Isle of Wight County: A good place for small business owners
Published 7:21 pm Friday, September 2, 2022
Isle of Wight County is one of the localities in Virginia with the highest percentage of tax returns claiming small business income, according to an analysis done by SmartAsset.
As noted on its website, SmartAsset is an online destination for consumer-focused financial information and advice that powers SmartAdvisor, a national marketplace connecting consumers to financial advisers.
The name of SmartAsset’s analysis is “Best Places for Small Business Owners,” and Isle of Wight ranked No. 3 in the state within the category of Small Business Returns.
SmartAsset Public Relations Manager Steve Sabato explained that the Small Business Returns category measured the percentage of tax returns in the county claiming small business income.
The analysis puts Isle of Wight’s small business returns at 30.48%, behind only Grayson County with 32.28% at No. 2 and Richmond County with 36.11% at No. 1, for Virginia.
“We are very pleased to see this data,” said Isle of Wight County Economic Development Director Christopher “Chris” A. Morello. “It indicates, on the whole, that small businesses are reporting strong earnings in Isle of Wight. Entrepreneurs living and working in the county and in our two towns, they know this is a wonderful place to live, and it stands to reason that they want to do both here.”
SmartAsset shared the methodology for its analysis with its results, noting that to determine the best places for small business owners, “our study measured three factors: the proportion of people in a county with small business income, the reported business income and the amount of tax a potential resident must pay on their 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, the methodology stated. Next, the organization compared the total amount of small business income to the overall amount of income reported in each region.
The methodology noted that 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. 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, SmartAsset used the national median household income and then applied relevant deductions and exemptions before calculating federal, state and local income taxes for each location.
“These three factors were then indexed and equally weighted to yield our Small Business Index,” SmartAsset officials stated in the methodology. “Places with the highest Small Business Index are the places which ranked the highest in the study.”
The SmartAsset analysis indicated that Isle of Wight’s Small Business Index was ranked No. 15 in Virginia.
Additionally, the study not only indicated that the county was ranked No. 3 in the state in Small Business Returns, but Isle of Wight also ranked No. 269 in the nation within the SBR category.
Morello indicated that he partially interpreted Isle of Wight’s No. 3 state SBR ranking as “Welcome to the Gig Economy: Isle of Wight Edition.”
“I think when you view this kind of high ranking with strong gains that we’ve had in business license issuances, they make sense when viewed together,” he said. “What’s really important from what we’re seeing in the business license data is the subset of home-base business growth. It’s really important for our economy, and it’s continuing at a very strong pace.”
He noted that Isle of Wight has been tracking trends in business license issuances for a while.
“(In) our annual report, for example, we list the total number of new business licenses in the county,” he said. “We show that up against the prior year, and we also report business licenses in the county and in the town of Windsor and in the town of Smithfield on a monthly basis with our newsletter, so we have been watching these trends for some years.”
But what the county has seen in the last two years has been especially positive, Morello noted.
“We saw a 15% increase in business license issuances from ’20 to ’21,” he said. “That’s great, but year-to-date through June, we’re seeing, currently, a 29% increase. So June of ’21 versus June of ’22, we’ve seen a 29% increase, and so if that trend continues, we’ll have an even stronger 2022 than 2021.”
He stated that Isle of Wight County has a lot of growth going on with its residential units and apartments and condominiums and other buildings, which includes out-of-town contractors who are issued business licenses to do their work.
“We haven’t teased out exactly what the statistics are, but some portion of that is temporary and out-of-town contractors,” he said. “I think if we tease them out, we’d still see very strong proportional year-over-year and year-to-date increases in business license issuances.”
Morello also underscored the importance of home-base operations in Isle of Wight’s small business landscape.
“We don’t have perfect information about this, we’re trying to gain a greater understanding working with our towns and the county to derive this, but we know that the number of home-base operations far outnumbers the other, more traditional business locations in the county,” he said. “I think there’s a connection between that data and the SmartAsset analysis.”
As for what Isle of Wight, Windsor and Smithfield have done to make the county so appealing and beneficial for small business owners, Morello cited the governments’ willingness to help in times of significant need.
“The county and the towns have stepped up to help small businesses with grant programs through the pandemic,” he said. “It seems like we have a very strong entrepreneurial base here and a lot of entrepreneurial spirit from what we learned when we talked to the businesses directly. It’s great.”
To see SmartAsset’s original study report for more information about the rankings, click here.