TAXES & ACCOUNTING • March 23, 2016
2 minutes Read
Sure, getting a refund on your business taxes can be a welcome little windfall, but are you utilizing that money in the smartest way possible? The most obvious ideas—paying off that big bill, handing out a bonus, purchasing new supplies or inventory—might not be the best for your business.
Employee bonuses or an influx of inventory can result in a temporary boost. But those short-term applications provide no long-term improvement of your financial situation. Instead, consider investing that money with the long game in mind. Here are three less obvious but better uses for your tax refund.
1. Invest in Employee Training
In the short term, paying for employee training is a cost. But in the long term, it becomes a huge savings, creates efficiency, and can net profit.
Training produces better, more effective and more productive employees. And while increased production is a boon in itself, educated employees are also less likely to leave your company, which prevents the costly process of employee replacement. How? Well, high employee engagement, which is closely tied to job satisfaction, is partially predicated on setting goals your staff feels that they can reach, as well as establishing opportunities to use their skills and abilities. Training programs teach your employees to set realistic goals and reach them, all while expanding their skill sets. Additionally, cross-training is especially beneficial to small businesses, as it creates redundancies for particularly busy times or for when an employee falls ill and misses work.
2. Get The Right Help
Even the highest-quality employee training will fall short, however, if you don’t have the employees to utilize it. Before you can grow your business, you must hire the people needed to run it well. Seems obvious, but failing to capitalize on opportunities to hire the right staff or promote those who can help run the business more efficiently, has crippled more than one small business.
If your operations staff is complete, look into professional consultants for long-term business improvement. A certified CPA can save you stress and money when it comes to your taxes. A business coach could guide you through the next stage of growth. A professional organizer can help you build systems for efficiency, resulting in increased productivity and lowered overhead costs.
3. Fix the Problem Area
Small business owners are often overwhelmed by business needs. Out of all those needs, however, there are usually one or two specific areas which really demand attention…and still don’t get it, because they’re seen as long-term issues, easily postponed. Maybe you don’t know where to begin. Or the barrier to improvement has a price tag on it that you haven’t been able to afford.
Whether the issue is lack of space, a poor or nonexistent marketing strategy, outdated systems, or bad inventory management, neglecting a long-term problem will only cause it to grow more costly in the end. Your tax return, when applied correctly, could be the catalyst needed to fix what is not working.
The temptation with any sort of windfall, whether from a tax return or not, is to throw the money at whatever seems most urgent. A forward-thinking business owner, however, will look at the overall effect. Applied wisely, your tax return could propel your business into a new level of stability and profitability.
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IMPORTANT INFORMATION: This is not investment, tax, or legal advice. Should you have questions, please consult your own attorney, tax accountant, or other appropriate expert having expertise in the area of your question or before making important decisions in these areas.