Tax season isn’t generally an exciting time for very many people. For most of us, it gives us a sense of frustration, confusion, and stress. For small business owners, taxes are even more complex. Particularly for new small business owners who only recently left full-time jobs to start their own businesses. If they’re leaving traditional full-time jobs, they’ve always had an employer to help them file their taxes. So they’re not only left with more complex tax forms than before, but they’re also without any resources to help them when they’re stuck.
We surveyed small business owners to learn more about what tax season is like for them, how they file their taxes, and their general challenges as small business owners. Below are the biggest takeaways from those results.
Men and women do not spend the same amount of time on their taxes
When we look at the data by gender, men tend to report both spending more time than women on their taxes and higher levels of confidence when it comes to filing them. And when asked how confident they were in preparing their taxes 39.8% of the total respondents said they were very confident but only 32% of those respondents were female. This could suggest that more women are choosing to outsource their taxes and let an expert handle them so that they can focus on other aspects of their business, while men tend to want to handle them themselves.
Layoffs were a reality for most small business owners in 2022
Tech layoffs might have made the biggest splash in 2022’s news cycle but layoffs weren’t limited to larger tech companies. 50% of small business owners between ages 31-40 said they had to lay off employees last year. Because smaller businesses tend to work with smaller budgets, each employee can have a big impact on cost. When economic downturns hit, these businesses can be heavily impacted. They need to be really strategic about how to weather economic challenges and come out successful on the other side.
Most small business owners file their taxes alone
When we asked how many respondents were preparing and filing their taxes on their own over 50% of respondents under 40 said they do. And 30% of respondents aged 41-50 report that they’re filing their taxes on their own as well.
Rising interest rates were a big concern for small business owners, particularly those under the age of 40
Last year interest rates reached the highest they’d been in 15 years and a lot of small business owners have felt the impact of that change. Just about half of respondents under the age of 40 said their business was strongly impacted by rising interest rates this year.
Most small business owners spend between $100-$300 preparing and filing their taxes
When we asked how much money respondents were spending on preparing and filing their taxes, 22% reported spending $100 every year and 38% said they spend between $100 and $200. 36% of respondents reported spending between $200 and $300.
Small business owners in different age groups get their customers from different platforms
37% of respondents shared that Facebook ads generate the most customers for them. When we look at responses by age groups, the channels are slightly different. For respondents aged 31-40, 47% say that Instagram generates the most customers for them. And for ages 22-30, 46% say that Tiktok generates the most customers for them.
Quiet quitting has made an impact on small businesses
52% report that they were negatively impacted by quiet quitting. Small businesses are not safe from the effects of quiet quitting and businesses of all sizes need to focus on building a strong employee experience that motivates their teams and helps ensure they stay engaged in their day-to-day jobs.
Many small business owners reported they had suffered significant financial losses due to the ongoing recession
When asked how much they had lost due to the ongoing recession 34% of respondents said they had lost $5,000 and 19% said they had lost $10,000. Some respondents had lost even more, with just around 10% saying they had lost $40,000 and another 10% saying they had lost $50,000+.
Budget cuts were mainly made around marketing, third-party software, and contractors
To look a little further into economic losses and how they were affecting small business owners, we asked where they were making budget cuts when it came to losses due to the economy. The biggest areas for cuts were marketing at 27%, third-party software at 22%, and contractors at 18%.
A better tax season with Lili
Tax season is challenging, but it doesn’t have to be. Small businesses that bank with Lili are able to use our tax bucket feature, which automatically takes a percentage of your earnings each month to ensure that you’re never caught in a bind because you owe money when tax season rolls around. You’re also able to easily categorize your expenses as you go so that it’s easy to keep track of your business finances and get the deductions you need. Open a Lili account today for an easier tax season and a better banking experience.