5 Ways to Recover After Your Car Is Repossessed

When your car is repossessed, you may not even know why it happened — or how you’re going to get to work the next day. But what you do next – whether you decide to reinstate the loan, pay what you owe or ignore everything – may have long-term credit consequences. Here’s what you can do to take care of your transportation needs and protect your credit from further damage:

1. Ask why your car was repossessed

If you’ve fallen behind on car payments, you may know exactly why your car was repossessed. Other times, it’s not so obvious. In some states, not getting insurance stipulated in a loan or lease contract can count as a default, and your car can be repossessed because of it. Call your lender before jumping to conclusions so you can clarify how you can set things straight.

2. Find out if you can get it back

Often, a bank or repossession company will let you get your car back if you pay back the loan in full, along with all the repossession costs, before it’s sold at auction. You can sometimes reinstate the loan and work out a new payment plan, too. The repossession may not be removed from your credit report in these situations, but your new payments will generally be reflected if you make a deal with your lender (but not if you buy the car back at auction). Before getting your car back, think through these questions:

If you got your car back, would you be able to afford insurance, maintenance and gas? Neglecting important repairs or getting into an accident while uninsured may land you in an even more difficult financial situation. And without gas, you still wouldn’t be able to get from A to B. If you can’t afford these expenses, redeeming your car may not be your most cost-effective alternative.

Do you have access to affordable public transportation or a carpool? Getting to work by bus or other means may be a better option than reinstating your loan or paying your balance and repossession expenses in full.

Are you going to declare bankruptcy? If you’re extremely behind on all your bills and have no way of turning things around, you may already be considering bankruptcy.  File before the bank or repo agency sells your car, and there’s a good chance you can keep your car and work out a plan to catch up on payments. Talk to your bankruptcy lawyer about whether this would be possible, based on the type of bankruptcy you’re filing.

3. Know your rights

Even when your car is towed away, you still have certain protections:

The lender or repo agency can repossess the car but not the items inside. If you left your world-class CD collection on the front seat, for instance, the lender can’t keep or sell it. In some states, the bank or repo agency may be required to give you a list of items inside the car and tell you how you can retrieve them. If that’s not the case, you may have to ask. Generally, this does not apply to accessories you may have installed in the car, such as new rims or a souped-up audio system.

Your property shouldn’t be damaged in the process. If your car is locked in your garage, for example, a repo agent can’t break down your garage door to get your car. Such actions would generally be considered “breaching the peace.” If you feel that your rights have been violated, consider contacting a consumer lawyer.

4. If the car is sold, ask if you still owe money

When a bank or repo agency repossesses your car and sells it at auction, you might think that you don’t owe any more money on it. That’s not always the case. Say a bank gave you a $10,000 car loan and you still owed $9,000 on it when you defaulted. If the repossessed car sold at auction for $7,000, you’d still owe $2,000 on the car, plus repossession expenses, in some cases. This is called a deficiency balance.

Deficiency balances are common, especially when your auto loan was for a new car. You can sometimes lose about 10% of a new car’s value just by driving it out of the lot. Even so, the lender or repossession company still has the responsibility to conduct the sale in a “commercially reasonable manner.” If the repossessed car is sold for a price far less than the fair market value, you may be able to dispute the high deficiency balance in court.

If you ignore this deficiency balance entirely, the account may be sent to collections. The lender can also sue you for this balance, generally, if the debt is within the statute of limitations. Accounts in collections and public judgments can stay on your credit report for seven years, so if you have the money, it’s usually a good idea to pay off the remainder to minimize the damage to your credit.

5. Work on improving your credit

A repossession typically stays on your credit report for up to seven years, so a big part of boosting your credit afterward is just waiting. But you can also be proactive in building your credit by paying your bills on time and chipping away at your existing balances. This way, by the time your negative history comes off the record, your credit score will be much higher than before, and you’ll be in a better position to rebuild.

Claire Davidson is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @ideclaire7 and on Google+.

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Cities Where the Middle Class is Rising

The middle class in America has long been called one of the strongest and most powerful middle classes in the world. In recent decades, however, the U.S. middle class has been shrinking, and in the past few years, stagnant income growth has been a major reason.

U.S. households have seen different rates of growth in earnings over the past 40 years depending on their income group. The table below shows the change in average household income, adjusted for inflation, from 1973 to 2013 for different income groups: the 20% in the lowest-earning group, the middle 60% we identified as the middle class and the highest-earning 20%, which includes the top 5% of households.

While the top 5% of U.S. households saw an astronomical increase in average income — 81.1% growth from 1973 to 2013 — those at the bottom suffered an 8.4% drop in average earnings. Meanwhile, middle-class households have witnessed a modest income growth of 17.6% in those decades.

However, the rate of growth for middle-class income has slowed significantly since the 1990s. In fact, since peaking in 2007, the average income of middle-class households has fallen about 6.8%, while the nation’s richest saw a 0.8% increase in average income. Over those seven years, the nation’s poorest households got significantly poorer, with average incomes falling 10.8%.

While the middle class is still the largest group in the country, it may no longer be the most powerful. In 2013, the highest-earning 20% of households controlled 51.4% of household income in the U.S., while the middle class owned of 45.4% of income.

To analyze the state of the middle class, NerdWallet examined the data for 1,946 U.S. cities to find where average middle-class income increased the most from 2007 to 2013. In our analysis, we viewed each city as a microcosm to identify the middle 60% of earning households. We investigated the following factors:

Growth in middle-class prosperity. We considered the strength of the middle class in each city by analyzing the share of total household income owned by middle-class households. We also examined the growth in the share of aggregate income since 2007 for the middle class and the growth in average middle-class household income to find the cities on the rise.

Middle-class income and affordability. We analyzed the average income of households in the middle 60% of earners. We also included average monthly housing costs in each city to assess affordability for middle-class families.

 

Top 100 cities where the middle class is rising

Urban vs. suburban middle class

Nearly all of the places where the middle class is growing stronger are small cities. In fact, the largest of the top 100 places is Frisco, Texas, which can be considered a midsized city. So what’s happening with middle-class population in urban America?

The numbers reveal a clear difference between the urban middle class and the middle class in the nation’s suburbs and small cities. The middle class in large cities, with populations of 200,000 or higher, owns 46% of total household income in those areas. Meanwhile, the middle class in small cities, places with populations under 75,000, has 49% of household income.

In large cities, the average middle-class income of about $52,194 is 16% lower than the average household income of $62,150 earned by the middle class in smaller cities.

These figures reflect a narrative that has long existed — that suburbia is a friendlier place for the middle class than large urban centers and the challenges of those locations, such as cost of living, safety and quality of schools.

The chart below displays the middle-class share of total household income, change in middle-class share of income, change in middle-class household income, average middle-class household income and average monthly housing costs of the 20 largest cities in the U.S.

Of these urban centers, only Fort Worth, Texas, has experienced growth in middle-class share of aggregate household income since 2007. San Francisco, California, and Austin and El Paso, Texas, are the only cities in this group that saw an increase in average middle-class household income.

Methodology

All income data are from the U.S. Census Bureau’s American Community Survey. Incomes for 2007 were adjusted for inflation to reflect 2013 dollars using inflation rates from the Bureau of Labor Statistics. The score for each city is from the following variables:

1. Middle-class share of total household income is 25% of the score.
2. 2007-2013 change in middle-class share of total household income is 25% of the score.
3. 2007-2013 change in average middle-class household income is 25%.
4. Average middle-class household income is 12.5% of the score.
5. Monthly housing costs are 12.5% of the score.

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The Best Places to Start a Business in Ohio

Throughout the late 19th and early 20th centuries, Ohio occupied the center of America’s industrial heart. The burgeoning United States economy couldn’t get enough of the region’s cars and steel, and in turn, Ohio and other states provided a virtually endless stream of jobs in its workshops and factories.

In the second half of the 20th century, however, the region fell into decline, as manufacturing output required less labor input, and companies left the Great Lakes states for the warmer climes of the Sun Belt. The entire region was categorized economically dead as factories closed and traditionally middle-class manufacturing jobs disappeared.

But what really happened wasn’t quite that simple. Although it’s true the number of manufacturing jobs has declined, Ohio remains one of the country’s most productive states. Photos of rusted, abandoned factories paint a dire picture, but companies and communities adjusted, and the Ohio economy proved to be more resilient and dynamic than portrayed.

The economy has changed, but several trends show that Ohio is anything but in decline:

A strong labor market: The statewide unemployment rate in Ohio touched 12% in January 2010, a couple of points higher than the national peak of 10% in October 2009. Since then, the unemployment rate in the Buckeye State has fallen to 5.4%, as of March 2015 — below the national rate of 5.5%.

