With Tax Day fast approaching, many small business owners are likely to be expecting a refund. If you are one of them, now is the time to consider how to use the extra cash wisely. One option is to treat your refund as an opportunity to invest in your business for the long term.
From growing your inventory to expanding your advertising, there are countless ways you can use the money to benefit your business. Here are a few ideas to consider:
1 – Buy New Equipment
Whether it’s machinery, computers, software, office furniture, or vehicles, every small business needs equipment to operate. However, many owners put off spending money on new or upgraded equipment due to the size of the expense. Getting a lump sum tax refund allows you to make a larger-than-usual investment in buying or leasing the equipment you need to keep your business growing.
Some business equipment falls under Section 179 of the Internal Revenue Code, which allows business owners to deduct capital assets immediately rather than depreciate them over several tax years. This tax code makes purchasing equipment more affordable for small businesses by allowing you to deduct up to $500,000 a year in qualifying purchases from your taxable income.
Also, keep in mind that Summit Financial Resources views your equipment as an asset we can loan against. As an add-on product to an Asset Based Loan or Invoice Factoring Loan, these term loans can speed your growth by adding availability to your existing working capital line of credit. Any equipment you use to run your business may be used as collateral.
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2 – Give Your Online Presence a Lift
Whether you are running a brick and mortar business or operating solely on an e-commerce platform, your online presence is essential to conveying a quality brand image and communicating your marketing messages to your customers. The costs of designing, developing, maintaining, and hosting a top-notch website can really add up, so if you’ve been putting it off for far too long, tax refund time is the ideal time to make the investment.
Remember to design your website around the user experience you want to create for your customers, and don’t forget to make sure it’s mobile responsive. People are spending more and more time using the internet on their mobile devices, and more activity means more potential traffic to your site. If you have funds left over, consider using them to launch or boost other online marketing efforts such as Facebook advertising, email marketing, or social media.
3 – Outsource Time-Consuming Tasks
In order to keep your focus on the big picture, you need to get out of the weeds. Think about whether handling time-consuming or tedious tasks like accounting or customer service is preventing you from taking care of higher priorities and maximizing your productivity. If so, invest your tax refund in outsourcing these functions to qualified professionals who can quickly take care of tasks that may take you hours or days to complete. Lightening your load will help you simplify your overall work schedule, concentrate on the most important things you have to do, and save time and money in the long run.
4 – Up Your Cyber Game
In today’s world, businesses large and small must have a strong system in place to protect their data from the threat of hackers and cyber-criminals. A cyber attack, computer virus, or internal security breach could turn your small business upside down and result in decreased productivity, outraged customers, and lost revenue.
Using your tax refund to invest in small business cyber security solutions or to hire a part-time IT professional can help protect your company’s online infrastructure from malware, spyware, and accidental or malicious internal threats. Although you cannot make your workplace 100 percent secure, it’s important to stay ahead of the curve. The more secure your business is, the more likely hackers will pass you by in favor of an easier target.
5 – Start a Rainy Day Fund
In a small business where every penny counts, setting cash aside “just in case” is easier said than done. However, a “rainy day” fund is the best insurance your business has for continuing operations in the face of the unexpected, from an equipment breakdown or the loss of a low-cost vendor to an unexpected dip in revenue. You might also consider putting money aside as insurance against a big tax bill in the future.
You can use your tax refund to kick-start your emergency fund. The amount you will need depends on numerous factors, so talk to your accountant or bookkeeper to decide what is appropriate. In the event of a financial challenge that exceeds available funds, consider applying for working capital financing. Summit Financial Resources offers working capital loans that involve using your accounts receivable and other assets as collateral. We specialize in financing for small businesses, with lending programs designed to give you flexibility and fast access to cash so you can cover operating expenses and pay your employees and suppliers.
If your small business is lucky enough to get a tax refund, don’t waste the opportunity to leverage the dollars to help your company grow. Even a small investment in your business today can lead to big results over time.
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Summit Financial Resources specializes in working capital financing for small to medium-sized businesses that need increased cash flow. We provide working capital financing through invoice factoring, asset-based lending, inventory lending, and equipment financing.