64 % of Small Businesses Spend At Least $1000 on Tax Administration Work
The new tax reforms passed by the Trump administration were supposed to simplify the tax system. However, The National Small Business Association’s (NSBA) 2018 Small Business Taxation Survey reports administrative burdens still outpaces those of finance as 63 percent said they spend more than $1,000 annually on the administration of federal taxes.
NSBA 2018 Small Business Taxation Survey
The 2018 NSBA survey provides insightful opinions on the Tax Cuts and Jobs Act from small businesses across the US. As part of the NSBA’s advocacy of small businesses, it's looking to find workable solutions to the tax code by and lowering rates. But the complexities persist.
For one in three small businesses, the survey reported they spend 40 hours each year on federal taxes. And to make matters worse, the NSBA says the complexity is expected to increase for tax year 2018. it's important to note the NSBA supported the law.
In the report, Cynthia Kay, NSBA Chair. Todd McCracken, NSBA President and CEO, said, “While the law is far from perfect, NSBA ultimately supported it as a good start to what meaningful, broad tax reform should look like.”
The survey was carried out online from March 23 &ndash. April 5 with the participation of 953 small-business owners.
Key Takeaways From the Survey
Because of the complexities of the tax code, small businesses have to pay accountants or other tax experts to handle their taxes. In the survey, more than two thirds or 68 percent said they pay an external accountant to handle the company’s taxes. Sixteen percent said they or a staff member does it, while another 15 percent said it's both.
Regarding how much time they spend on their taxes, the time can go as high as 120+ plus hour every year. This high number was for 11 percent of the respondents. Still, a considerable number of businesses spend many hours, with eight percent stating 81 to 120 hours, 15 percent 41 to 80 hours. 18 percent 21 to 40 hours. . A simplified tax code would mean these small businesses could spend this time for more lucrative pursuits.
What about the expense?
The financial burden for small businesses is quite high. There is a wide spectrum for this data set, which starts at less than $500 for 21 percent of the respondents to more than $40,000 for three percent. This is followed by five percent who spend $20,001 to $40,000, seven percent at $10,001 to $20,000. 16 percent from $5,001 to $10,000. Exactly one third or 33 percent have to fork out $1,001 to $5,000.
You can look at the rest of the data in the survey (PDF).
There is no question the tax code is more burdensome for small businesses. As a group, they've been pushing to get relief from rates and the complexity.
Kay and McCracken added, “America’s small-business owners have consistently ranked “tax reform&rdquo. Among the top issues for Congress to address. Even with the reforms in the Tax Cuts and Jobs Act, more must be done to simplify taxes, achieve parity in taxation between large and small businesses, eliminate sunsets and make tax reform permanent. Address the deficit.”
Fingers crossed, here is hoping the President and Congress are listening.
This article, “64 % of Small Businesses Spend At Least $1000 on Tax Administration Work”. Was first published on Small Business Trends