Sunday, March 23, 2014

How to Use Your Small Business Tax Refund

Prioritize Your Financial Needs

small business tax refund, how to spend tax refund for small business
Tax time is here and if you were lucky enough to get a tax refund, you want to make sure you make the money as effective as possible. For those that have a regular job, this money is often earmarked for a family vacation or a new purchase. However, as a small business owner, it is a bad idea to waste the money on these things when you can use these funds to make your business more profitable.

Your Tax Refund Is an Unexpected Influx in Operating Capital

Yes, it would be great to go on a luxurious vacation, but is that really the best way to spend your tax refund if your business is still young and struggling to get by? Rewards like that will come down the road; right now, your priority needs to be to make your business more effective and profitable. If finances are right, this money should be looked at as an influx in capital instead of a vacation fund.

Take a good look at your company finances and operations to see how this money can be spent to make the business more operationally sound. There are probably more than a few ways where you know your business is a little behind the competition and using your refund wisely will help you to catch up to the crowd. It may also help you streamline operations to you can free up more time in the future.

Where to Spend Your Tax Refund on Your Small Business

We have a few ideas that should help a new small business owner get the most bang for his or her tax refund dollar. There are surely other areas, but these are the most common for new business owners that are working with a tight budget.

·         Eliminate High Interest Debt - if you were lucky enough to get small business loan, the interest rate is probably reasonable. However, if you are supporting your business off your credit cards, you may be paying 20 percent or more on your balance. Look at your debt and try to pay off the higher interest cards with smaller balances. If you can reduce the amount of cards you are paying, the money spent each month will be more effective on your larger balance cards (assuming you continue to budget the same amount of money as you were before paying off the other cards).

·         Improve Marketing - this is often the first thing to go when money gets tight. However, if consumers do not know about your business, they cannot spend any money with you. At the very least, earmark enough money to do a small advertising campaign within your demographic. This is your chance to land some new customers and improve your cash flow.

·         Upgrade Your Programming - are you still keeping your books by hand? This is not as uncommon as you might think. Good business accounting software can be found for $100 or less today. Invest the money and your books will be more accurate as well as taking less time to update. 

·         Medical and Retirement - if you have yet to secure some type of medical plan, the money left over may finally allow you to secure coverage. If anything is left over, it can be used to start up a retirement account. Check with your local bank or investment advisor, as there are many programs available for both medical and retirement that are specifically designed for small business owners.

Need more help getting your business organized? Can you benefit from a small business mentor? Stacy O'Quinn was once in your shoes and thanks to his Dani Johnson training, he is now out of debt and his small business is more profitable than ever! If you would like to learn more about Stacy O'Quinn and find out how he can help you, click here.

*Photo Courtesy of 401(K) 2012 via Creative Commons License

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