Hidden Tax Challenges for Small Businesses: FreshBooks 2025 Tax Trend Report

Find out how small business owners are thinking about their taxes in 2025. From confidence gaps to procrastination habits, find the truth about how entrepreneurs manage tax season. 

Toronto, CANADA, March 19, 2025 – FreshBooks, a leader in cloud-based accounting software for small businesses and accountants, released its in-depth report on how small business owners are thinking about their taxes in 2025. The report uncovers trends among American small business owners on what’s going behind the scenes about their tax habits, fears, and what they do to procrastinate. 

“At FreshBooks, we understand that tax season can be a source of stress for many small business owners. Our ‘2025 Small Business Tax Trends: Procrastinator or Planner’ report highlights that only 26% of small businesses feel confident about their tax submissions,” said Faye Pang, Chief Growth Officer at FreshBooks. “The data reveals a concerning trend: many small businesses, the backbone of our economy, are essentially ‘winging it’ when it comes to tax submissions. This may lead to costly penalties and unnecessary financial risk. It’s why having an accounting solution like FreshBooks is so important – we keep the hard parts of running a business, easy.”

Key Takeaways 

• Confidence gap: Only 26% of small business owners and freelancers feel completely confident about their taxes.
• Tax preparation methods: Small business owners and freelancers primarily manage their taxes through software (35%) or by hiring accountants (33%).
• Top challenges: The biggest tax-related headaches include organizing receipts (35%), understanding complex tax laws (33%), and identifying proper deductions (32%).
• Procrastination trends: While 78% claim to start tax preparation early, 51% of Gen Z self-employed individuals wait until the last minute.
• Tax compliance: Tax compliance is primarily motivated by fear, with 46% concerned about penalties and 37% worried about potential audits.

Read the full report.

Methodology: 

FreshBooks designed and conducted an online survey of approximately 1,300 self-employed individuals, freelancers, and small business owners from the United States. Participants were sourced through an online panel representing a diverse range of small businesses across various industries, revenue levels, and employment sizes. The study examined tax preparation habits, challenges, and attitudes across demographic segments.

The survey’s margin of error is +/- 2.7% at 95% confidence.

About FreshBooks

FreshBooks is a leading cloud-based SaaS accounting software platform built for small business owners and consistently ranks #1 for ease of use. With an emphasis on keeping things simple and stress-free wherever possible, FreshBooks makes the hard parts of running a business easier. With Freshbooks, small businesses can get paid faster and spend less time on administrative tasks and paperwork, so they can focus on what they do best — growing their businesses.

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