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Small-Business Owners Upbeat; Uncertain on Impact of Tax Law

Small-Business Owners Upbeat; Uncertain on Impact of Tax Law

by Frank Newport and Coleen McMurray

Story Highlights

  • Small-business owners evince strong financial outlook
  • More optimism than pessimism about future of their business
  • Impact of tax reform mixed -- many cite no impact

WASHINGTON, D.C. -- U.S. small-business owners are largely positive about their financial situations according to the latest Well Fargo/Gallup Small Business Survey conducted April 1-5, 2019. Seven in 10 owners describe themselves as "more optimistic than pessimistic" about the financial outlook for their business over the next 12 months with 84% saying their company's financial situation will be either very good or somewhat good one year from now. And, almost eight in 10 owners describe their current financial situation as very or somewhat good.

Owners More Optimistic than Pessimistic
In general, would you describe your financial outlook for your business over the next 12 months as more optimistic than pessimistic or more pessimistic than optimistic? (Q2 2019)
April 2019
More optimistic than pessimistic 70
More pessimistic than optimistic 30
Wells Fargo/Gallup, April 1-5, 2019

Small-business owners' optimism aligns with their generally positive view of the national economy. Sixty-three percent of owners rate the current state of the national economy as excellent or good, and 37% say the economy has improved over the past year, compared with 20% who say it has declined (the rest, 43%, say it has stayed the same).

Owners, however, are more subdued when asked about the future of the national economy. While 34% say it will improve over the coming year, 26% say it will decline, with 40% saying it will stay the same.

State of Economy
How would you rate the current state of the national economy? (Q2, 2019)
April 2019
Excellent 15
Good 48
Fair 31
Poor 6
Wells Fargo/Gallup, April 1-5, 2019

Still, even if the national economy conditions do worsen, small-business owners appear to be ready to roll with the economic punches that might ensue. Over two-thirds (69%) say their company "has the right strategy to handle changes in economic conditions" with just 8% disagreeing.

Impact of Tax Reform

Small-business owners have mixed views of how the changes in tax laws resulting from the 2017 Tax Cuts and Jobs Act will affect them. Fifty-one percent of owners in the current survey (conducted April 1-5, prior to the tax filing deadline) say that the law has not had much effect on their business either positively or negatively, while 25% say it has had a positive effect and 20% say it has had a negative effect.

Similarly, about half (48%) of owners surveyed expected that the tax law wouldn't have much effect on the amount of taxes they paid in 2018, with 23% saying it would result in their paying less in taxes, but almost the same percentage, 21%, saying they would pay significantly more in taxes. These results tend to mirror the views of the general public, based on separate Gallup research.

Challenges Facing Owners

Reflecting their generally positive ratings of their financial situations, small-business owners don't have a dominant concern. Instead, small-business owners provide a variety of answers, none of which are mentioned by more than 11% of the owners surveyed. The five challenges which are mentioned most frequently are attracting and keeping customers, taxes, hiring and keeping good employees, dealing with competition, and cash flow.

Bottom Line

Small-business owners remain positive about their companies' financial situations and are upbeat about the outlook for their business going forward. The 2017 Tax Cuts and Jobs Act appears to be a non-issue, as many owners so far have not felt any impact from it, and those who have are slightly more likely to say it has helped than hurt their business.

Owners are also mostly positive, about the current national economic environment with relatively few expecting it to worsen in the coming year. Nevertheless, whatever the economy brings, owners' feel that they are prepared to weather whatever economic changes occur.

For more information about Wells Fargo Works for Small Business, visit Follow us on Twitter @WellsFargoWorks.

Learn more about how the Wells Fargo/Gallup Small Business Index works.

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