Addressing Tax Complexity: A Challenge for Small Businesses in 2025
The 2025 Small Business Taxation Survey Insight
The National Small Business Association (NSBA) has unveiled the findings of their recent survey exploring taxation complexities faced by small businesses. This comprehensive survey highlights the critical impacts that federal taxes have on the operations and overall stability of America’s smallest entrepreneurs. One of the significant takeaways is the impending expiration of the 2017 Tax Cuts and Jobs Act tax cuts and the serious concerns that many small businesses have regarding potential tax hikes.
Understanding the Concerns of Small Business Owners
NSBA President and CEO Todd McCracken emphasized how most small-business owners, specifically those classified as pass-through entities, will face the brunt of tax implications at the personal level. The figures reveal that 83 percent of small businesses fall into this category, prompting concerns about navigating possible tax increases should Congress fail to act decisively in extending the current tax provisions.
Key Findings from the Survey
The survey paints a detailed picture of the challenges encountered by small businesses regarding their taxation duties and obligations. Here are some crucial findings:
Time Spent on Tax Management
A significant number of small-business owners report dedicating over 20 hours each year managing their federal tax responsibilities. Intriguingly, despite the majority engaging external tax practitioners for assistance, the time spent remains substantial.
Impact on Operations
Another compelling statistic indicates that ninety percent of small-business owners recognize that federal taxes influence their daily operations. Among them, one-in-three indicate that this impact is profound, highlighting the pervasive nature of tax obligations in managing their businesses.
The Challenges of Working with the IRS
Moreover, businesses that import goods from international suppliers, with a significant number sourcing from China, also face unique challenges. Among these, more than half of the surveyed small-business owners expressed difficulties in obtaining necessary information directly from the IRS. This underlines the ongoing frustrations within the bureaucratic systems tailored to assist small businesses.
Complexity Outweighs Financial Costs
Interestingly, the survey found that the primary challenge confronting small businesses relates to the administration and complexity of federal taxes rather than the associated financial costs. This revelation underscores the pressing need for tax reforms that simplify the tax code and provide more straightforward guidelines for enterprise owners.
Policy Engagement and Advocacy
The NSBA has long been alerting policymakers about the adverse effects of sunsetting laws on small businesses. Currently, the impending expiration of small-business tax cuts such as the 199A Qualified Business Income Deduction remains a high-priority item for legislators. The association aims to push forward initiatives that ensure equitable tax treatment for small enterprises, seeking accountability from lawmakers as any discussions around tax reform or extensions unfold.
The Call for Stability and Predictability
NSBA Board Chair Michael Canty, who operates Alloy Precision Technologies, highlighted the critical need for small businesses to receive assurances concerning tax stability, predictability, and permanency. The differences between larger corporations and smaller entities must be addressed to facilitate a fair playing field.
About NSBA
For over 85 years, the NSBA has proudly represented the interests of American entrepreneurs, acting as a nonpartisan voice for small businesses across diverse industries and states. The organization boasts a membership of 65,000 eager to engage in dialogue that leads to significant legislative reforms that benefit the entrepreneurial community.
Frequently Asked Questions
What is the main focus of the 2025 Small Business Taxation Survey?
The survey primarily highlights the complexities of federal taxes and their significant impact on small businesses.
How many hours do small business owners spend handling taxes?
Many small-business owners report spending over 20 hours annually managing their tax obligations.
What do small-business owners find difficult regarding taxes?
Over half of the owners find it challenging to obtain necessary information from the IRS.
Why are tax cuts a concern for small businesses?
The expiration of the 2017 Tax Cuts and Jobs Act risks increasing tax liabilities for small businesses.
What advocacy efforts does NSBA engage in?
NSBA advocates for tax stability and reforms that ensure equitable treatment of small businesses in legislative discussions.
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