Jamie Sutherland, vice-president and general manager of Simply Accounting at Sage, said these findings show there’s an opportunity for more education and understanding when it comes to financial literacy in the small business market space.
The Angus Reid survey was conduced last October and included responses from 503 randomly selected Canadian small business owners (0-100 employees), who are also Angus Reid Forum panelists.
Hamish Marshall, director of research at Angus Reid, said financial literacy was determined in the survey by the question, “Have you identified the most important cost that your business needs to get under control?” Marshall said if the respondents knew the answer to this, they were deemed to be “more financially literate.”
“Seventy-eight per cent of Canadian small business owners are more financially literate,” Marshall said. “Twenty-two per cent said they didn’t know what their most important cost was that is needed to get the business under control.”
Another key finding when it comes to what type of compliance small businesses are the most concerned about, 38 per cent of small businesses stated that income taxes are a concern for them, with 16 per cent of them citing sales taxes, followed by record keeping, at 13 per cent.
Sixteen per cent of survey respondents who represented a one-person small business, said retail sales taxes were a concern for them, compared with only nine per cent of small businesses of six or more employees.
“Small businesses that have six or more employees are more likely to have a full-time book keeper or accountant and they’re less likely to worry than a one-person small business,” Marshall said. “If you’re self-employed, this is a bigger concern. These findings show there are differences in the types of concerns based on the employee size.”
Hugo Croft-Levesque, senior manager of product management at Sage, said with the upcoming harmonized value-added sales tax (HST) taking effect on July 1, 2010 in Ontario and British Columbia, all small businesses in these provinces will be affected.
Sutherland said Sage’s Simply Accounting software suite is designed to help keep customers compliant with the upcoming regulations.
“A lot of small businesses don’t understand things like what the biggest cost for them in their business is and that’s critical to understanding and running a business,” Sutherland said. “It takes a bit more training and understanding to see where the business is trending and customers should be evaluating their reports on a weekly or monthly basis so it’s a routine.”
Marshall said customers who fail to include any tax changes into their financial plans for the coming year are subject to missing out on opportunities to minimize their tax bills, compared to customers who are determined to be more financially literate.
Sutherland said Sage partners can leverage customers who may not be as financially literate as some of the others by providing them with tools such as accounting software, which helps automate certain processes.
In addition to helping to raise awareness and helping customers become more financially literate, Sutherland will be travelling across Canada beginning Jan. 16, 2010 on a nine-city listening tour to hear form book keepers, accountants and end-users on what their business needs and feedback are.
“A key theme for us this year is around the customer experience and being customer-connected,” Sutherland said. “We’re making a stronger push to understand customer needs by listening to them and getting their feedback.”
Sutherland will visit Saskatoon, Sask., Winnipeg, Man., Vancouver and Edmonton, Alta. this month and will be stopping in Calgary, Halifax, N.S., Ottawa, Toronto and finishing in Kelowna, B.C. by February 23.