The number of small business owners who say the economy is getting worse dropped to 60 percent, down from 69 percent the previous month and significantly below the all-time high of 79 percent reached in June 2008. Those who see the economy getting better rose from 12 percent to 16 percent.
March Highlights:
24 percent of owners see economic conditions for their businesses improving, up from 19 percent in February and the highest response in this category since August 2008. Similarly, 47 percent see conditions getting worse, down from 54 percent in February.
- 41 percent of owners say they have experienced temporary cash flow issues over the past 90 days, basically unchanged from 42 percent in February.
- Views of the current economy remained constant: 90 percent rated the economy as fair or poor in March, unchanged from February.
- 48 percent of owners say they plan to decrease spending on business development over the next six months, a drop from 51 percent in February; while 21 percent plan to increase spending and 29 percent will make no changes.
85% of Small Business Owners Expect to Earn Less than $250,000
An overwhelming majority, 85 percent, of small business owners said their income would fall below $250,000 and would not be subject to a tax increase proposed in the Obama administration’s new budget.
However, they were split on the fairness of that threshold on small business owners: 44 percent said it was fair, 46 percent called it unfair, and 10 percent weren’t sure.
The Most Frustrating Tax
When asked which taxes frustrate them the most as a small business owner, 32 percent said self-employment taxes, followed by:
- 24 percent – federal income taxes
- 11 percent – real and property taxes
- 9 percent – the employer’s contribution to an employee’s Social Security tax
- 3 percent – unemployment taxes
- 3 percent – state income taxes
- 2 percent – sales taxes
- 0 percent – excise taxes.
Seventeen percent weren’t sure which taxes frustrated them the most.
Preparation and Documentation Remains Time Consuming
More than three-quarters, 77 percent, of small business owners say that the tax preparation and documentation process is very or somewhat time consuming, an increase from 75 percent a year ago. Likewise, 46 percent of owners say that finding and organizing the documents they need to prepare their taxes is very or somewhat difficult, an increase from 41 percent a year ago and 39 percent in March 2007.
"For the third straight year, we see that tax preparation and the process involved remains a significant distraction for small business owners, who often need to devote large amounts of time to getting organized and cutting through the complexity of the tax code," Scully said.
Other Tax Poll highlights:
- 74 percent of small business owners have business income reported as part of their personal income taxes and 22 percent are taxed as corporations.
- While 69 percent of small business owners will still turn to professionals for tax help, do-it-yourself tax software gained popularity this year: 21 percent plan to use a computer software program, up from 15 percent a year ago.
- But no matter who does their taxes, nearly a third of small business owners, 32 percent were not very confident or not at all confident that they will receive all of the deductions to which they are entitled.
- 38 percent of small business owners are expecting a refund, 21 percent plan to break even, 36 percent expect to pay taxes and 5 percent aren’t sure.
- Among those expecting a refund this year, 41 percent of owners said they will use it to repay debts, 22 percent will use if for their businesses, 21 percent will save for the future, 14 percent will use it for personal purposes, and 2 percent weren’t sure.
