Small Businesses Get Creative During Tax Season
Small Business Owners Want Pets to Fetch Tax Write-Offs; Disconnects Exist Between Accountants and Small Businesses When It Comes to Managing Business Finances
SAN FRANCISCO, CA–(Marketwired – Mar 24, 2015) – Xero (@Xero), the global leader in online accounting software for small business, today released its Xero to Sixty Report, which examines the relationships between U.S. small businesses and accountants, and their attitudes towards tax season.
Among the key findings are the impact of fluctuating gas prices and minimum wage changes, a notable disconnect between accountants and their small business clients, and the strangest write-off attempts accountants have seen from small businesses, including pet-related and adult-themed items. "At Xero, we keep a pulse on how accountants and small business owners are doing, and how they're interacting with each other — where their attitudes and experiences are in sync, and where they differ," said Russ Fujioka, president of Xero U.S.
"Tax season offers a perfect snapshot at a time when small business owners and accountants typically interact the most, reflect on the previous year's successes and challenges, and think about goals for the year ahead."
Strangest (and Furriest) Attempted Write-Offs
Asked to cite the strangest item that a client has ever tried to write off, more than 35 percent of accountants cited pet-related items. And it's not just dogs — cats, horses, and even a donkey, made the list. In second place comes "adult" activities, from strip clubs and gambling, to alcohol and even breast enhancements.
Just as accountants steer their clients clear of bizarre, audit-inducing write-offs, they are also trusted advisors to small businesses outside of tax-time interactions. Cloud technology solutions, such as file-sharing and accounting applications, have had a huge impact in recent years, opening the doors to transparency between accountants and small business owners. Xero's survey found that technology is having a powerful — and positive — impact on the accounting practice. Eighty-five percent of accountants surveyed reported that recent technology advances for business accounting and taxes have had a positive impact and allowed them to be more efficient.
"Accountants have their fingers on the pulse of the small business economy and can help accelerate small business growth," said Amy Vetter, global vice president of Education and Enablement and Head of Accounting for Xero. "As a trusted advisor, they have the ability to help their customers be more successful by taking a step back, looking across industries and new regulations, and spotting trends or potential challenges."
Gas Prices, Tax Policies, and Minimum Wage
The economy is still the top challenge in 2015 according to both small business owners (53 percent) and accountants (29 percent); however, factors such as gas prices and minimum wage were identified as variables that can significantly impact small businesses — for better or worse. Nearly half (48 percent) of small businesses saw a positive impact from recent lower gas prices and they are reinvesting these savings back into their business:
- 36 percent are investing in infrastructure
- 17 percent are hiring new employees
- 16 percent are expanding their business
The survey found that minimum wage increase is a challenge that accountants believe small businesses will face in 2015 (21 percent), coming in second behind overall economic challenges. However, only 8 percent of small businesses are concerned about minimum wage increases in 2015, expressing more concern about new tax policies (14 percent), new technologies (11 percent) and raising capital (10 percent).
The Disconnect Between Small Businesses and Accountants
Xero's report also revealed disparities between how small businesses and accountants want to communicate. For example, 70 percent of accountants recommend their small business clients talk to them at least monthly, while only 45 percent of business owners currently do so. According to the survey, the number of accountants who believe small businesses should be talking to them weekly has risen nearly 10 percent, from 22 percent in 2014 to 31 percent in 2015.
Overall, the Xero to Sixty Report tells us that while there may be differing opinions on how often small businesses and accountants should be in touch, or whether a donkey is a write-off, the underlying message is clear: both parties want to improve their relationship in order to grow and thrive. Methodology The survey was conducted by Dimensional Research, which polled small businesses and accountants across the U.S.* to better understand attitudes and experiences around current financial challenges for small businesses, tax time sentiments, the use of technology to support the accounting function, and issues small business owners have when doing their taxes.
To view the full report, please click here. To learn how to build your small business, visit Xero's Small Business Guides for more information.
Xero is an online accounting software for small businesses and their advisors. The company has over 400,000 paying customers in more than 180 countries. Xero seamlessly integrates with over 350 third party tools, and was recently ranked No. 1 by Forbes as the World's Most Innovative Growth Company.
*U.S. Department of Commerce, Bureau of Economic Analysis
**Dimensional Research Methodology: Dimensional Research was commissioned by Xero to survey 603 participants: 300 U.S. accountants that work with small businesses and 303 U.S > small business owners. The primary research goal was to understand attitudes and experiences with finances and taxes for business with 20 employees or fewer. This survey was conducted between February 18, 2015 and March 4, 2015.