Manufacturing output: Although it is true that manufacturing jobs have decreased from around 22% of all jobs in Ohio in 1990 to 12.6% now, this is still a higher proportion of manufacturing jobs than the national average of 10.4%. Ohio more than pulls its weight in output as well — the state makes up 3.4% of the U.S. gross domestic product but is responsible for 4.8% of its manufacturing output.

To put it another way, the state’s GDP of $565 billion in 2013 would make it the 27th largest economy in the world if Ohio were its own country. And with 25 Fortune 500 companies based in Ohio, there is a strong existing business infrastructure to draw on. These qualities of size and strength present potential entrepreneurs with plenty of opportunities in the Buckeye State.

Where are the best places to start a business in Ohio?

To find the best places to start a business in Ohio, NerdWallet examined communities with more than 500 businesses and a population of at least 5,000. These businesses range in size from sole proprietorships to large companies. We used two categories with a total of six variables for our analysis.

Business climate. NerdWallet analyzed the average revenue of businesses, the percentage of businesses with paid employees and the number of businesses per 100 people. A higher measure for each variable indicates a more business-friendly environment.

A majority of businesses in the U.S. — and in Ohio — are made up of one person and don’t have paid employees.

Local economic health. We looked at annual median income, monthly median housing costs and unemployment rates for each community. We analyzed income and housing costs, so areas with a high median income and low housing costs scored higher. We examined the unemployment rate to see whether a community’s economy supported business success. A lower unemployment rate scored higher.

NerdWallet’s key takeaways

Greater Cincinnati is a hot spot. Four cities in the top 10 are in Hamilton County, where Cincinnati is located. Cincinnati is home to nine Fortune 500 companies, making this a strong and established business environment.

Small cities dominate. The average population of the top 10 cities is 10,303, significantly less than the statewide average of 28,470. This means entrepreneurs can network through the entire business community in many of these cities.

Top communities are highly entrepreneurial. The top 10 have, on average, 14.92 businesses per 100 people, well above the statewide average of 9.03, meaning business owners are highly concentrated in many of these cities.

Best places to start a business in Ohio

1. Blue Ash

With the highest concentration of businesses relative to population in the state of Ohio (24.19 businesses per 100 residents), Blue Ash takes the top spot as the best place to start a business in the Buckeye State. This Hamilton County community 15 miles northeast of Cincinnati also has provided business opportunities for many well-known entrepreneurs — multinationals such as Coca-Cola, Procter & Gamble Co. and Toyota have operations in Blue Ash, and the city is the headquarters of The J. Peterman Co., the clothier made famous by the TV show “Seinfeld.”

2. Independence

The top-ranked northern Ohio city, Independence is a state hub for information services and tech companies. Independence is home to satellite offices of tech giants Microsoft and EMC, which has provided entrepreneurs an established pool of talent and opportunity. The city is also expanding its high-speed fiber-optic network, an amenity that has proved to be a job magnet in other markets such as Chattanooga, Tennessee.

3. Moraine

This Dayton suburb of 6,314 holds the distinction of having the highest average revenue per business in the state, so there are plenty of opportunities for entrepreneurs to tap into an established business community. This environment has also continued to be attractive to established businesses — the city recently announced that Fuyao Glass America Inc. planned to hire 1,550 workers and invest $360 million into a plant in Moraine.

4. Beachwood

With 20.88 businesses per 100 residents, Beachwood, 10 miles east of Cleveland, is one of the most entrepreneurial places in the state. This enterprising spirit has led to the lowest unemployment rate in the top 10, at 2.1%. It should come as no surprise, then, that the Beachwood Chamber of Commerce holds monthly networking events to foster this pioneering business environment.

5. Fairlawn

As the home of the UH Fairlawn Health Center and Summa Health System, Fairlawn is developing into a regional hub for health care. Fairlawn has clearly benefited from the growing health-care industry, as indicated by the community’s 3% unemployment rate — the second lowest in the top 10.

6. Sharonville

Sharonville is Blue Ash’s neighbor to the northwest, and like its Hamilton County neighbor, it is something of a regional destination for business and opportunity. First, the city has the second-highest proportion of businesses with paid employees in the state, at 54.73%. This indicates that Sharonville is full of established, successful employers, rather than individual proprietors. Second, the town draws talent from the entire region. The city is proud of this strong business environment, boasting on its website that the population of Sharonville is 13,500 — but 39,000 during the daytime.

7. Kenwood

Kenwood is the third Hamilton County community in the top 10. Just south of Blue Ash, Kenwood has a well-balanced local business environment. It scores high in businesses with paid employees (49.95%), and the unemployment rate of 4.6% is below the top 10 average of 4.8%. The town itself provides a strong and steady economic environment — of the four Hamilton County communities in the top 10, Kenwood has the highest median annual income, at $63,063.

8. Oregon

Oregon was recently in the news because it temporarily changed its name before the Oregon Ducks played the Ohio State Buckeyes in the 2015 college football national championship. Business owners, however, have taken notice of this Toledo suburb for other reasons: Oregon’s 1,102 businesses have the second-highest average revenue per business in the state, behind only Moraine. Business owners can also count on local support to help build and grow in Oregon. For the last 22 years, the Oregon Economic Development Foundation has helped shape the local economic landscape.

9. Springdale

The fourth Hamilton County community in the top 10, Springdale — like its neighbors — has a high proportion of businesses with paid employees (52.29%, which beats the statewide average of 29.99% by a notable margin). The city also has a stronger than average labor market, with an unemployment rate of 4.9%, compared with the statewide average of 5.9% (as of the 2013 American Community Survey). To help foster a strong business environment, Springdale provides financing and tax incentives to help businesses create jobs and grow in the community.

10. Ontario

Ontario is about halfway between Columbus and Cleveland, which makes it the top 10 city farthest from one of Ohio’s major population centers. This community of 6,172 residents, however, has seen strong growth in recent years, attracting employers by way of incentives including the Ontario Job Creation Tax Credit. The project has worked well — for example, Cole Tooling & Stamping moved to Ontario from nearby Mansfield, and the company reportedly expects to see a 25% increase in jobs “over the next few years, each year.”

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Best places to start a business in Ohio

 

