What the 2026 Business Owner Experience Data Reveals About Government

In the year following COVID, more than 6,300 businesses packed up and moved across state lines. While taxes and labor costs often dominate the headlines behind numbers like these, day-to-day friction plays a quieter but far more powerful role in those decisions.

For business owners, interacting with local government isn’t a one-time milestone. It’s an ongoing relationship that unfolds through licensing applications, renewals, tax filings, compliance requirements, payments, and routine communications. Each interaction leaves an impression.

Those moments add up. They shape whether business owners see their local government as a capable partner or an obstacle standing between them and growth.

The 2026 Neumo Business Owner Experience Survey stresses just how much expectations have changed. Business owners now measure government services against the digital experiences they rely on every day, from online banking to e-commerce platforms.

When government processes feel fragmented, unclear, or outdated, the consequences extend well beyond inconvenience. They cost time, money, and trust. In an increasingly mobile economy, they can influence where a business chooses to stay, invest, or leave.

For local governments, improving the business owner experience can no longer survive on making incremental tweaks to improve processes. It requires completely rethinking how government services are designed, delivered, and communicated through the lens of the people using them.

The Current State of the Business Owner Experience

The 2026 Neumo Business Owner Experience Survey findings paint a picture of uneven progress. While many local governments have invested in online tools, fully digital, end-to-end experiences remain the exception rather than the rule.

• Only 1 in 5 local governments offers a fully digital business license application experience, meaning most business owners still encounter partial digital processes that ultimately require printing forms, mailing documents, or visiting offices in person.
• Even after completing applications online, more than 35% of business owners reported visiting a government office in person just to pick up their license certificate, highlighting how disconnected workflows create unnecessary friction.
• Renewals tell a similar story. More than half of all business licenses are still renewed by mail or in person, and fewer than half of business owners complete renewal payments fully online. For businesses juggling staffing shortages, rising costs, and market uncertainty, these extra steps add up quickly.
• The burden becomes even more apparent in tax compliance. Only 2 in 10 local governments offer an online business portal with automatic tax calculations, leaving nearly 80% of business owners to manually calculate taxes, penalties, and interest on their own.
• Unsurprisingly, two-thirds of business owners reported paying a late fee or penalty due to confusing paperwork or processes, a cost they often absorb despite trying to comply in good faith.

These gaps don’t suggest a lack of effort by governments. Rather, they point to systems that were built over time, often in silos, without a cohesive experience in mind.

Time Is the Hidden Cost Businesses Feel the Most

Beyond frustration, the survey reveals a more tangible impact and a far more critical type of currency to business owners—lost time. When asked how much time they spend annually on licensing and tax paperwork, many business owners estimated relatively low numbers.

Yet the data suggests that time spent traveling to offices, waiting in lines, manually calculating taxes, and correcting errors is frequently underestimated.

For small and midsize businesses, time away from operations directly affects everything from revenue to staffing to customer service. Every additional step in a government process becomes a tradeoff between compliance and core business priorities. More than likely, the last thing a local government wants is for business owners to forego compliance because it’s too cumbersome and cutting into their bottom line.

Improving the business owner experience, then, cannot merely be about making things more convenient. It’s about actively reducing the hidden costs that slow economic activity at the local level.

What Business Owners Expect Moving Forward

If the first half of the survey highlights where processes fall short, the second half makes clear where business owners want government to go next.

• A striking 93% of respondents said it is important for government business licensing and tax services to be available online.
• 90% said they would be more likely to file and pay on time if their local government offered a fully digital process.
• 79% said they would be comfortable with licensing and tax processes being fully automated through AI, provided those systems are reliable and transparent.

These findings directly link digital access with improved compliance through simple clarity and usability, not through enforcement. Contrary to common assumptions, business owners are also far more open to automation than many government leaders expect.

What business owners consistently emphasize, however, is not technology for its own sake. They want systems that reduce guesswork. Automatic calculations, clear instructions, and intuitive interfaces were repeatedly cited as ways governments could make it easier to stay compliant.

