Purpose Small business owners play an important role in the tax system. This paper seeks to establish a framework to highlight the particular tax situation of small business owners and the resulting implications, from a psychological perspective. Design/methodology/approach A framework identifying the key characteristics of small business owners' actual and perceived tax situation is established. Literature investigating these characteristics is reviewed in line with the proposed framework. Findings Three key aspects seem to distinguish small business owners' perceptions of their tax situation: small business owners are likely to perceive more opportunities not to comply than employed taxpayers; they are more likely to experience a lack of meaningful taxation knowledge; and they are more likely to face decision frames that render taxes as painful losses. Research limitations/implications The suggested link between the subjective experience of the tax situation and compliance calls for a focus on strategies that aim to influence taxpayers' perceptions of their own evasion opportunities, their level of legislative and procedural knowledge, and their sense of ownership of tax money. Such a strategy is suggested to be particularly likely to be effective in the phase of nascent entrepreneurship and in a climate of mutual trust between taxpayers and tax authorities. Originality/value This paper comprehensively identifies and reviews the perceptual correlates of factors unique to small business owners' tax behaviour.
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