TAXES: 85% of Small Business Owners Expect to Earn Less than $250,000; Self-Employment Tax Voted as the Most Frustrating
RIVERWOODS, Ill., Mar 30, 2009 (BUSINESS WIRE) -- Economic confidence among small business owners saw its largest jump in
confidence in nine months as fewer owners see the economy getting worse
and more believe conditions are improving for their own operations,
according to the latest Discover®
Small Business WatchSM.
The monthly index increased more than six points, rising to 78.2 in
March from 71.9 in February.
"Increased confidence in economic conditions is definitely a bright spot
in an otherwise bleak business environment," said Ryan Scully, director
of Discover's business
credit card. "Small business owners are far less bleak about the
direction of the overall economy than they have been in months."
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.
The views and opinions expressed by small business owners and
consumers who participate in the Small Business Watch survey are their
own and do not necessarily reflect those of Discover
Financial Services or its affiliates.
About the Small Business Watch
The Discover Small Business Watch is a monthly index measuring the
relative economic confidence of U.S. small business owners who employ
less than five employees, a segment that consists of 22 million
businesses producing more than a trillion dollars in annual receipts.
The Watch is based on a national
random survey of 1,000 small business owners. It is commissioned by
the Discover Business Card, which strives to offer the best business
credit card for American small businesses, and is conducted by Rasmussen
Reports, LLC (www.rasmussenreports.com),
an independent survey research firm. The numeric index is calculated by
assigning values to responses to a set of six consistent questions. The
base value of the Watch was established at 100.0 based on surveys
conducted in August of 2006. In addition to generating the index, the
Small Business Watch surveys small business viewpoints on key business
drivers, and also surveys 4,000 consumers to gauge purchasing behavior
and attitudes towards small businesses. For past results and small
business survey data, visit www.discovercard.com/business/watch.
For information on Discover Business Card, visit www.discovercard.com/business.
About Discover Financial Services
Discover Financial Services (NYSE: DFS) is a leading credit card issuer
and electronic payment services company with one of the most recognized
brands in U.S. financial services. Since its inception in 1986, the
company has become one of the largest card issuers in the United States.
The company operates the Discover Card, America's cash rewards pioneer,
and offers student and personal loans, as well as savings products such
as certificates of deposit and money market accounts. Its payments
businesses consist of the Discover Network, with millions of merchant
and cash access locations; PULSE, one of the nation's leading ATM/debit
networks; and Diners Club International, a global payments network with
acceptance in 185 countries and territories. For more information, visit www.discoverfinancial.com.
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SOURCE: Discover Financial Services
Discover Financial Services
Jon Drummond
224-405-1888
jondrummond@discover.com
or
Robinson Lerer & Montgomery
Daniel Delson
646-805-2036
dmd@rlmnet.com