Rank	City	Population	Number of businesses	Average revenue per business	Percentage of businesses with paid employees	Businesses per 100 people	Unemployment rate	Overall score
1	Blue Ash	12,116	2,931	$4,377,407	48.17%	24.19	5.30%	71.58
2	Independence	7,123	1,458	$4,903,249	50.75%	20.47	4.70%	71.35
3	Moraine	6,314	938	$9,410,111	51.07%	14.86	8.40%	70.44
4	Beachwood	11,884	2,481	$2,481,222	48.41%	20.88	2.10%	69.83
5	Fairlawn	7,427	1,356	$2,423,739	50.66%	18.26	3.00%	66.77
6	Sharonville	13,898	1,460	$5,259,934	54.73%	10.51	4.60%	65.30
7	Kenwood	6,671	983	$1,763,341	49.95%	14.74	4.60%	58.65
8	Oregon	20,255	1,102	$9,216,269	37.66%	5.44	5.50%	58.58
9	Springdale	11,171	1,113	$3,709,226	52.29%	9.96	4.90%	58.11
10	Ontario	6,172	614	$2,313,077	52.44%	9.95	4.90%	56.41
11	Milford	6,715	812	$1,211,044	46.67%	12.09	2.70%	55.09
12	Worthington	13,521	2,527	$1,311,554	31.70%	18.69	2.90%	54.42
13	Upper Sandusky	6,844	612	$1,579,899	55.23%	8.94	5.80%	53.95
14	Maumee	14,212	1,899	$2,638,319	39.44%	13.36	4.50%	53.04
15	St. Clairsville	5,158	900	$575,632	30.22%	17.45	1.90%	51.48
16	Solon	23,214	3,245	$2,818,962	34.73%	13.98	4.70%	51.30
17	Chardon	5,162	908	$1,006,111	34.91%	17.59	4.50%	50.19
18	Montgomery	10,283	1,632	$2,492,042	25.00%	15.87	3.50%	50.08
19	Dublin	41,958	5,360	$3,337,720	27.20%	12.77	3.30%	49.63
20	Middleburg Heights	15,863	1,838	$1,763,982	40.37%	11.59	5.80%	49.51
21	Hillsboro	6,598	510	$1,756,365	54.12%	7.73	9.10%	48.95
22	Willoughby	22,334	2,521	$1,481,314	39.27%	11.29	4.60%	48.43
23	Rocky River	20,107	1,986	$484,131	37.06%	9.88	3.30%	48.06
24	Coshocton	11,223	818	$1,561,793	45.23%	7.29	5.50%	47.69
25	Westlake	32,552	3,987	$1,227,554	32.46%	12.25	3.50%	47.49
26	Brecksville	13,584	1,652	$1,559,279	33.35%	12.16	4.20%	47.49
27	Bedford Heights	10,699	842	$3,725,711	46.91%	7.87	9.90%	47.35
28	Highland Heights	8,315	1,088	$2,038,608	29.32%	13.08	3.20%	47.07
29	Zanesville	25,481	1,958	$2,270,849	46.22%	7.68	7.20%	47.00
30	Twinsburg	18,765	2,060	$2,167,792	30.58%	10.98	3.30%	46.62
31	Steubenville	18,525	1,322	$1,086,497	41.53%	7.14	4.10%	46.36
32	Streetsboro	16,043	952	$3,022,471	39.81%	5.93	4.60%	46.13
33	Dover	12,828	847	$1,497,519	43.45%	6.60	5.10%	45.94
34	Oxford	21,608	707	$735,446	49.22%	3.27	3.50%	45.44
35	Forestville	10,298	1,109	$894,995	30.30%	10.77	3.20%	45.20
36	Franklin	11,825	726	$2,862,231	43.94%	6.14	7.60%	45.07
37	Mayfield Heights	19,029	2,061	$2,637,858	26.25%	10.83	3.40%	45.02
38	St. Marys	8,232	954	$1,211,709	34.80%	11.59	5.50%	44.99
39	Landen	7,005	1,486	$305,814	20.12%	21.21	4.00%	44.92
40	Mentor	47,134	5,112	$1,175,734	34.00%	10.85	4.20%	44.76
41	Wooster	26,260	2,163	$1,613,607	35.83%	8.24	4.00%	44.49
42	Marietta	14,067	1,582	$1,388,175	33.57%	11.25	5.60%	44.29
43	Vandalia	15,206	1,055	$2,511,343	38.86%	6.94	6.50%	44.14
44	Geneva	6,175	569	$667,722	42.00%	9.21	6.60%	43.86
45	Napoleon	9,000	759	$1,678,353	39.66%	8.43	8.10%	43.80
46	Boardman	35,173	3,676	$661,086	33.87%	10.45	4.40%	43.74
47	Cambridge	10,622	940	$1,202,455	39.26%	8.85	6.30%	43.72
48	Washington Court House	14,139	912	$3,954,924	33.66%	6.45	6.30%	43.65
49	Belpre	6,440	635	$1,599,975	32.13%	9.86	4.50%	43.64
50	Granville	5,659	681	$380,727	30.40%	12.03	3.70%	43.62
51	Harrison	10,054	983	$1,176,724	36.01%	9.78	5.60%	43.51
52	Grandview Heights	6,695	897	$764,246	26.98%	13.40	2.70%	43.17
53	Howland Center	6,554	541	$445,575	36.97%	8.25	4.00%	43.13
54	Bellbrook	7,008	863	$648,528	32.68%	12.31	5.40%	43.12
55	Hudson	22,335	3,087	$954,637	23.32%	13.82	3.50%	43.09
56	Canal Fulton	5,480	589	$414,063	34.80%	10.75	4.90%	42.82
57	Jackson	6,363	764	$2,247,690	26.57%	12.01	5.00%	42.67
58	Mount Vernon	16,947	1,098	$1,982,706	39.80%	6.48	6.20%	42.52
59	Westerville	36,778	4,926	$1,093,418	23.57%	13.39	3.20%	42.50
60	Heath	10,351	727	$2,174,103	33.43%	7.02	4.60%	42.45
61	Mansfield	47,360	3,740	$1,444,200	38.93%	7.90	6.90%	42.41
62	London	9,892	600	$2,497,775	34.67%	6.07	4.90%	42.28
63	Huron	7,133	622	$716,291	36.17%	8.72	4.90%	42.28
64	Urbana	11,669	655	$1,754,258	44.27%	5.61	8.60%	42.28
65	Portsmouth	20,357	1,554	$964,723	36.87%	7.63	5.40%	42.23
66	Tiffin	17,896	1,455	$2,067,102	39.24%	8.13	8.30%	42.20
67	Columbiana	6,231	581	$686,379	29.09%	9.32	1.80%	42.17
68	Medina	26,617	2,738	$946,516	31.19%	10.29	4.20%	42.16
69	Brooklyn	11,080	809	$4,693,933	26.08%	7.30	6.50%	42.11
70	Bryan	8,536	734	$1,864,007	35.15%	8.60	6.60%	41.97
71	Niles	18,988	1,110	$1,661,323	38.47%	5.85	6.20%	41.83
72	Norwood	19,151	1,401	$1,747,717	35.40%	7.32	5.40%	41.69
73	Athens	24,201	1,254	$718,363	43.38%	5.18	6.40%	41.47
74	Bedford	12,994	1,055	$1,726,703	35.17%	8.12	6.30%	41.45
75	Reading	10,370	824	$1,374,579	35.80%	7.95	6.80%	41.43
76	Oberlin	8,380	579	$1,183,228	32.99%	6.91	4.20%	41.22
77	Troy	25,134	1,943	$3,111,596	27.90%	7.73	5.20%	41.16
78	Shelby	9,022	629	$961,380	32.43%	6.97	3.90%	41.10
79	Avon	21,440	1,409	$1,129,067	33.22%	6.57	4.40%	41.07
80	Madeira	8,749	1,134	$259,430	22.75%	12.96	3.10%	41.06
81	Kenton	8,019	535	$1,153,163	45.05%	6.67	9.00%	40.98
82	Logan	7,261	736	$794,662	31.79%	10.14	5.50%	40.96
83	Wapakoneta	9,861	811	$807,787	33.42%	8.22	4.20%	40.95
84	Canfield	7,478	1,043	$517,705	20.04%	13.95	4.20%	40.95
85	Warrensville Heights	13,469	1,155	$1,856,794	37.06%	8.58	7.30%	40.80
86	Macedonia	11,268	1,361	$950,126	28.29%	12.08	5.40%	40.27
87	Powell	11,746	1,597	$259,364	21.54%	13.60	2.50%	40.20
88	Norwalk	16,959	1,552	$826,928	32.86%	9.15	5.80%	40.19
89	Greenville	13,152	1,195	$1,408,417	32.47%	9.09	6.70%	40.09
90	Ashland	20,492	1,505	$1,037,918	39.00%	7.34	7.60%	40.05
91	Loveland	12,370	1,359	$598,428	23.91%	10.99	2.80%	40.03
92	Monroe	13,009	628	$3,204,390	33.12%	4.83	5.10%	39.97
93	Aurora	15,524	1,719	$1,289,682	24.08%	11.07	4.90%	39.73
94	Fairfield	42,623	4,097	$2,529,828	28.56%	9.61	7.00%	39.73
95	Centerville	23,965	2,181	$1,120,149	26.64%	9.10	4.20%	39.72
96	New Philadelphia	17,321	1,659	$890,212	31.16%	9.58	5.60%	39.60
97	Fremont	16,633	1,494	$1,546,292	35.14%	8.98	8.40%	39.58
98	Northwood	5,289	546	$2,421,749	31.14%	10.32	8.80%	39.54
99	Celina	10,388	869	$743,679	36.59%	8.37	7.40%	39.32
100	Strongsville	44,656	4,182	$1,087,691	26.02%	9.36	4.70%	38.97
101	Miamisburg	20,148	1,814	$1,059,055	27.34%	9.00	4.50%	38.90
102	Findlay	41,373	4,052	$2,019,100	27.12%	9.79	6.70%	38.88
103	Springboro	17,693	1,765	$1,149,070	25.84%	9.98	4.20%	38.87
104	Defiance	16,658	1,226	$1,503,079	35.24%	7.36	8.00%	38.68
105	Gahanna	33,570	3,478	$822,962	27.08%	10.36	4.20%	38.63
106	Salem	12,264	1,319	$999,237	30.48%	10.76	7.20%	38.52
107	North Royalton	30,355	3,038	$464,671	26.07%	10.01	4.50%	38.49
108	Norton	12,048	827	$1,043,642	31.08%	6.86	4.60%	38.39
109	Perrysburg	20,982	2,430	$636,442	22.59%	11.58	4.40%	38.36
110	Avon Lake	22,708	1,949	$2,306,740	19.55%	8.58	3.40%	38.33
111	Barberton	26,461	1,442	$2,632,941	34.19%	5.45	7.90%	38.15
112	Wilmington	12,500	908	$1,851,638	36.34%	7.26	9.20%	38.04
113	Cortland	7,064	796	$500,446	22.36%	11.27	4.20%	38.00
114	Van Wert	10,787	833	$2,182,101	31.81%	7.72	8.30%	37.91
