Small Business Annual Report 2025 Intuit QuickBooks offers many consulting options for accountants

Small businesses, often seen as higher-risk borrowers, find it increasingly difficult to access credit, and when they do, it comes at a higher cost. The 2024 report highlighted a critical trend: credit cards were the leading source of financing for small businesses, surpassing all other forms of financing. Entrepreneurs not only used credit cards more often, but also carried higher balances and made higher interest payments. This year’s report shows that the use of credit cards as an essential source of financing remains unchanged and deepens the long-term change in the small business credit market. Traditional long-term borrowing from financial institutions continues to be increasingly replaced by credit cards and fintech lenders, leading to unique challenges, especially as small businesses face the biggest sudden increase in interest rates in two decades.

Marcus Dillon, owner and founder of Dillon Business Advisors, and member of the Intuit Partner Council, highlights the impact of this trend.

“When small business owners budget more for loan and interest payments, less cash flow is available to invest in new team members, technology or marketing,” he said. “The significant year-over-year decline in US small business hiring, the largest since 2015, underscores the impact of higher interest rates and inflation on employment. Small business owners should closely monitor these factors to determine the best path to revenue growth and profitability.”

Debt management, forecasting and ensuring compliance with credit companies will become increasingly important advisory topics for accountants in the coming years, and helping them navigate these challenges will be crucial to their long-term success.

Accountants should be well-versed in how their clients’ preferred banks are positioned because traditional banks have reduced their long-term loan offerings and diversified their offerings with more credit card products. The report finds that small businesses working with banks whose finances have not been improved by higher interest rates received less access to financing compared to those working with banks whose finances improved.

Customers look to you for banking advice, so the options available to your customers from their preferred banking partners—especially those often considered higher-risk borrowers—can significantly affect a loan. Some banks have managed to contain the negative impact of higher interest rates by offering higher limits on credit cards for their small business customers. However, this can pose long-term risks for your customers. Managing debt and cash flow will be key to their success.

Small business owners have become more risk averse in their hiring and investment decisions. Despite improvements in inflation and incomes, the Small Business Index shows that employment numbers for small businesses are still below pre-pandemic levels in some sectors and regions.

Financing has allowed businesses to continue hiring based on short-term cash infusions. However, payroll consulting will be a critical growth area for firms as clients evaluate how to address staffing concerns. You can play a vital role in helping clients navigate these challenges by providing strategic advice on hiring and payroll management.

Technology has emerged as a crucial buffer, enabling small businesses to adapt quickly to challenges and the market; in fact, the Index shows that the pandemic showed that technology-enabled businesses are more resilient. For example, small businesses that use cash flow reporting, management applications, and e-commerce tools experienced faster growth through early 2021 than those that lack such resources. Further data from the Intuit QuickBooks Small Business Insights survey supports these findings, showing that digital tools improve efficiency, reduce costs and mitigate errors – all critical factors for businesses operating in an unpredictable market.

“What strikes me about this report is that small businesses that go digital grow faster than those that don’t,” said KC Eames, director of Client Advisory Services at Dark Horse CPAs. “Accounting professionals must look for ways to help as much as possible bring our clients into the digital age. It is not only for our benefit and ease of working with them; it is also for the success of their ventures.”

As various market factors fluctuate, advising clients on transitioning their manual and analog processes to more high-tech solutions and digital strategies can better position them for success.

The report found that accounting and financial software are seen as the most usable and valuable among these digital tools, with benefits in improving efficiency, followed by time savings and error reduction.

The report also found that recommendations are essential when a business owner is considering changing their technology. Providing technology stack recommendations that streamline workflows and are cost-effective will help your customers make smarter technology decisions.

Understanding the AI ​​tools your customers are using and how they are integrating them into their accounting and financial software is no longer something to ignore. Nearly 50% of respondents indicated that AI has been a valuable tool for increasing productivity and positively impacting their work efficiency.

Addressing AI knowledge gaps is a worthwhile investment for your firm, your clients, and the accounting profession. As software evolves, it’s important to know how to guide your customers while also gaining an understanding of how AI can improve efficiency in your workflow.

You know your customers and are well versed in their challenges. This year’s report provides valuable insights for businesses and offers guidance to help you set your customers up for success. Keep visiting the Firm of the Future blog for constant updates on technology, practice management, consulting and a variety of other topics. By staying informed and proactive, you can help your clients navigate 2025 and achieve their goals.

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Amanda Thompson works on the Intuit Accountant team, developing relevant content for the accounting industry. Prior to joining Intuit, Amanda worked in marketing at a Top-40 accounting firm where she developed and strengthened the firm’s digital presence and thought leadership content. She has also created content for national brands, coding schools and non-profits.