Communication Gaps Undermine Even Good Systems

Even when digital tools exist, inconsistent communication often undermines their effectiveness. One in five business owners reported that their government does not communicate regularly about renewals, payments, or requirement changes, leaving many to rely on memory, outdated information, or last-minute reminders.

Open-ended survey responses reinforce this point. Business owners across regions asked for clearer instructions, more proactive reminders, and easier access to help when questions arise. Several explicitly mentioned email and text notifications as preferred channels for staying informed.

This insight reveals an important reality when it comes to improving the business owner experience, and it doesn’t mean just digitizing forms and calling it a day. Ultimately, it comes down to designing communication strategies that guide business owners through processes before problems occur, not after.

Generational Differences Reveal One Consistent Theme

The survey’s generational analysis adds nuance but reinforces a consistent message. While comfort levels with AI vary, particularly among older respondents, nearly all age groups overwhelmingly agree on the importance of having licensing, tax filing, and payment processes available online.

Younger business owners tend to rate government portals lower compared to other digital services they use, while older cohorts place greater emphasis on clarity, tutorials, and human support when needed. Across generations, however, the most common requests remain the same. They want:

1. Clearer information
2. Simpler interfaces
3. Consistent communication

In other words, governments don’t need separate tools for each age group. What matters more is offering experiences that are simple, adaptable, and comfortable for business owners with varying levels of digital confidence.

Why Experience Matters for Compliance and Trust

The survey’s findings point to a critical connection between experience and outcomes. When business owners understand what is required of them and can complete those requirements efficiently, they are far more likely to comply on time and without errors.

Late fees, penalties, and enforcement actions often stem not from avoidance but from confusion. When local governments reduce that confusion through better design and communication, they not only improve compliance rates but also strengthen trust with the business community.

That trust matters. Local businesses are deeply embedded in their communities. When they perceive government as a reliable partner rather than a bureaucratic hurdle, it creates a healthier environment for growth, investment, and long-term economic stability.

Building a Better Experience Requires a Shift in Perspective

One of the most important takeaways from the 2026 Neumo Business Owner Experience Survey is that modernization should be guided by experience, not just infrastructure. Many local governments already have online portals, licensing tools, digital forms, or payment systems.

Yet business owners still report friction because those tools don’t always work together or reflect how people actually move through processes.

Improving the business owner experience means stepping into their shoes and asking the right questions. Where do they get stuck? Where do they have to leave a digital process and switch to paper or in-person steps? Where does silence replace guidance?

By addressing these moments, local governments can move beyond partial digitalization toward experiences that feel coherent, predictable, and supportive.

The Opportunity Ahead for Local Governments

Progress is happening. Paper applications are declining. More governments are investing in online services. Business owners recognize these efforts and want to see them continue.

The opportunity that local governments must seize now lies in finishing the work and delivering fully digital, end-to-end experiences. This means automatic calculations and proactive reminders. It means interfaces that match modern usability standards and communicate clearly, consistently, and early.

When governments modernize with these principles in mind, they improve processes, and more importantly, they improve relationships.

Are You Ready to Make Improving the Business Owner Experience Your Economic Strategy?

At its core, improving the business owner experience shouldn’t be looked at solely as a technology initiative. It’s an economic one.

Every hour saved on paperwork is an hour reinvested into serving customers, hiring staff, or expanding operations. Every avoided penalty reduces strain on small businesses already navigating tight margins. Every clear interaction builds confidence that local government understands the realities of running a business.

The 2026 Neumo Business Owner Experience Survey offers a roadmap grounded in real feedback from the people most affected by these systems. Local governments that listen and act have an opportunity to turn compliance into collaboration and modernization into meaningful support for their business communities.

The question is no longer whether expectations have changed. Of course they have, the data makes that clear. The question now is how deliberately governments choose to respond.