115	Marysville	22,581	1,643	$1,049,322	29.03%	7.28	4.40%	37.84
116	Lancaster	38,948	2,939	$742,237	34.13%	7.55	6.90%	37.80
117	Wickliffe	12,719	1,163	$840,645	29.23%	9.14	6.40%	37.73
118	Richmond Heights	10,524	1,013	$662,990	31.00%	9.63	7.10%	37.72
119	Mason	30,905	2,647	$1,356,270	27.13%	8.56	4.90%	37.67
120	Green	25,742	2,171	$1,246,550	26.26%	8.43	5.00%	37.66
121	Brook Park	19,126	1,551	$1,693,716	29.34%	8.11	6.40%	37.64
122	Bellefontaine	13,162	989	$1,188,128	34.98%	7.51	7.80%	37.63
123	Lyndhurst	13,916	1,715	$253,016	20.58%	12.32	3.00%	37.57
124	Wadsworth	21,678	2,205	$605,681	23.76%	10.17	4.00%	37.46
125	Newark	47,708	3,035	$1,585,418	32.49%	6.36	6.80%	37.32
126	Sandusky	25,606	1,728	$1,080,594	33.97%	6.75	7.30%	37.15
127	Sylvania	18,929	2,168	$453,533	22.56%	11.45	4.90%	37.14
128	North Olmsted	32,504	2,802	$1,122,241	28.27%	8.62	5.90%	37.13
129	Springfield	60,423	3,267	$1,767,509	37.62%	5.41	8.70%	37.10
130	Eastlake	18,549	1,613	$1,292,109	26.16%	8.70	5.20%	37.10
131	Beavercreek	45,459	3,679	$855,806	22.45%	8.09	3.50%	37.09
132	Warren	41,199	2,863	$1,554,264	30.49%	6.95	6.80%	37.03
133	Fairview Park	16,704	1,516	$366,662	28.17%	9.08	5.70%	37.00
134	Upper Arlington	34,008	4,638	$255,743	14.88%	13.64	3.10%	36.88
135	Fostoria	13,209	752	$2,012,725	36.04%	5.69	9.50%	36.77
136	Beckett Ridge	8,728	747	$932,731	23.03%	8.56	4.30%	36.74
137	Amherst	12,057	993	$1,115,261	26.28%	8.24	5.80%	36.72
138	Northgate	7,109	594	$610,522	26.77%	8.36	4.80%	36.65
139	North Canton	17,433	1,541	$571,621	26.61%	8.84	5.20%	36.59
140	Canton	73,027	4,983	$2,681,704	32.55%	6.82	9.60%	36.54
141	Sidney	21,095	1,649	$2,362,255	27.23%	7.82	7.30%	36.51
142	Tallmadge	17,492	1,226	$827,945	25.12%	7.01	3.80%	36.44
143	Hubbard	7,817	796	$339,377	23.12%	10.18	4.60%	36.36
144	Grove City	36,261	3,000	$1,687,417	21.33%	8.27	3.70%	36.33
145	Ironton	10,989	877	$521,181	27.25%	7.98	5.00%	36.29
146	Broadview Heights	19,292	1,831	$776,458	21.90%	9.49	4.60%	36.27
147	Ashtabula	18,976	1,594	$884,152	32.62%	8.40	8.00%	36.25
148	Stow	34,750	3,189	$707,084	24.55%	9.18	4.70%	36.22
149	Lebanon	20,287	1,709	$1,212,610	30.37%	8.42	7.70%	36.11
150	Berea	19,072	1,561	$666,183	31.26%	8.18	7.10%	36.03
151	Cincinnati	297,150	26,491	$2,272,362	25.07%	8.92	8.30%	35.93
152	Wheelersburg	6,600	773	$389,922	25.74%	11.71	8.70%	35.29
153	Wauseon	6,803	671	$806,565	30.70%	9.86	9.20%	35.21
154	Brookville	6,162	562	$619,157	21.71%	9.12	4.70%	35.15
155	Conneaut	12,839	795	$611,187	32.33%	6.19	6.50%	35.13
156	Delphos	7,212	654	$1,083,612	22.94%	9.07	6.20%	35.01
157	Cuyahoga Falls	49,430	4,188	$699,020	23.30%	8.47	4.80%	34.98
158	Circleville	13,410	880	$815,968	30.11%	6.56	6.80%	34.72
159	Tipp City	9,731	880	$807,890	22.50%	9.04	5.30%	34.71
160	Delaware	35,599	2,704	$1,032,484	19.79%	7.60	3.10%	34.57
161	Forest Park	18,687	1,319	$2,174,637	27.29%	7.06	6.90%	34.55
162	Seven Hills	11,756	832	$584,953	23.80%	7.08	5.10%	34.52
163	Munroe Falls	5,027	699	$170,525	16.17%	13.90	5.50%	34.50
164	Kettering	56,202	4,771	$1,118,311	20.90%	8.49	5.00%	34.44
165	Marion	36,857	1,796	$1,228,928	29.90%	4.87	5.90%	34.40
166	Englewood	13,440	976	$461,934	28.18%	7.26	5.90%	34.40
167	New Franklin	14,239	1,135	$273,979	28.63%	7.97	6.90%	34.38
168	Eaton	8,362	717	$1,238,810	23.85%	8.57	6.30%	34.38
169	Brunswick	34,386	2,631	$546,094	25.31%	7.65	4.90%	34.37
170	Bowling Green	31,049	1,835	$1,241,165	34.44%	5.91	9.90%	34.25
171	Piqua	20,600	1,535	$948,074	30.16%	7.45	7.80%	34.12
172	Lima	38,570	2,263	$2,589,925	32.88%	5.87	11.30%	33.90
173	Elyria	54,290	3,597	$1,128,917	30.47%	6.63	7.90%	33.86
174	Portage Lakes	6,912	705	$343,843	25.53%	10.20	8.00%	33.53
175	White Oak	18,708	1,128	$292,631	25.35%	6.03	4.90%	33.32
176	University Heights	13,476	1,313	$314,352	19.35%	9.74	4.50%	33.20
177	Ravenna	11,653	1,266	$838,034	25.91%	10.86	9.30%	33.15
178	Chillicothe	21,885	1,784	$937,642	28.25%	8.15	9.60%	33.08
179	Massillon	32,130	2,089	$1,299,545	27.24%	6.50	7.90%	33.07
180	Alliance	22,256	1,595	$840,841	31.41%	7.17	9.20%	32.99
181	Columbus	800,594	56,954	$2,118,546	21.78%	7.11	6.70%	32.91
182	Austintown	29,605	2,104	$839,037	26.00%	7.11	7.10%	32.90
183	Fairborn	32,798	1,309	$1,283,630	29.56%	3.99	6.60%	32.86
184	Vermilion	10,775	994	$375,635	24.55%	9.23	6.60%	32.65
185	Oakwood	9,165	829	$184,881	10.62%	9.05	1.50%	32.62
186	Louisville	9,161	686	$471,592	16.18%	7.49	2.90%	32.54
187	Shaker Heights	28,200	3,291	$201,849	12.82%	11.67	4.20%	32.51
188	Hilliard	29,715	3,057	$671,412	18.22%	10.29	5.00%	32.51
189	Mount Healthy	6,060	509	$264,334	22.79%	8.40	6.00%	32.40
190	Whitehall	18,291	1,376	$924,159	31.03%	7.52	9.10%	32.32
191	Dry Run	7,109	762	$76,573	16.27%	10.72	4.00%	32.31
192	Painesville	19,616	1,280	$991,041	27.58%	6.53	7.30%	32.04
193	Lincoln Village	9,453	786	$670,453	23.79%	8.31	5.80%	32.00
194	North Ridgeville	30,103	2,350	$422,404	24.51%	7.81	6.30%	31.81
195	Dayton	143,446	9,071	$1,744,635	29.91%	6.32	10.30%	31.78
196	Cleveland	394,335	26,174	$1,859,640	30.50%	6.64	11.70%	31.09
197	Parma	81,055	5,695	$595,757	21.63%	7.03	6.00%	31.03
198	Xenia	25,835	1,931	$615,943	22.11%	7.47	6.30%	30.99
199	Middletown	48,664	3,570	$2,064,557	24.03%	7.34	9.50%	30.91
200	Finneytown	13,115	1,074	$261,265	22.91%	8.19	5.80%	30.87
201	Olmsted Falls	8,946	796	$208,068	14.82%	8.90	3.70%	30.80
202	Akron	199,038	14,301	$1,315,304	27.24%	7.19	9.80%	30.75
203	Struthers	10,630	778	$448,357	25.84%	7.32	7.90%	30.74
204	Clayton	13,207	1,148	$262,417	22.39%	8.69	6.30%	30.53
205	Reynoldsburg	35,652	3,086	$301,287	18.05%	8.66	5.00%	30.47
206	Youngstown	66,511	3,856	$1,237,514	28.48%	5.80	9.90%	30.42
207	Garfield Heights	28,650	1,879	$852,757	26.13%	6.56	8.50%	30.14
208	Riverside	25,181	1,190	$814,499	31.93%	4.73	9.60%	29.89
209	Hamilton	62,350	4,014	$911,812	24.96%	6.44	8.40%	29.82
210	Girard	9,874	861	$410,109	16.61%	8.72	6.10%	29.80
211	Lakewood	51,693	4,371	$428,229	19.35%	8.46	6.90%	29.72
212	Lorain	64,017	2,943	$1,117,459	29.05%	4.60	9.50%	29.67
213	Cleveland Heights	45,851	4,544	$218,388	17.63%	9.91	6.90%	29.49
214	Toledo	285,459	16,554	$1,137,032	28.84%	5.80	10.70%	29.45
215	Kent	31,301	1,414	$690,474	30.69%	4.52	9.10%	29.13
216	Pataskala	14,969	1,486	$676,030	12.52%	9.93	4.60%	28.91
217	Parma Heights	20,583	1,325	$195,792	17.28%	6.44	4.80%	28.90
218	Huber Heights	38,573	2,397	$665,030	20.28%	6.21	6.40%	28.60
219	Pickerington	18,678	2,061	$327,275	13.88%	11.03	5.90%	28.39
220	South Euclid	22,139	1,768	$242,175	21.61%	7.99	7.90%	28.04
221	Dent	10,398	561	$458,936	14.62%	5.40	4.00%	27.92
222	Sheffield Lake	9,103	613	$123,951	15.50%	6.73	4.10%	26.90
223	Willowick	14,123	711	$334,646	18.85%	5.03	6.40%	26.83
224	Euclid	48,564	2,779	$1,066,628	21.52%	5.72	9.30%	26.57
225	Maple Heights	22,996	1,498	$837,773	24.23%	6.51	10.50%	25.87
226	Trotwood	24,375	1,418	$376,471	15.59%	5.82	8.40%	22.16
227	Northbrook	10,226	525	$355,461	14.29%	5.13	9.00%	19.01
228	East Cleveland	17,812	887	$346,888	23.22%	4.98	14.20%	18.54

