Smart Ways to Spend Your Tax Refund
In an abundance of caution, you paid more taxes than you actually owe, and now you’re due a refund check. How can you turn those unexpected funds into a windfall for your small business?
Bill Sanders, Principal & Senior Consultant of Roebling Strauss, Inc. and Craig Bloem, founder and CEO of LogoMix have some great advice for how small business owners can get the biggest bang from their tax refund.
Invest in yourself
To get the biggest return on unexpected funds, invest in yourself. You are the most valuable resource your small business has.
“Building a small business alone is difficult in any circumstance, but owners tend to make mistakes when they are breathing their own exhaust,” Sanders said.
Spend the extra cash on management classes or time with a consultant.
“An advisory board, a business coach or a consultant can be a great source of outside perspective and act as insurance against making costly mistakes or slower than possible growth,” Sanders said.
Increase your marketing budget
Use the extra funds to pad your marketing budget for resources like Google or direct mail.
“If you have the option, try testing out new advertising channels like popular podcasts, sponsoring a local event or creating a Facebook paid advertising campaign,” Bloem said. “You might just find a great way to boost your customer base.”
Expand your brand
Take that money and spend it on increased branding. Do you need to update your logo or add a modern color scheme?
“Depending on your business, this can be as simple as creating a new storefront banner or lawn sign or even updating your business cards. Both options are costeffective but can go a long way to help you promote your business,” Bloem said.
Create a new look with company uniforms
Improve the appearance of your staff and communicate your professionalism by designing shirts or uniforms for your staff. This helps make every employee an advertisement.
“A cohesive team portrays success and instills faith in the business,” Bloem said.
If your refund check is significant, now is the time to upgrade computers, printers, and other software to give your employees and your business a leg up on the competition.
The newest versions of programs such as Photoshop and InDesign can make a huge difference to your marketing plan. While updated bookkeeping and accounting software such as QuickBooks Pro and apps like FreshBooks may help prevent inaccurate tax estimation in the future.
“Reliable computers can help crunch numbers, saving time, money and, not to mention, headaches,” Bloem said.
While a tax refund may seem like an unexpected bonus, remember that it is always better to plan ahead and pay only what you owe.
“A tax refund is the return of an interest free loan to the IRS that could have been of far better use to you as cash flow throughout the year,” Sanders said.
If you find that you are getting a tax refund in multiple years, perhaps you can spend that refund on the services of a CPA to help with tax planning.
“Attention is a limited resource,” Sanders said. “I recommend small business owners focus their attention on the health and growth of their business and leave the tax planning to their CPA.”