Getting your tax return is one of the happiest feelings we tax payers know. But, that money may be burning a hole in your pocket which makes it ripe for impulse spending.
Many times, people get their tax refund back and are not really sure what to do with it. This usually leads to poor decision-making and a loss of precious funds. Here are some useful ideas for how to use your tax refund this year.
- Pay debts – individuals use their tax refunds to pay off old debts, so why not do the same for small businesses? Pay off that dangling bill for the electrical work you had done, or finish purchasing the forklift you started paying on last October. Paying off smaller debts is a great way to use your tax return because it increases your net worth; less debt means more overall value.
- Invest – Stocks and bonds are a great way to think of investing, but you own a business now. What kinds of investing can you do that will pay you back in returns? How about servicing the company car that would improve gas mileage? Perhaps re-configuring the layout of an assembly line will produce more efficient movements in your workers. Perhaps upgrading equipment in your home office will produce more efficiency.
- Pay workers – This goes right along with investing. Happy people make productivity go through the roof. Right now, everyone could use a little extra in his or her pockets. Why not show your employees you care about them and their families by helping them make ends meet. This will produce loyalty like none other and people will be more willing to stay productive if they know you are behind them in their personal life. Are bonuses in order?
- Return to community – Donating to charity is always a worthy cause. Putting back in to the community is not only rewarding and great media publicity, but also counts towards your tax write offs for the next year. Using the funds to help build up the community also makes a better place to live and do business and usually, those you help are more than willing to help you out when it comes time.
- Save – Putting money away for a rainy day is what usually saves most small businesses. With the rates that businesses go under even in a perfect economy, having a little savings in the bank is a great place to gain stability. Find a good bank that will give a decent rate and put your money in for the long haul, or until you are ready to invest it in your business.
There are plenty of things to do with your tax return, but there are only a few things that make good business sense. Before you start spending your tax return, talk to your CPA about what would make the most sense for your business, now and in the long run. You will know what you are supposed to do when it all feels right and makes the most sense financially.