Is your business getting a little extra cash this year in the form of a tax refund? That’s great news. Now, how should you spend that windfall to deliver maximum benefits for your business? If you need a little help deciding where the money will have the biggest impact, here are 10 ideas to consider.
Upgrade your website
Is your website fast enough? The probability of users leaving a website increases by 32 percent if the site takes longer than 3 seconds to load. Is your website easy to use on a mobile device? For several years now, the majority of online searches have taken place on mobile devices, not on desktop computers. Do you want to start selling online? Your website is your storefront, so hiring a website design company or expert to update and upgrade your site is a smart move.
If you’re not ready to hire permanent, full-time employees, outsourcing can be the perfect alternative. Assess which tasks in your business could benefit from outsourcing and look for independent contractors or freelancers to tackle them.
Donate to charity
Does your business already have a relationship with a nonprofit organization or charity? Consider sharing the wealth by making a cash donation to your cause. If you’ve always wanted to get involved with a local charity, use your tax refund as the impetus to get started. (Be sure to talk to your accountant about any effects the Tax Cuts and Jobs Act may have on tax consequences of charitable donations.)
Invest in business relationships
Is networking an important part of your sales process? Using your tax refund to pay membership dues for an industry association or networking group can reap big benefits. You could also put the money toward membership in a golf club, country club or other leisure organization where you could hobnob with prospective clients off-duty.
Start (or add to) your retirement fund
If you already have a retirement fund, use your tax refund to max out your 2021 contribution. Don’t have a retirement plan yet? Retirement plan options exist for even the smallest, one-person business. They not only help you prepare for your future, but also give you tax breaks. Learn more about retirement plans for small businesses.
Invest in your mind
The world of business is changing at lightning speed, and you need new skills to keep pace. Use your tax refund to pay for courses at community colleges or online courses like those from Coursera, Skillshare, or Udemy. You can learn everything from accounting and finance to management and leadership.
Invest in your health
You are the foundation of your business, so taking care of yourself is vital — but if you’re like most entrepreneurs, you don’t have a lot of spare time for self-care.
Solve the problem by spending your refund on a personal trainer to come to your home a few days a week, a meal delivery plan, or another service that saves you time and boosts your energy levels.
Use the money to take a much-needed vacation or to treat yourself to a memorable experience. (Experiences create more lasting happiness than things, studies by a Cornell University professor found.) For example, get tickets to a play, concert or sporting event you normally wouldn’t splurge on.
Buy or lease new Equipment
Investing in new machinery, vehicles or other equipment your business needs can have a huge impact on your company’s productivity and sales. Even something as simple as upgrading office equipment like printers and copiers can really streamline your workflow, making your employees more efficient.
Hire a tax professional next year
Was your tax refund really big? As good as it might feel to get that check, it’s not such a great thing: It means you overpaid taxes during the year and let Uncle Sam use your money instead of using it yourself.