Small businesses in Chicago face operational challenges that include high taxes, a slow economy, and budgetary problems in the state capital. According to an Illinois business law attorney, Chicago can be a profitable place to start a small business if entrepreneurs are willing to navigate the challenges.
High Taxes
One of the biggest hurdles facing small businesses in Illinois is high taxes. According to a recent article, The State of Small Business: Illinois, entrepreneurs regard high taxes as a primary drawback to doing business in Illinois. According to the Illinois Department of Revenue, the corporate income tax rate is currently 7.75 percent. The state sales tax is currently 6.25 percent, but in certain municipalities it can reach numbers as high as 9.75 percent. The combined sales tax rate for Chicago is 10.25 percent, the total of state, county and city sales tax rates.
Budgetary Problems
The current gridlock in Illinois’ state capital is a big concern for small business owners in Chicago. A long-term budgetary gridlock in Springfield poses risks for existing small businesses and start-ups across the state. Due to the lack of a state budget, entrepreneurs are expressing negative outlooks and hesitancy for small business start-ups in Chicago and other areas. In 2015, Illinois’ credit rating was downgraded to Baa1 by Moody’s Investors Service, making it the lowest rating in the United States and increasing the cost of borrowing money. According to many entrepreneurs, Chicago can be an expensive place to start a business, especially without legal direction from an Illinois business law attorney.
Slow Economy
Since the 2008 financial crisis, Illinois has encountered a slow economic recovery, but the Capital Markets Improvement Act aims to help small businesses grow. Although Illinois ranks fifth in the country’s gross domestic product, the state’s rate of growth is low. In 2014, Illinois’ GDP only grew at a rate of 1 percent, while the nation’s GDP grew by 2.2 percent. In addition, Chicago’s unemployment rate has remained high over the last few years. In 2015, it finally dropped below 6 percent for the first time since the recession.
While Chicago businesses do face big challenges, the city presents many positive business opportunities. Chicago boasts a large, diverse population, a major transportation hub, and world-class amenities. Chicago is home to the majority of the state’s businesses, resulting in a huge demand for all types of goods and services and great opportunities to attract new customers.