Methodology

We analyzed communities with a population over 5,000 and with 500 or more businesses, but we excluded places that lacked data. We calculated the score for each location with the following criteria:

Business climate (65% of the overall score).  This was based on three metrics from the U.S. Census Bureau’s American Community Survey:

Average revenue of businesses (20% of the score) — a higher average contributed to a higher overall score.
Percentage of businesses with paid employees (25% of the score) — a higher percentage contributed to a higher overall score.
Businesses per 100 people (20% of the score) — a higher number contributed to a higher overall score.

Local economic health (35% of the overall score). This was based on three metrics from the U.S. Census Bureau’s American Community Survey:

Median annual income (10% of the score) — a higher median contributed to a higher overall score.
Median monthly housing costs (10% of the score) — a higher median contributed to a higher overall score.
Unemployment rate (15% of the score) — a lower rate contributed to a higher overall score.

For more information on starting a small business, check out NerdWallet’s small business guide.

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Image of Cincinnati skyline via iStock.

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Best Places for Millennial Job Seekers in South Carolina

Although the Great Recession hit South Carolina harder than most places, recent economic indicators show the state is making some headway, if slowly. While the unemployment rate hasn’t budged much in the past year, millennials here are primed to find jobs.

Young adults, or millennials, in South Carolina are attracted to the laid-back Southern lifestyle, coastal towns, thriving cities and lower rents throughout the state.

Some of the most successful businesses in the Palmetto State are in sectors such as aerospace, alternative energy, automotive manufacturing, biotechnology and pharmaceuticals, distribution, food processing, forestry and wood products, plastics and chemicals as well as recreation, according to the state Department of Commerce. The Charleston metropolitan area, in particular, is seeing a rise in its millennial population as the tech industry moves in.

NerdWallet crunched the numbers for 66 cities and towns in South Carolina to determine the best places for millennial job seekers.

NerdWallet’s analysis

1. Are there jobs in the area? We looked at the unemployment rate in 2013 and the average worker payroll salary in 2012 using the most recent U.S. Census Bureau figures. We determined the average worker’s salary with the census bureau’s payroll by ZIP code. Lower unemployment rates and higher payroll salaries scored positively.
2. Can you afford to rent near work? Using census data, we measured a city’s median rent, including utilities, to determine if an area has reasonable rent costs. Lower costs resulted in a positive score for a city.
3. Do other millennials live there? We determined that millennials are workers ages 18-33, which is the definition used in a March 2014 Pew Research Center report. We used two of the census bureau’s brackets, ages 20-24 and 25-34, to create a millennial group for our analysis. From this, we found the percentage of millennials in a city’s 2013 population and the growth of millennial residents from 2010 to 2013. High percentages received positive scores.

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Key takeaways 

Millennials are moving to the Charleston area. Half of the places on our list are in the city or within 45 minutes of Charleston — from the city itself to North Charleston and small suburban cities. The city’s economy has been on the upswing and attracting the kind of tech startups that hire large numbers of millennials. Charleston’s waterfront, historic sites, museums, cultural centers, universities, restaurants, retail and, of course, beaches are also appealing.

They are jetsetters — or live near airports. South Carolina millennials can get away at a moment’s notice thanks to their proximity to the state’s airports. Five of the places on our list have airports within city limits including Aiken Municipal Airport, Berkeley County Airport, Charleston International Airport, Columbia Metropolitan Airport and Greenville-Spartanburg International Airport.

Best places for millennial job seekers in South Carolina

1. Cayce

This suburb of South Carolina’s capital, Columbia, sits at the top of our list with about 29% of the city’s population of 13,000 in the millennial age group. Cayce also boasts the highest salaries of any place on our list at a median nearing $50,000 a year. The city is on the Congaree River and close to the Columbia Metropolitan Airport and major roads, making it a great choice for commuters. Some of the biggest employers in the Columbia area include the state government, Palmetto Health hospital system, University of South Carolina and the energy company SCANA.

2. Fort Mill

Fort Mill, a suburb of Charlotte in York County, saw one of the highest increases in its millennial population from 2010 to 2013, with an increase of over 26%. Some of the largest employers in Fort Mill include Wells Fargo Home Mortgage, Ross Distribution, Schaeffler Group USA, Citi Financial, US Foods, Shutterfly, Domtar and Daimler Trucks North America. Nearby attractions include the Anne Springs Close Greenway, Carowinds amusement park and the annual South Carolina Strawberry Festival.

3. Greer

About 1 in 5 residents are millennials in Greer. This suburb of Greenville boasts one of the lowest median rents on the list at $747 a month. For commuters, it’s conveniently located along Interstates 85, 185 and 385. It also is home to the South Carolina Inland Port and lies next to the Greenville-Spartanburg International Airport. While Greer’s economy was once rooted in textiles, it is now home to North America’s only BMW manufacturing plant.

4. Ladson

Ladson, a census-designated place in both Berkeley and Charleston counties, had one of the higher surges in its millennial population with an increase of 25% from 2010 to 2013. While it has the highest median rent on our list at $1,034, residents also have higher median salaries at nearly $50,000 a year. Ladson is primarily a bedroom community, but an auto manufacturer — General Dynamics — is based there. Ladson is bordered by both North Charleston and Summerville, and runs parallel to U.S. Route 78 and I-26. The best-known attractions in Ladson are the Coastal Carolina Fair held annually and the Exchange Park events center.

5. Greenville

In Greenville, a city in upstate South Carolina, millennials make up 28% of the population. Residents here are fortunate to see some of the lowest rents on our list at $749 a month. The biggest employers in Greenville include Greenville Health System, School District of Greenville County, Bon Secours St. Francis Health System, Michelin North America, GE Power & Water, as well as the county, state and federal governments. The city, located in the foothills of the Blue Ridge Mountains, is famous for its unique Liberty Bridge and quaint, revitalized downtown. Several festivals are held every year including events dedicated to arts and crafts, comedy, comic books and science fiction, STEM activity, culinary arts and Shakespeare.

6. Hanahan

Hanahan, a city in Berkeley County, is just 13 miles from Charleston, and 22% of its population are millennials. Hanahan’s proximity to Charleston, including major roads, makes it an ideal location for commuters. In addition, the city is home to Naval Weapons Station Charleston and a medium-security military prison. Residents have access to the Cooper River and Charleston Harbor as well as the Goose Creek Reservoir, a popular place for fishing.

