If you paid more taxes than you owed during the previous year, or if you qualify for certain credits, you may receive a small business tax refund after you file your tax return. Although it may be tempting to simply deposit your refund in the business bank account as a cushion, you can often use your refund more effectively in other ways. Here are some suggestions to help you decide how to use your small business tax refund to build your company this year.
- Invest in new technology.
Technology is always changing and evolving. If your business is currently using outdated equipment or software, consider using your small business tax refund to upgrade your company's technology for the sake of efficiency and accuracy. Conduct in-depth research before making any purchases so you can be sure you are investing in technologies that will improve your company's operations.
- Boost the morale of your employees.
Another way to use your tax refund appropriately involves using it to improve the lives and job satisfaction of your employees. Depending on the amount of your refund and your preferences, you may issue bonuses, or you may simply provide your employees with some form of reward, such as a catered lunch or a fun outing.
- Invest in marketing.
Marketing is one of the best ways to improve your business's productivity and profitability. If you have extra money in your coffers because of a large small business tax refund, consider investing it in marketing efforts, such as a new website, social media campaign or some other promotion. Do your best to select a marketing strategy that offers a solid return on investment so you can be sure you are getting the maximum benefit from your tax refund.
- Lower your future tax bills.
If you think you may owe taxes during the following year, applying your refund to that year's taxes may be the best way to use it. If you use your refund in this way, you won't have to worry about paying as much next year. To estimate what your tax liability will be during the following year, you must be able to estimate your revenue and liabilities. You must also have an understanding of the current tax code. If you aren't sure how much you may owe in taxes next year, consider consulting a tax professional.
Do you have the support you need to manage your small business bookkeeping?
Schedule a 30-minute appointment to speak with a local small business adviser.