Small Business Owners Sour on Current Conditions for Their
Businesses, See Economy Getting Worse
TAX TIME: No Relief from the Government: 72% of Small Business
Owners Did Not Find Tax Breaks; 54% Frustrated by Income and
Self-Employment Taxes
RIVERWOODS, Ill., Mar 29, 2010 (BUSINESS WIRE) --There is little spring optimism in the hearts of more than half of
America's small business owners, who see conditions for their businesses
getting worse in the next six months, according to the Discover(R)
Small Business WatchSM. After some upward trends for most
of last summer and into the fall, Discover's monthly check on the pulse
of small business owners measured 75.7 in March, down 9.2 points from
February and back to the levels of a year ago.
"We've seen bigger month-to-month drops, but there is clearly a pattern
here: Small business owners don't like what they're seeing - both at
home and in the larger economy - and they're responding by pulling back,
rather than just holding the line," said Ryan Scully, director of
Discover's business
credit card, who commissions the monthly survey. "Tax season could
be having an effect on the overall mood, especially because they're
still not seeing any relief from the government."
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.
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 have 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 750 small business owners. It is commissioned by
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 2006. In addition to generating the index, the Small
Business Watch surveys small business owners every month on key issues,
and polls 3,000 consumers four times per year to gauge purchasing
behavior and attitudes towards small businesses. For past results and
survey data, visit www.discovercard.com/business/watch.
For information on Discover Business card, visit www.discovercard.com/business.
About Discover
Discover Financial Services (NYSE: DFS) is a direct banking and 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 personal and
student loans, online savings accounts, certificates of deposit and
money market accounts through its Discover
Bank subsidiary. Its payment businesses consist of 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 more than 185 countries and
territories. For more information, visit www.discoverfinancial.com.
Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6228617&lang=en
SOURCE: Discover Financial Services
Jon Drummond
Discover Financial Services
224-405-1888
jondrummond@discover.com
or
Lauren M. Onis
Burson-Marsteller
212-614-4069
lauren.onis@bm.com