AI for Small Businesses: Impact and Sentiment

Artificial intelligence is everywhere these days. Tech companies consistently launch new platforms or upgrades to existing models. Workplaces are abuzz with daily talk of AI and its impact, from productivity to privacy and from security measures to questions about job replacement. The pace nor the concerns have kept businesses of every size, from Fortune 500 companies to the mom-and-pop shops, from integrating AI in some way, shape, or form into their operations.

At the same time, states are proposing legislation to provide guardrails on AI for businesses, as well as protect its citizens.

So, what are small-business owners’ and HR leaders’ thoughts on artificial intelligence? Surveying a little more than 1,100 small-business owners and HR professionals at small businesses, the 2025 Paychex State of Small Business AI Report shares data and insights on the survey results.

The biggest find is that owners of small businesses – for this survey, those employing fewer than 500 people – are optimistic, with 72% expressing a somewhat positive to a very positive attitude toward AI and 82% viewing AI technology as helpful to their business.

Not every respondent offered such praise, as 18% viewed AI as a threat. However, of those 18%, a hint more than one-quarter (26%) saw it as a threat because they said they feared being outpaced by competitors who could leverage AI more effectively.

“There is FOMO about not using AI,” said Beaumont Vance, senior vice president of data, analytics, and AI at Paychex. “However, I think businesses know that if they don’t adopt technology, they could get wiped out.”

Small business owners and their HR leaders seem to have embraced AI or at least the thought that the technology will benefit their business. Of those surveyed, 65% use artificial intelligence at work, with 61% using it daily. Seventy-six percent (76%) expected a moderate to significant impact in the next five years, and more than one-third (34%) anticipate significant transformation in their business.

Time Savings, Productivity, and a Key Driver

We know AI saves time. Just ask anyone who hasn’t had to wait on a phone to resolve a simple issue on their cell phone bill and, instead, got the answers required from an AI-powered chatbot in minutes. In fact, customer support is the overwhelming choice – at 64% – from respondents as to where AI is used most across their core business operations. The next five core operations are within percentage points of one another when it comes to AI use, between 34% and 42%, with employee retention lagging at 27%.

As for the use of AI across key business functions (departments), the survey found similar results as the core business operations: a key leader with 50% using it in HR and a clear function (sales and business development) in last place with 20% usage. In between were customer/client service, marketing, and IT.

Respondents using AI in their businesses said there have been positive impacts, with 66% citing increased productivity. The chart below highlights other benefits of AI use reported in the survey.

In a recent Paychex podcast, OpenAI’s latest feature release on ChatGPT – Deep Research – was a topic of discussion. Members of academia have returned positive reviews on Deep Research’s ability to return a greater volume of results in a fraction of the time. However, the host also said Deep Research was asked, “What jobs will OpenAI and Deep Research replace that humans are doing right now?” A few notable roles popped up, including job recruiters and tax preparers. Check out the full list on the Paychex THRIVE Week in Review episode.

Accuracy, Privacy, and Security

In January 2025, the AI platform DeepSeek exposed more than 1 million sensitive records because of a misconfigured cloud storage instance that lacked proper access controls.

It’s not surprising, then, that the top concern for all business owners and HR leaders who participated in the survey is data privacy and security. However, it was only a concern for a little more than half of the respondents (54%), perhaps reflective of how high-ranking officials in the U.S. government ranked security as lower than cost and speed in their general assessment of DeepSeek’s overall performance.

The Paychex report also found that 31% of businesses surveyed stated data/privacy is their top reason for not adopting the technology. Nearly half (45%) of respondents had some concerns – and 17% flat-out did not trust – how tech companies use their data through AI products.

“For anything you do online, always ask the question of how they are protecting your data,” Vance said. “In many cases, your data will be stored and then shared and possibly end up on the Dark Web.”

Almost 9 in 10 respondents (87%) said that for them to trust and/or adopt AI tools at their business, it is very to extremely important that they trust the accuracy of the data source. Yet nearly 1 in 5 (18%) cite poor data as a key challenge they’ve experienced while using AI. Members of Generation Z (32%) said this is a huge challenge.

“It’s just like providing your information online,” Vance said. “You should make sure you know who you are dealing with before trusting them. So, make sure you google the company and its data privacy policy."

Investing in AI

Small business owners and HR leaders have a desire to level the competitive playing field, whether that is in recruiting talent, saving money, finding efficiencies, and more. So, when it comes to technology and its ability to help in those areas, survey participants are making a business investment in AI – and robustly. A majority (51%) of small businesses are spending between $1,000 and $9,999 a year. Even more – 62% – of owners and HR leaders said they plan to spend between $1,000 and $9,999 on AI technology in 2025, while 90% overall plan to invest in some AI in 2025.

The business operations that small business owners and HR leaders plan to invest in throughout 2025 include customer support, finance and accounting, and marketing, but the business function at the center is HR (53%) – and the focus is on people. Respondents listed recruiting and payroll (both at 44%) as their top focus, but also emphasized investing in AI to help with onboarding new employees (41%) and employee retention (32%).

What if Small Businesses Need Help With AI?

Employers and HR leaders interested in enhancing the efficiency of how their business works and streamlining what their business works on have opportunities to use AI technology to facilitate the outcomes. There are a number of platforms to choose from, but Paychex’s Vance says small businesses looking to adopt AI or even expand upon its use should seek out the input of experts for help.

“Most people in business can’t keep up with AI technology to assess it,” Vance said. “And at this point, for the most part, AI is so general in its use rather than specific for many businesses. It is critical for businesses that plan to adopt AI and spend money on technology to do their due diligence. Identify the problem and look for the AI tech that can help you solve it.”