The March results were marked by a surge in the number of small business owners who say economic conditions for their own businesses are deteriorating: 53 percent of them say the climate will get worse in the next six months, compared to only 37 percent who answered that way in February. Of the remaining respondents, 20 percent said things are getting better, 20 percent said things are the same, and 6 percent are unsure.
When asked about their intentions to invest in their businesses, 52 percent said they would decrease spending, up from 43 percent in February, while 27 percent said they would make no changes, and 18 percent said they plan to increase spending.
Other March Confidence Indicators:
- Little faith was expressed for the direction of the larger economy, as 58 percent said it is getting worse, up from 44 percent in February; while 22 percent think it is getting better, down from 31 percent the prior month; and 16 percent said it’s staying the same, versus 24 percent last month.
- Views on the current economy were relatively unchanged over February: 59 percent rated the economy poor, 31 percent called it fair, 6 percent said good, and 1 percent chose excellent.
- Cash flow issues remained largely unchanged: 46 percent said their businesses encountered temporary cash flow issues in the past 90 days that caused them to hold off on paying some bills, 47 percent did not have issues, and 7 percent weren’t sure.
TAX TIME: Small Business Owners Can’t Get a Break
In February, 70 percent of owners told Discover that federal stimulus efforts have had no impact on their businesses, while 17 percent said it hurt their businesses. Only 10 percent reported being helped by federal efforts.
So it was no surprise in March when 72 percent of small business owners said they were not able to take advantage of tax breaks for their businesses or themselves for 2009, while 19 percent said they had, and 9 percent weren’t sure.
When asked which of the following taxes caused the most frustration, owners said:
- Federal income taxes, 29 percent
- Self-employment taxes, 25 percent
- Real and personal property taxes, 7 percent
- Employer portion of Social Security taxes, 5 percent
- Sales taxes, 4 percent
- Unemployment taxes, 3 percent
- State income taxes, 2 percent
- Excise taxes, 1 percent
- Not sure, 24 percent
Tax Preparation
Finding and organizing tax preparation documents was very to somewhat difficult for 42 percent of small business owners, and not very or not at all difficult for 54 percent of them.
Even though 70 percent of small business owners use a professional to do their taxes, 73 percent of them say the preparation and documentation process is somewhat to very time-consuming. Among the general population surveyed this month, 51 percent of people say they use a professional to do their taxes.
Of those small business owners who said they were not hiring a professional, 62 percent said they were using computer software, down from 71 percent last year.
Tax Returns and Extensions
Twenty-four percent of small business owners are expecting a refund this year, 28 percent will break even and 39 percent will owe taxes. Nine percent were not sure. Among non-business owners, 50 percent expect a refund, 18 percent will break even and 21 percent say they owe taxes. Ten percent weren’t sure.
For those who expect to owe taxes, 43 percent of small business owners said they would likely file for a tax extension, compared to 30 percent of people in the broader population who will likely seek more time. About half of those filing for extensions in both segments said they were doing so because of the economy.