7. Charleston

Charleston is an urban magnet for millennials — 30% of the population’s 123,000 people are young adults. It’s the biggest city on our list with a range of opportunities for job seekers. The city expects 11,000 new jobs in the region over the next two years, and over 25,000 new jobs in the next five years, according to the Charleston Metro Chamber of Commerce. The main job boom is expected to be in fields including computers, software, science and engineering, sales and marketing and also in the medical industry. Charleston is above all a port city, and boasts the fastest-growing facility in the country, according to the chamber.

8. Aiken

In Aiken, over 17% of the population are millennials. It’s the county seat of Aiken County and it’s one of the two largest cities in the Central Savannah River Area. Aiken’s economy is steeped in energy and major employers include Savannah River Nuclear Solutions and the U.S. Department of Energy. Aiken is also home to the University of South Carolina at Aiken. The city features historic homes, equestrian activities, Aiken State Park, several arts organizations, the county farmers market and more.

9. Moncks Corner

Moncks Corner may be the smallest town on the list at just under 8,400 people, but millennials account for over 22% of the population. Millennial population growth was the highest on our list by far with a boom of nearly 53% from 2010 to 2013. The town is just 45 minutes from Charleston and is home to Berkeley County Airport. Residents find both the lowest rents and the lowest payrolls to match in Moncks Corner. Downtown includes progressive shops, restaurants, national retailers and small businesses as well as other attractions, including the Cypress Gardens.

10. North Charleston

North Charleston, just seven miles from Charleston, is the third-largest city in the state and the second biggest on our list with over 100,000 people. Nearly 29% of the population are millennials, who saw their population grow 11% from 2010 to 2013. The biggest employer by far is Joint Base Charleston, a military facility. The base shares its runway with Charleston International Airport, another area employer. And job seekers will also find opportunities at Boeing South Carolina, an assembly site for Boeing Commercial Airplanes, which is also a big employer in North Charleston.

Check out this interactive map of our top 10 cities for millennial job seekers in South Carolina. Click on a marker to see the city’s overall score.

 

 

Best places for millennial job seekers in South Carolina

Methodology

The overall score for each place was derived from the following sources:

1. Millennials as a percentage of the population and the growth in the millennial population from 2010 to 2013 are each 15% of the score.
2. The unemployment rate for each city is 20% of the score. The lower the unemployment rate, the higher the score.
3. Average annual worker salary is 30% of the overall score. Salary figures were calculated by averaging salaries by ZIP code, then dividing by the population.
4. Median gross rent is 20% of the score. The lower the rent, the higher the score.

All data are from the 2013 American Community Survey and the 2012 Business Patterns Survey conducted by the U.S. Census Bureau. NerdWallet analyzed 66 places in South Carolina. Places missing payroll data weren’t included.

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Charleston, South Carolina, image via iStock.

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How to Become a Freelancer

People have been earning money freelancing for several hundred years. During the Middle Ages, medieval soldiers would offer their combat services and weapons — including their lances — to the highest bidder. They were free to serve whatever kingdom needed them, so each knight with a weapon was literally called a “free lance” for hire.

If you freelance, your clients may not need you to be ready for battle, but you will need to be ready to run a business.

Being a freelancer is, in fact, one of the easiest ways to start a company. If you find clients to contract with you for a skill that you offer, then you’ve basically formed a business. A survey from the nonprofit Freelancers Union found that in the United States, about 53 million people do some sort of freelancing. Less than half of them work full-time for multiple clients, but they’re all entrepreneurs in the eyes of the law.

“The term ‘freelancer’ has no legal meaning, but it is generally understood to be an individual who runs a business providing services,” says Stephen Fishman, an attorney and the author of “Working for Yourself: Law & Taxes for Independent Contractors, Freelancers and Consultants.” “It’s a pretty straightforward type of business to start,” he says.

Here’s how to tell if you’d be a good candidate.

A freelancer business might work for you if:

• You crave more freedom and flexibility than you can get working for a single company. As a freelancer, you set your own hours and can choose which assignments to accept and reject. You also decide where you’ll work and what equipment you’ll use for your jobs.
• You don’t want to rely on a boss for a raise. As a freelancer, you can choose to work more hours to get more business, or market yourself to higher-paying clients to make increased income. You may be able to make more money per hour than an employee in the same position because companies won’t have to pay benefits when they hire you — you’re responsible for your own taxes and insurance.
• You enjoy working with different people. Chances are you’ll be working with new clients on a regular basis. In fact, one major of benefit of being a freelancer and having several clients is that even if you lose one gig, your income won’t drop to zero. A client’s layoffs or firings won’t affect you the same way they’d affect an employee.
• You like working from home. When you’re a freelancer, you choose where your office is located, and many times the cheapest and most practical place is a room in your home.
• You have home office expenses. Freelancers have more freedom than employees to deduct expenses from income, as long as those expenses are ordinary and necessary for business. Examples include cleaning costs for the home office, magazine subscriptions and the cost of creating a website. They could also include trips to restaurants and sports events with clients and potential clients.

A freelancer business might not work if:

• You require a steady paycheck from Day One. Like any business owner, as a freelancer you probably won’t have regular income when you start. You’ll do a lot of marketing and it might take time to build up a client base. Even when you do get work, you might have to chase down payments from some clients.
• You don’t have a savings cushion or other source of income to rely on while you get your business off the ground. You should probably keep your day job and save money (enough to cover expenses for a few months) before starting a company.
• You don’t want to spend money on equipment and permits. As a freelancer, you’ll need to pay for business licenses and certifications. You’ll also need to provide your own gear and buy your own insurance.
• You want to avoid self-employment tax. If you have a sole proprietorship, you’ll need to pay Medicare and Social Security tax on your income. This is in addition to the regular income tax you would owe. Of course, as an entrepreneur, you get to decide your business structure: sole proprietorship, partnership or corporation. If you decide to go with another choice, you might not owe as much self-employment tax, but you’d have more paperwork to manage.
• You prefer job security. While there’s less risk of being fired or laid off, as a freelancer your assignment may be among the first to end if a client is trying to cut costs. And as an independent contractor, you’re generally not entitled to worker’s compensation or unemployment benefits.
• You’re really an employee. Your job shouldn’t be confused with that of a company hire. A freelancer is a type of contractor. If your client’s providing you with the tools to do your work, telling you when to work and controlling how you work, then you may be an employee, not a freelance contractor. The client could face stiff penalties from the IRS if it’s determined that you’ve been misclassified.
• You’re an entrepreneur, but you don’t really freelance. If you plan to sell products and keep inventory, you probably wouldn’t refer to your company as a freelance business.

NerdWallet verdict

You should consider starting a business as a freelancer if you sell services to multiple clients. If you’re a writer, a graphic designer or an attorney, you’re a good candidate to start a freelance business. You can also freelance successfully as an independent sales representative, especially if you represent multiple clients and don’t have to manage extensive inventory.

Being a freelancer is not a great idea if you require a steady paycheck from your work and you don’t like marketing for new clients. In fact, if you work for just one customer who gives you the technology and tools you’ll use, and monitors the hours that you work, you should check with your contact person to make sure you’re not an employee who’s being misclassified.

If you plan to sell products, manage inventory or hire employees, you probably won’t refer to yourself as a freelancer. Owners of flower shops, franchise restaurants and day care center operators all have many customers, but “entrepreneur” is a better description for their type of work.

How to get started

• Decide the type of business structure you want for your freelancer small business: sole proprietorship, partnership or corporation. You should also decide if you want your business to be an LLC, which could reduce your liability if your company were ever to be sued. “Most freelancers are sole proprietors because that’s the cheapest and easiest way to go,” Fishman says. But you should learn about all the business types before making a decision.
• Contact your secretary of state and city or county clerk to get necessary licenses and permits. Many cities require them, even for home-based businesses.
• Apply for a free Employer Identification Number from the IRS, so you won’t have to give out your Social Security number to the clients you invoice.
• File for a fictitious business name (also called “Doing Business As” or DBA) if you choose not to form an LLC. This can be done with your local municipality.
• Open a business checking account and consider getting a credit card for your freelance business. This will help you keep business and personal finances separate. Make sure you keep good financial records.
• Create a business plan that includes a great marketing strategy, and follow it.

For more information about starting a business freelancing and getting small business loans, visit NerdWallet’s Small Business Guide.

Margarette Burnette is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @margarette and on Google+.

