By the Numbers: Here’s How Small Businesses Are Allocating Their Savings in 2022

Setting aside savings for small business owners has become more of a focus than ever before. Here are the top goals small business owners are saving for according to Square data.

This article is for educational purposes and does not constitute legal, financial, or tax advice. For specific advice applicable to your business, please contact a professional.

Setting aside savings for small business owners has become more of a focus than ever before. According to a 2022 Federal Reserve report, 85% of businesses faced financial challenges in the prior year. Respondents took on financing more often to meet operating expenses rather than expand their business. The share of applicants seeking funds for operating expenses grew from 43% in 2019 to 62% in 2021.

So, how are some small business owners thinking about savings now? We took a look at the top savings needs Square Banking business owners planned ahead for between October 2021 and October 2022. Square Savings customers have the option to organize, fine-tune, and separate their funds within their savings account by dedicating folders with their intended plan. Here is a look at the top goals for those business owners:


1. Taxes

The largest amount of folders for Square Banking customers were dedicated to taxes. As small business owners navigate business operations throughout the year, they keep this in mind when tax day rolls around. Small business owners have a multitude of taxes that they need to file, from industry-specific taxes to business entity-specific taxes. Within tax savings, some kept the folder broad to simply “Tax”, while others set funds aside for sales taxes, annual taxes, state taxes, and self-employment taxes.

If you are among the business owners setting aside savings for taxes, the IRS offers resources to find your tax obligations unique to the state your business operates in.

2. Rainy Day Savings

Many business owners found themselves with little buffer room as the pandemic changed the way businesses could operate. In a 2021 Goldman Sachs survey, 44% of small business owner respondents said they had less than three months of cash reserves in case of an emergency or shut down.

A 2020 Square survey showed that 67% of respondents were planning to set aside some of their sales in a business savings account. Of this group, 20% were planning on opening a new savings account to do so.

Rainy-day savings were split into two categories: First, rainy-day savings for emergencies or an unexpected business occurrence and, second, for savings like retirement. These savings folders saw a range of labels like “BTC” for bitcoin or “IRA” to put towards an IRA for retirement. Retirement was the leading goaled folder within general savings set aside by business owners.

3. Business Expenses

Although business expenses featured a range of savings goals, there were a few top-ranking expenses business owners were saving for.

  • Rent: This category was most active for retailers and salon owners. Store rent and salon or booth rent were some of the top savings folders. These sellers aren’t alone — rent delinquency rates among U.S. small businesses have increased for October 2022 according to a recent survey by Alignable. Of those surveyed, 37% were unable to rent in full for the month of October with higher rents impacting 51% of them.

  • Payroll: From payroll software to paycheck or labor savings folders, these business owners were setting aside money to put back into their employees.

  • Bills: These types of folders featured internet and cable providers, such as Comcast, as well as utilities like electric or water bills.

  • Supplies: Those saving for supplies set aside money for inventory as well as shop supplies, for example. Supplies as a savings goal was the smallest category of named business expenses folders.

Overall business expenses focused on setting funds aside for ongoing costs and costs associated with running the business, like insurance, electricity, or rent.

4. Personal

Personal savings folders ranged from money set aside for mortgage payments to student loans or even event-focused personal goals, like weddings or a luxury car. Topping this list was money saved for Christmas. In addition to setting aside holiday money, business owners set personal goals around big-ticket items like saving for a car or house.

5. Vacation

Often, small businesses are open on holidays, catering to shoppers looking for last-minute groceries for Thanksgiving, holiday presents, or Mother’s Day flowers. One study by OnDeck showed only 57% of small business owners take vacation and of those, 67% still check in at work at least once a day. But small business owners have been navigating changing ways of doing commerce.

Square data shows that these business owners are now prioritizing taking some time off. Many have set aside vacation savings goals for Christmas — or trips to New Orleans, Mexico, and Italy to name a few.

6. Business Profit

Business profit savings goals were neatly split between profit and owners’ salaries. This category sits at number six as business owners might move this money or rename the folder when they decide what they want to do with their set-aside profit. Setting aside an owner’s salary within your savings account can be a good way to make sure thatyou are paying yourself as you grow your business.

In our final episode of Paying It Forward, hear financial expert Priya Malani walk through the difference between APR, APY, and how interest rates can impact decisions, from what savings account you might pick to business credit cards. Then you’ll hear from Wasi Clothing owner Vanessa Acosta. When it comes to her small business, setting aside savings has meant being able to reinvest in her business, buying new equipment, and, this year, hiring new employees.

Listen to Square’s Paying it Forward podcast and hear firsthand from a small business owner who has taken out a loan and some of the unexpected obstacles she encountered along the way.