Tax Complexity Challenges for Small Businesses: Survey Insights

Overwhelming Tax Complexity: A Daily Struggle for Small Businesses

In a recent survey conducted by the National Small Business Association (NSBA), small businesses expressed overwhelming frustration regarding the complexities of federal taxation. With 83% of small businesses structured as pass-through entities, many face the very real possibility of significant tax hikes if Congress allows expiring tax cuts to take effect. The survey, released in March 2025, highlighted that over 90% of small business owners feel the squeeze of federal taxes on their daily operations.

The Cost of Compliance

Managing federal tax compliance is no minor task for small business owners. The survey revealed that owners spend more than 20 hours per year dealing with tax-related issues, even though many hire tax professionals to help navigate these complex waters. The reality, however, is that the burden of tax administration—ranking higher than financial costs—significantly impacts day-to-day business operations.

Information Accessibility Challenges

A notable hurdle that small-business owners face is accessing the crucial information they need from the IRS. More than half of those surveyed stated that obtaining necessary resources directly from the federal agency is a struggle. This difficulty compounds the challenges of managing taxes effectively and forces businesses to expend even more time and energy. Every delay and complication can translate into lost revenue, further straining operation viability.

Future Implications: What Lies Ahead for Small Businesses?

With the impending expiration of key tax provisions such as the 199A Qualified Business Income Deduction, small business advocates are urging Congress to prioritize stability in tax legislation. "Tax stability, predictability, and permanency are crucial for small businesses to thrive," emphasizes NSBA Board Chair Michael Canty. As policymakers gear up to discuss tax extenders and reforms, the message is clear: small businesses must be protected from drastic changes that could destabilize their financial footing.

Creating Space for Voices

The NSBA warns Congress of the pressing need for equitable tax treatments, one that parallels the benefits larger corporations receive. The focus on small businesses in legislative discussions must remain a priority, as their contributions to the economy are significant. As more voices join in this essential conversation, the hope remains that proactive strategies will emerge from the legislature to support vulnerable small businesses.

Ultimately, taxes represent more than just numbers on a form for small business owners; they reflect their hard work, dedication, and dreams. It’s time to simplify the system and create an environment where small businesses can flourish without the added stress of navigating overly complex tax laws. Advocating for these changes is a step towards a future where small businesses can focus on what truly matters—growing and serving their communities.