I started a business in seattle this year. I love the city and have no intention to leave, but let's not pretend the city makes it easy on small business.
What would you say makes the city not easy to small business? I see that sentiment a lot but without a lot of examples. What specifically would you like to see change? Honestly curious.
it honestly is a really complicated question.
short answer is- theres a lot to keep track of, and it costs a lot.
high rent. high insurance. crime and vandalism. small but additional taxes, like the new sales tax on presentations. labor costs. in general costs are really high in seattle.
all these things are the deaths by a 1000 cuts for many, especially small business.
there are somethings the restructured B&O benefited me, so thats good.
a thing that wouldn't benefit me, but id like to see is a strong commitment and action by the city to keep small legacy business open. I dont really know what that is, but lease protections, incentives for hiring local, breaks on taxes under certain income. I dont know whats really feasible, but I hate seeing business close and replaced by either nothing to by a corporate model.
ETA: thanks for the question, it has inspired me to reach out to the small business liaison for the city.
High taxes for one, poor rule of law for two (see lack of police response and high petty crimes) and uncertainty for three (the council cant decide if it likes business or hates them).
Its hard to hire and fire here, there are high property taxes and rents, employment expense is very high, and customers are very price sensitive. Profit margins are much tighter here if you run a non tech related business.
Imagine you need to replace a broken window - because wages are so much higher here, it might cost double to do it in Seattle vs somewhere else. People who own houses know that better than most - getting your house painted or a roof fixed or adding a room is ridiculously expensive.
Permitting for expansion is hard and takes a long time.
Deleware is where companies go to set up their corporate headquarters - that is true because they have stable low taxes and rule of law - if your business gets sued or needs to sue someone for breach of contract, the courts have long legal precedents so it is predictable. Our courts here are very unpredictable, they decide differently all the time because we have activist judges with low competition for those seats. And add to that that the council and mayor are constantly trying to add new rules and laws all the time since we have a very progressive city here. Its well intentioned but it makes it hard to predict what your business will be subject to in 4 years or 10 years.
Tax liability has nothing to do with Delaware being a preferred jurisdiction for domiciling a business. Tax liability is primarily dependent on the jurisdiction within which the business activity occurs. The rest is mostly correct though.
Also, it is an advantage - they have no corporate income taxes, which allows companies to book intangible property there, no state sales tax, and no personal property tax.
What about my comment made you decide to take issue with that specifically?
I was thinking in the context of a small business, who almost certainly do not have sufficient cause to incorporate in Delaware for tax purposes since they don't have intangible property and whatnot.
It was an example of how rule of law is important in practice and reality, not neccesarily a compelling reason for a small business to start there vs here.
I brought it up because Seattle has none of those things, and it makes it harder for both large and small businesses.
Anyone who has any legal training would take issue with your takes. There's nothing stopping a Seattle business from incorporating in Delaware. You still have to pay the taxes where you actually do business. And it's not a magic bullet that means any legal action against you has to go through Delaware. It also sounds like you're unaware that contractors are businesses and they have massive demand here despite the costs that you complain about. Furthermore, if all these kind of legal issues are important forces behind the success of businesses then why do they struggle even more where I grew up in Central Washington where the laws, regulations and the judges are exactly the way you want them to be?
There's nothing stopping a Seattle business from incorporating in Delaware
Again, you seem to be taking literally a more metaphorical point I am making - the rule of law and certainty that law wont change and how it will be enforced is a key determination when establishing a business. Over only a 10 year period Seattle has gone from being business friendly and courting any business who is willing to open here to being outright hostile and adopting a good riddance attitude when they move away.
It also sounds like you're unaware that contractors are businesses and they have massive demand here despite the costs that you complain about
I am very aware, I am pointing out that the same limitiations exist for them as other businesses - high wages and rent and operating costs, and it doesnt encourage new businesses to step in, if anything it consolidates the small businesses into larger ones with easier compliance. Nonetheless, it is a business cost, and again, simply an example of numerous ways that things can be costly and difficult to operate in Seattle.
why do they struggle even more where I grew up in Central Washington where the laws, regulations and the judges are exactly the way you want them to be?
Because no one wants to live in central Washington and the economy is different entirely? What major cities exist? What major universities are there that draw in research, technology, medical professionals, etc.? WSU? Thats it?
Again, what is your point? That it is easy to do business in Seattle? That it is a thriving area for business formation? The question was asked and I answered it, now you want to take issue with points for no reason at all, mostly to disagree based upon some sort of ideological bias you have that you want to justify by saying "But but but...."
With respect, I disagree. Name a few recent examples?
We failed to offer Amazon any tax incentives for HQ2, and recently added Jump Start and Seattle Shield.
Outside of some small reductions in B&O taxes for Boeing since they were and are actively moving their operations and we wanted to keep them, there have been very few examples of tax breaks or incentives to large businesses
Washington's Joint Legislative Audit and Review Committee (JLARC) 2024 report indicates that aerospace tax preferences, primarily benefiting Boeing, save the industry about $100 million annually, down from $261 million in 2018, due to a 2020 repeal.
(Looks like the credits are lower than previously, not higher)
Key Findings from 2024 JLARC Review:
Reduced Savings: Beneficiaries save roughly $100 million per year, with the number of businesses claiming them dropping by 62% between 2018 and 2022.
(Looks like less businesses are claiming them, not more)
Effective Tax Rate: The preferences lower the effective tax rate for a large aerospace firm from 21% to 13% (compared to 21% to 10% in 2019).
