Tax season is just around the corner and people are starting to get their W2 forms in the US. Even for early filers, the road to the tax deadline can be one of the most stressful times for individuals and small business owners alike. According to a new Adobe US survey*, an overwhelming majority of SMB owners (77 percent) and consumers (80 percent) plan to file their taxes either very early or early. Why? Peace of mind so they’re not stressed and can focus on other priorities (SMBs: 52 percent; consumers: 49 percent).
The survey further explored what SMBs and consumers think about preparing their taxes, with questions ranging from ”How confident do you feel about preparing your taxes?” to “How do you describe you experience working with tax forms?” to “Have you ever used AI to prepare your taxes?”
There were common themes across both audiences:
- Working with tax forms is grueling, analogous to medieval torture!
- Cracking the ever-changing code of tax rules is the top challenge.
- Taxpayers think AI can help make filing easier (with a few caveats).
Here’s a breakdown of the survey insights by audience:
For small business owners
Last year, the U.S. averaged 430,000 new business applications per month, marking a 50 percent increase from 2019. Interest in starting a small business has been booming, which means more first-time entrepreneurs will be tackling taxes from a whole new perspective. Going from an individual taxpayer to a business can be exciting. However, it can also come with a learning curve as many business owners are navigating this complicated process for the first time.
According to the research, tax-related forms are the most common type of documents that SMB owners signed in the past year (75 percent). Yet, more than half (52 percent) feel only “somewhat confident” or “not confident” about preparing their taxes. Solopreneurs and small business owners deal with some tricky tax considerations, like figuring out what counts as a deductible expense vs. what doesn’t — think startup costs, raw materials, office supplies, travel and salaries. Plus, making sense of IRS documents, like the Tax Guide for Small Business, can feel overwhelming. It’s no wonder that 41 percent of SMB owners compare their experience working with tax forms to a “medieval torture device,” with understanding complex tax regulations and rules (#1), shuffling through a lot of paper docs (#2) and combining all tax-related documents for their tax advisors (#3) as the top stressors.
Small businesses are increasingly turning to AI to help them work more efficiently and taxes are no exception. According to the survey, they see convenience (53 percent) and speed (45 percent) as top benefits. Similar to larger companies, SMBs also voiced concerns about using AI solutions for their taxes, citing accuracy and reliability (59 percent) as well as data security and privacy (55 percent) are their top concerns.