the back yards of many streets there. Who knows, maybe if I looked again this time around I could find something suitable.
That issue aside, I would give it a recommendation. I found the people were friendly and helpful and open to new ideas. Much of western NY and even central NY is like that to some degree. I'm originally from Connecticut and in my case, like yours, the cultural differences would be small when compared to some of the other places you are looking at.
Taxes at the lower income levels of society are not as bad as many states. I was shocked to find property taxes in Buffalo (city proper) are pretty reasonable compared to some of the suburban areas and even competing cities that I have looked at. The work ethic there and attitude of the people is better than many areas where I've spent time.
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