The National Federation of Independent Business (NFIB) latest report indicates concerns about imminent tax hikes under the Biden administration as the Small Business Optimism gauge drops below the average in December.
“This month’s drop in small business optimism is historically very large and most of the decline was due to the outlook of sales and business conditions in 2021,” said NFIB Chief Economist Bill Dunkelberg. “Small businesses are concerned about potential new economic policy in the new administration and the increased spread of COVID-19 that is causing renewed government-mandated business closures across the nation.”
The NFIB Small Business Optimism Index declined 5.5 points in December to 95.9, falling below the average Index value since 1973 of 98. Nine of the 10 Index components declined and only one improved. Owners expecting better business conditions over the next six months declined 24 points to a net negative 16%.
- The NFIB Uncertainty Index decreased 8 points to 82.
- The percent of owners thinking it’s a good time to expand decreased 4 points to 8%.
- Sales expectations over the next three months declined 14 points to a net negative 4%.
- Earnings trends over the past three months declined 7 points to a net negative 14% reporting higher earnings.
Apart from the individual data points that the NFIB tracks – the key takeaway was that concerns regarding imminent tax hikes moved to the forefront of small business owner’s minds. Everyone cares about taxes in Q1 with filing deadlines pending, but real tax planning for your business is integral in smoothing earnings volatility and peace of mind.
If you have any questions about potential liability under different tax scenarios, please reach out to us – this is what we do best.
And if anyone is still reading (after all those sweet charts) and would like to see more, read the full NFIB report at the link below;