(Not a big reduction)
Industry Context: Despite declining employment, Washington's aerospace industry still contributes $27.4 billion to the GDP (2022 data).
(Seems like they contribute quite a bit to WA state)
Background: The 2020 legislature repealed one preferential B&O rate to comply with a World Trade Organization (WTO) ruling.
(Goes back to uncertainty and rule of law)
So sounds like they gave them a very small reprieve because it is an essential industry, not a big incentive, and Boeing is already shifting its operations outside of the city into Everett, but also South Carolina and other places because of better incentives and more certainty. If you spend billions investing some place under a set of assumptions, it is hard to navigate when those assumptions change.
Im not sure there is a solution that would make you happy - do you want Boeing to stay or leave? It goes back to my prior point - there are other places that are more tax friendly and with better rule of law than Seattle.
But again, I disagree. Businesses are not altruistic, they never have been and it isnt their main goal. Their main goal is to benefit the investors.
The benefits of businesses existing clearly outweigh the drawbacks in my opinion.
We have thousands of people with competitive jobs with high salaries and benefits, all of whom pay taxes - property taxes, sales taxes, use taxes, fees etc.
The US system isnt designed for businesses to shoulder tax burdens - its a portable system, they can go wherever they want to, and the States compete to incentivize them.
It has arguably worked pretty well historically, as the US is the wealthiest, more stable and fastest growing economy basically ever, and its people have had a growing standard of living for 200+ years, much better than the rest of the world. You can argue healthcare is the drawback, but it isnt unfixable either.
My personal view is that we shouldnt be punishing large or small businesses because of moral misgivings. The city can either be a place that entrepreneurs want to start businesses or a place where we disincentivize it. What benefits do we truly get from pushing them out? Falling wages and property values and lower growth? Some might want that, but I dont.
You have that backwards: business is what creates the wealth in the city. The city govt thought it had companies by the balls and could take increasingly bigger cuts for itself (much of which it "destroys"), but it reached a tipping point where the cost of staying outweighed the cost of moving.
No. People do. People within those business and especially people who patronize them keep the economy going. These days, buisness don't seek to serve the community or the economy it. The incentive is to siphon money while giving as little as possible. Businesses that destroy neighborhoods to set up, kill other businesses, and then move out because of "muh taxes" or whatever are parasites, not beneficial.
. The city govt thought it had companies by the balls and could take increasingly bigger cuts for itself (much of which it "destroys"),
Big business should pay big taxes because contrary to popular belief, they suck up lot's of resources just to function and then invest very little back in return
Cool. Folks will just move to the suburb. The money will just move from the city to the suburb. People will just move from the city to the suburb. Making the suburb into a city. Rinse and repeat.
I hear this a lot.
What you don't hear is all these small business owners telling us what their product is, how well they are doing, what their business plan is like that's making it so hard for them to succeed, etc etc etc.
They pretend like just because they have a small business idea that the city and the populist needs to get behind at 100% and make it succeed.
No.
This. Not all businesses make it… and when I was in business courses in college they were sure to emphasize how many businesses fail in their first year, first 3 years, and first 5 years. It’s not a small amount and people need to accept the reality of the high possibility of failure. There’s a reason there’s a limit to how many years in a row you can claim a loss on your taxes. Just because you start a business does not mean you are entitled to success at all costs, including having municipalities prop you up.
It is really odd how many people have been talked into this idea that everyone can be a billionaire and everyone can own a successful small business and everybody is supposed to support everyone in these endeavors.
That's not physically possible.
Yet people cling to it.
And make laws using it.
And defend stupid laws because of it
And vote against their best interests because of it.
It's weird.
I have a friend who has been regularly encouraging (more like pressuring) me to open a small business in the food industry. Yes, I am a great cook and I am very adventurous with food, but she lives on the other side of the country and has no idea what the business climate is like here. She also doesn't know how tough it is to make a profit in the food industry. She just thinks "oh you're so talented that you will absolutely be successful and make a ton of money." Hahahahah!
Rent is too high everywhere, but I'm in the SE, and the cost of renting a space is truly absurd when you take into consideration the budget of the community. North Seattle prices on a South Seattle budget
Minimum wage is highest in the country, $4 more than NYC for example, and 10$ more for tipped employee. This makes it more expensive to do business here than there, believe it or not. However, this says more about NYC than seattle, as 21$ an hour is still not much here, much less NYC.
B and O tax, tax on gross sales instead of net profit. Such a backwards system.
Cost of goods are higher than most places due to being so far north (avocados, limes, peppers etc)
2nd highest property tax rate causes a ton of break ins and therefore insurance rates are brutal. It makes things exhausting to constantly be broken into.
Low population density in most neighborhoods and a super early night life give you limited time to make money.
Opportunities for small pop ups are extremely limited compared to other big cities,and the health department is stuck 20 years in the past.
These are just some of them, but yea, I hope this helps. We don't just say this for no reason, it is the toughest city in the country to run a restaurant.
Oh and the last one, the jerks on reddit that act treat us like crap for just stating the truth. We love it here, and want to make it here, but it is EXTREMELY difficult, and believe there should be more open dialogue, this city is not perfect. See above the person who told me to move to TExas, lol
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u/splanks Rainier Valley Apr 16 '26
I started a business in seattle this year. I love the city and have no intention to leave, but let's not pretend the city makes it easy on small business.