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General Partnerships: Easy to Form but Lots of Liability

Deciding how to legally structure your business is one of the first steps to forming a new company. Your business’s structure informs how you’ll pay taxes and to what extent you’ll be personally liable for company debts or lawsuits. When you’re just starting out, a general partnership can be a good business structure to consider because it’s easy and inexpensive to set up. However, general partnerships also saddle the partners with a lot of personal liability.

Overview of general partnerships

A general partnership is an unincorporated business owned and run equally by two or more people known as general partners. Each general partner shares responsibility for the business’s profits, losses and debts, and managing the business day to day.

If you’ve agreed to go into business with another person, you’re already running a general partnership. You don’t have to register with state agencies to officially form one, unlike limited liability partnerships (LLPs), limited liability companies (LLCs) and corporations.

A general partnership is easy to set up, but it’s also risky because as a general partner, you and the business are one and the same; if the business gets sued or owes money to creditors, it’s as if you get sued or owe creditors. In a general partnership, you’ll also face the challenge of splitting responsibilities, profits and losses with the other partners, unlike in a sole proprietorship, where you’d have full control of business decisions and full responsibility for your business’s financials.

Even if you go into business with a family member or your best friend, it’s smart to create a partnership agreement, a legal document that spells out each partner’s’ rights and responsibilities in the business. Creating this agreement at the beginning of your partnership will help you and your partners think through tough questions like “How will we split profits and losses?” and “What happens if one partner leaves the business?” Putting answers to these questions in writing can help you prevent future conflicts, or at least provide a framework to help you and your partners settle disagreements when they arise.

If you want to go into business with a partner, starting as a general partnership is a good strategy. It’s easy and inexpensive to form, which will save you time and money while you focus on other aspects of starting your business, such as writing a business plan, acquiring funding and finding customers. However, it will likely make sense for you to consider forming an LLC or corporation later on to decrease your personal liability.

Advantages of general partnerships

• They’re easy and inexpensive to form. You don’t have to file paperwork with your state to start a general partnership; it’s automatically in place as soon as you and your partner go into business.

• It’s a straightforward process to convert to another business structure. Since general partnerships don’t require much paperwork, it’s easy to change one to another business structure if you so choose. For example, say your business starts as a general partnership, but two years in, you decide to form an LLC to decrease your personal risk. The conversion process differs by state, but generally it involves dissolving the general partnership and filing paperwork to form an LLC, or simply filing conversion paperwork.

Disadvantages of general partnerships

• You and your partners carry a large amount of personal liability. You and the other general partners are personally liable for all of the business’s debts and lawsuits, and the actions of the other partners. If your business doesn’t pay your supplier or lender, you and your partners are responsible for those debts, and creditors can go after your personal assets, including your home or car.

• Shared ownership can get complicated. A partnership is like a marriage; all partners have equal ownership and decision-making responsibilities, which can become difficult if you and your partners disagree. Experts recommend creating a partnership agreement to formally outline how to handle responsibilities and conflicts within the business.

NerdWallet verdict

You should consider structuring your business as a partnership if you’re a new business and want to test your concept before putting time and money into incorporating. Once you’re committed to the business, give serious thought to converting the partnership to an LLC, LLP or a corporation to lessen your personal risk for the business’s debts and losses.

You shouldn’t form a partnership if your business inherently deals with issues of liability, such as in a medical practice or a roofing company. If your business gets sued, you and the other general partners are personally responsible for paying any damages, and creditors can go after your homes, cars and other personal assets.

How to get started

1. Name your business. The name of your partnership is automatically the surnames of all partners. For example, if your name is Sue Johnson and you and Bob Green open a flower shop together, your business is legally called “Johnson & Green.” To do business under a different type of name, you have to register a Doing Business As (DBA) name to claim your business’s fictitious or assumed name. To extend the previous example, you and Bob would have to register with your state government to be able to go into business using the name “Flowers-R-Us.”
2. Get the proper licenses and permits for your business. Depending on your state, locality and industry, you need certain licenses and permits to legally operate. Use the SBA Business Licenses and Permits search tool to find links to the relevant paperwork you’ll need.
3. Create a written partnership agreement between all partners. A General Partnership agreement isn’t legally required, but it’s highly recommended as a way to document the terms of your partnership and the expectations of all its general partners. Your general partnership agreement should outline how you and your partners will share responsibilities, split profits and losses, solve disagreements, change ownership and dissolve the partnership.

File income taxes as a general partnership

Your partnership itself doesn’t pay income taxes at the business level. Instead, the taxes “pass through” the partnership to you and the other general partners. Your partnership still has to file an annual information return (Form 1065) to report its income, deductions, gains and losses to the IRS.

Your partnership also must file a Schedule K-1 for each of the general partners to report how much of the business’s income each partner is responsible for. You and your partners need to report that income on your individual tax returns.

Top states for general partnerships

In general, Delaware and Nevada are considered to be the best states for businesses because their state laws offer tax advantages. However, since general partnerships don’t need to register with a state to form, state doesn’t matter as much as it does for an LLC or corporation.

Next steps

If a general partnership makes sense for your business, work with an attorney to create a partnership agreement between you and your partners, or create your own agreement using an online template.

If you’re still unsure about how to structure your business, read about your other options, including a sole proprietorship, limited liability partnership, limited liability company and a corporation. It’s also a good idea to talk to an attorney, accountant or a financial advisor to double check that the structure you choose is the best option for your business.

For more information about how to start your business, visit NerdWallet’s Small Business Guide.

Teddy Nykiel is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @teddynykiel and on Google+.

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Advantages and Disadvantages of Sole Proprietorships

A sole proprietorship is by far the most popular business structure in the United States. More than 70% of U.S. companies can be classified this way, according to the Small Business Administration. They include restaurants, online Etsy shops and even freelance consultants.

One reason this business type is so common is because it’s practically the default for entrepreneurs. If you’re putting time and effort toward an activity for profit, you have a business. And if you haven’t set up a specific structure, such as an LLC or corporation, and you’re not in partnership with someone else, then you have a sole proprietorship. In short, the definition of a sole proprietorship is an unincorporated business owned by one person who pays personal income taxes on its profits.

Running your company as a sole proprietor has many advantages, but there are some drawbacks as well.

Advantages of sole proprietorships

This business type is great for you if you don’t have the resources to do a lot of paperwork. With a sole proprietorship, you don’t have to spend time writing bylaws, issuing stock or making complicated financial decisions, so you can spend more time focusing on your company. When it comes to taxes, income and expenses are simply reported on your personal return, using the form Schedule C.

A sole proprietorship is defined as a pass-through entity because there is no separate tax on business profits. Instead, earnings are “passed through” to you to file on your personal taxes. Other business structures can serve as pass-through entities, but they’re usually more complex to set up and maintain.

Another benefit of sole proprietorships is that you can deduct company expenses on your personal return, even if those expenses are higher than business income.

“Your business might have losses in the first few years until it gets established. You’d generally want to put those losses on an individual return so you could offset them against other income,” says Mark Luscombe, principal analyst at Wolters Kluwer tax and accounting company in Riverwoods, Illinois.

Another benefit: When customers and clients pay you, income taxes don’t have to be withheld. You get more money upfront, which can help with business cash flow. However, you do have to pay estimated quarterly income taxes to the IRS or risk penalties.

Disadvantages of sole proprietorships

If you could easily face lawsuits in your line of work, think twice about a sole proprietorship. Since your business assets are not separate from your personal assets, liability risk is a major drawback. If a disgruntled person sues your company, all of your property could be exposed, including your home and car.

Say an employee of yours causes a traffic accident while working and hurts someone. The injured party could potentially sue you for damages. If you or an employee sends out a tweet that defames someone, you may be sued for libel.

You can limit this risk, however, by buying adequate liability insurance. In fact, some of your customers may require you to carry insurance before they agree to do business with your company.

Other business structures, such as LLCs or corporations, keep your business assets separate from your personal concerns. But you could still face lawsuits regardless of business type.

In addition to liability risk, another drawback of sole proprietorships is that they tend to face tighter scrutiny at tax time.

“For many sole proprietorships where only one person is involved, there’s no one else double-checking what they’re doing in terms of claiming expenses,” Luscombe says.

This could lead to fraud.

“If you look at the audit statistics, the IRS has one of their highest rates for sole proprietorships,” he says.

More than 2% of sole proprietor business returns reporting income between $25,000 and $100,000 were audited in 2014, according to the IRS. That’s compared with an audit rate of only 0.4% for all S corporations and 0.4% for partnerships.

Another downside to sole proprietorships is that when profits increase, you have to pay higher Social Security and Medicare taxes. The current rate for these payments is 15.3% of annual income that exceeds $400.

NerdWallet verdict

Being a sole proprietor is a good idea if you have adequate insurance and you estimate that the cost of paying your self-employment taxes will be less than the cost of creating a more complex business structure (in both time and money). Examples of good sole proprietor entrepreneurs are web designers, IT consultants and hairstylists.

