The Outer Banks has ranked as the top place for small business owners to operate in North Carolina, while the top five counties in the state are all located in popular visitor destination.
Dare County ranked number one overall in the SmartAsset Small Business Index and had the highest percentage of income from small businesses of any county in North Carolina.
At number two is Hyde County, which includes Ocracoke and has the state’s 6th highest percentage of small business income.
The rest of the top five were the popular mountain destinations of Watauga, Macon and Buncombe counties. They was followed by New Hanover, Orange, Carteret, Union and Mecklenburg counties. Currituck County, which includes Corolla, ranked 26th in the state.
The study measured five factors: the proportion of people in a county with small business income, the reported business income, the amount of tax a potential resident must pay on their income, the five year change of small business tax returns, and the five year change of small business income.
To determine how attractive a region is for small business owners, SmartAsset compared the number of tax returns that report small business income and compared that to the total tax-filing population of the region.
Small business returns accounted for 37.62% in Hyde County (first in N.C.), Dare County 35.29% (2nd in N.C.), and Currituck 22.65%. Across the rest of the Greater Outer Banks: Chowan 22.29%, Perquimans 22.22%, Tyrrell 20.86%, Camden 20.0%, Pasquotank 19.55%, Bertie 17.5%, Hertford Co. 17.49%, Gates 16.63%, and Washington Co. 15.61%.
Next, they compared the total amount of small business income to the overall amount of income reported in each region: Dare 15.53% (number on in the state), Hyde 11.20% (6th in N.C.), Currituck 7.54%, Chowan 7.21%, Tyrrell 5.31%, Hertford Co. 4.81%, Pasquotank 4.48%, Perquimans 4.29%, Camden 4.0%, Bertie 3.22%, Gates 2.22%, and Washington Co. 2.61%.
Another factor in the overall ranking was an index calculated using the five-year change in the number of small business returns that were filed and their incomes.
Currituck County had the second highest five-year change in small business returns index at 58.17, second only to the Brunswick County on the opposite end of the N.C. coast.
Small businesses are typically incorporated as pass-through entities, meaning that the business owners pay income taxes on the company profits rather than the company itself paying income tax.
SmartAsset said that because of this, income taxes can play a major role in determining the financial success of a small business.
To determine income tax burdens across counties, the national median household income and then applied relevant deductions and exemptions before calculating federal, state and local income taxes for each location. That rate was calculated to $9,444 for each county in North Carolina.
The five factors were then indexed and equally weighted to yield the Small Business Index. Counties with the highest Small Business Index are ranked highest in the study.