If you’re expecting to receive a tax refund for your business, you may have already thought of dozens of ways to spend the money. It’s also possible that you have no idea how to spend or invest it wisely to contribute to the future growth of your company. However you eventually decide to spend your business tax refund, we recommend that you take a future-oriented approach. Below are five recommendations to help you do that.
Consider Your Investments and Next Year’s Taxes
Business tax laws change all the time, and this year is no exception. If you don’t have pressing needs that you need to put the money towards, consider reviewing how the upcoming tax changes could affect your business and set aside money accordingly. This is also the ideal time to review your retirement savings and investment accounts to ensure that they are on track to meet your goals. Meeting with a financial advisor for tax planning purposes is the best way to ensure that you’re in a good position when it comes time to file your 2019 business return.
Invest in Employee Development
Using your business tax refund to invest in additional training for your current employees is smart because it makes them feel valued and more engaged in the success of your company. It also puts them on a faster track to a promotion, something they are sure to appreciate. Employees who have no chance to learn on the job or advance are likely to suffer from low morale, a problem that is just as much yours as it is theirs. Low morale costs businesses millions of dollars in lost productivity and high turnover every year.
Pay Off Your Business Debts
Although your tax refund may not be enough to pay off all business debts, paying down even one account can be immensely satisfying. Not only will you pay the loan or line of credit off sooner than you expected, you will pay less interest for the remainder of the time that you have left to pay on the debt. This strategy also frees up funds for future investments that you may be able to pay for in cash without having to take on any debt at all.
Consider Upgrading Your Technology
Technology changes so fast, the computer, smartphone, or software you bought for your business last year may already be outdated. To ensure that you remain competitive, you may wish to consider upgrading to the most recent version of technology that you need to keep your office running smoothly. Another possibility is to start a savings account for larger pieces of equipment that you’re interested in purchasing in the future.
Complete an Energy Audit and Upgrade Equipment for Greater Efficiency
Did you know that the lighting you choose for your business has a major impact on comfort, energy efficiency, and the amount you pay to the utility company each month? Arranging for a local HVAC company to complete an energy audit of your business and then upgrading according to its recommendations makes good business sense. In addition to immediate savings on your utility bill, you may qualify for some attractive tax breaks from the Internal Revenue Service or rebates from your local utility company.
Let Us Help You with Accounting, Tax Planning, or Payroll
Rickhoff & Associates believes in “Business in Balance.” It’s hard to feel balanced when you’re pulled in so many different directions and have so many priorities competing for your time and money. We can assist you with getting your goals down on paper and then provide ongoing assessments to ensure that you’re right where you want to be as a business owner.