As your company grows, and if you consider hiring employees, the Nerds suggest you look at other business structures for tax and liability advantages. If you’re running, say, an auto shop, a clothing store or a gym with employees, you should consider filing as a corporation or an LLC.

How to get started

• You might have already begun. If you’re in business for yourself, you haven’t formed any other type of entity and you don’t have a partner, then you’re already a sole proprietorship.
• Get a business license and permits. Contact your city or county clerk for more information on local requirements, and the office of your secretary of state for other licensing rules.
• Apply for a free Employer Identification Number from the IRS. Many clients will require a tax number on invoices. It’s not a good idea to share your Social Security information on these documents, because of the risk of identity theft. Use an EIN instead.
• File for a fictitious business name (also called “Doing Business As” or DBA) with your local municipality if you don’t have an LLC. When you have a DBA, clients can write checks to the name of your company instead of to you, and that makes a better impression. You’d probably get more business as “John Smith Landscaping” than you would as plain old “John Smith”. You’ll have to search local records to make sure your desired name isn’t being used by someone else, and you should also make sure you don’t infringe on another company’s trademark. (You can search for active trademarks at the United States Patent and Trademark Office.)
• Open a business checking account to go alongside your personal account. Even though you will report business and personal income and expenses together, you should keep the money separate, so in the event of an audit you can prove your deductions are for business purposes.
• If you’re married and go into business with your spouse, determine how both of you will file taxes. The IRS would ordinarily view your company as a partnership, and filing requirements would be different. Spouses living in one of the nine community property states can treat their business as a sole proprietorship, and those in the other states can file as a qualified joint venture, which is similar. Each individual would then report his or her share of business income and expense on a separate Schedule C.

For more information about how to start a small business, visit NerdWallet’s Small Business Guide.

Margarette Burnette is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @margarette and on Google+.

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Texas Hill Country Wineries Find Success Amid Growing Pains

California and Oregon may be the first states you think of when it comes to U.S.-produced wine, but Texas is hoping to earn its place on that list. The largest wine-growing region in Texas, the Hill Country, is home to more than 70 wineries.

Keith Wallace, former winemaker, wine consultant and founder of the Wine School of Philadelphia, began noticing Texas Hill Country wines 10 to 15 years ago. “Even a decade ago, it was clear that parts of Texas were really doing something interesting,” Wallace recalls. “They were looking at grapes that weren’t really planted anywhere else and were being successful with grapes that nobody else was growing successfully.”

California still dominates the industry, producing 90% of the country’s wine, according to Golden State advocacy group Wine Institute. Texas has fought its way to being the nation’s fifth largest wine producer, though Wallace says about 90% stays in the state. Experts say wineries in the Texas Hill Country aren’t yet able to grow enough grapes to produce the volume needed for national distribution, and Texas has such a large demand for wine, almost all made is easily sold in-state. And the local demand continues to increase: The Texas wine industry is now so large, it contributed $1.88 billion to the state economy in 2013, says Debbie Reynolds, executive director of the Texas Wine & Grape Growers Association. She projects it will exceed $2 billion by 2016.

Entrepreneurs are jumping into the booming Texas wine industry, and although it’s possible to make money, it’s a costly and complicated endeavor. “The wine business is pretty well everything — it’s an agricultural operation, it’s a production operation with winemaking, it’s hospitality, it’s retail,” says Julie Kuhlken, co-owner of Pedernales Cellars in Stonewall, Texas. “There are a lot of moving parts, and a lot of experimentation is needed to know what you should be growing and what’s going to work.”

Types of wine grown

Winegrowers in the Hill Country have found huge success with tempranillo, which Wallace says was rarely grown outside of its native Spain, but is exceptional in Texas. Hill Country wineries are also succeeding with grenache, syrah and mourvedre — Rhone varietals grown in the Mediterranean area of France that thrive in Texas heat, he says.

Viognier has also been a hit, and local winemakers are experimenting with other French and Spanish varietals, Kuhlken says. Although cabernet is grown in Texas, it’s hard to make well every year due to the climate, she adds.

Benefits of opening a Hill Country winery

Experimentation and innovation

Kuhlken says Texas winemakers originally thought they’d have to plant the same grapes as California since that’s what consumers are used to, but they realized the same grapes wouldn’t be successful there.

This led to an environment of experimentation, she says. Kuhlken points out that this is unlike California, which is highly regulated and stuck with certain grapes that have proven profitable, even if the climate and resulting wine aren’t ideal.

Jeff Ogle is the general manager of Duchman Family Winery, a 10-year-old operation in Driftwood, Texas. He says since the state is still nailing down varietal selection, these experiments are expensive gambles as new vines typically take years to produce viable grapes, and not everything works out. However, Ogle believes it’s gratifying to learn more each year about how to successfully grow grapes in Texas and consistently improve with each harvest.

A tourist hub

One of the Hill Country’s main wine trails follows Highway 290. It starts just west of Austin and ends in Fredericksburg, which has long been popular for beautiful scenery and attractions like the LBJ Ranch. Reynolds says as Fredericksburg has grown as a travel destination, it was a natural progression for wineries to arrive. With their opening, an influx of tourists followed. Ogle says the proximity to Austin, the state capital, also provides exposure to a large nearby population. The area is now so highly trafficked, some wineries from other areas have opened satellite tasting rooms along 290.

The wine industry in the Hill Country can attribute much of its success to being oriented toward selling directly to consumers rather than going into distribution, Kuhlken observes. She says this is partially due to tasting rooms along wine trails and wine clubs.

Old World style

The California wine industry focuses on creating wines that are the same year to year, Kuhlken says. “It’s a success, but it’s also not traditional to winemaking to try to make them taste exactly the same from year to year,” she says. Kuhlken believes if Texas wines continue to become more successful, vintages will matter in a way they don’t in California. “Texas is Old World in this way; you could never make them taste the same year to year since the growing conditions are so different each year.”

Downsides of opening a Hill Country winery

Lack of infrastructure

As a newer wine region, the Texas Hill Country doesn’t have the infrastructure you’d find somewhere like in Napa, California, Kulhken says. There are not yet vineyard management companies that can help someone plant and manage a small vineyard since there isn’t scale to justify it.

She says lack of warehousing space is another infrastructure challenge. Having air-conditioned storage is vital, and many wineries don’t find out until too late that they don’t have enough room for their cases. She opened a warehousing facility a year ago, and other Hill Country wineries rent space from her when they run out of room.

Unpredictable weather

“I would say our biggest issue in Texas is the weather, which isn’t consistent or predictable, so we struggle with predicting how much we’ll be bringing in each year and managing those inventories,” Ogle explains. He says two of the last four years were tough weather ones with very low yields, and this irregularity requires flexibility with inventory handling.

Kuhlken points out that the Texas Hill Country has additional concerns some wine regions don’t, such as light spring frosts, occasional hailstorms and grape-eating animals (deer fences are required).

Massive time and financial investment

When someone asks Ogle about opening a winery, he tries to dissuade them because of the high barriers to entry, including start-up expenses that can run into the millions. “It’s such a young industry that a lot of those expenditures in terms of equipment and acreage haven’t been fully capitalized yet, so the costs are still very high,” he says.

Reynolds says the investment in the equipment alone is substantial, leading some neighboring wineries to combine efforts by sharing storage or producing the wine at someone else’s winery (she advises choosing neighbors strategically). Additionally, winemaking is a complicated craft usually requiring years of hands-on experience to succeed. Unless you are already seasoned, you must also spend money on staffers who know how to grow grapes, make wine and operate your business.

This isn’t a business you can enter overnight, Reynolds says — it takes major planning, including obtaining federal approval and numerous state permits. She recommends finding an attorney knowledgeable in liquor law before making the leap. If you plan to make your own wine and sell your own brand, know that it will likely take years to grow, age and bottle wine before you have anything to sell, she says. Some new wineries open a tasting room and sell other local wines until they have their own.

Resources for starting a winery

The Texas Wine & Grape Growers Association advocates for members of the industry and offers educational opportunities for those interested in the business. The Texas Department of Agriculture also has an online guide for starting a winery in the state. The Texas Winegrape Network is another treasure trove of information on grape growing and winemaking in the Lone Star State.

Although Texas Hill Country winemaking is an expensive and challenging industry to break in to, its spirit of innovation and growth holds promise for a bright future.

Emily Starbuck Crone is a staff writer covering personal finance for NerdWallet. Follow her on Twitter @emstarbuck and on Google+.

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For more information about how to start and run a business, visit NerdWallet’s Small Business Guide. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

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