Did you file your income tax return by April 15th this year? Are you expected to receive a tax refund, or have you already gotten your check in the mail or via direct-deposit?
According to the IRS, about 75% of taxpayers receive some type of refund after filing their returns. The average tax refund is approximately $2,800.
So, if you receive this refund, try to restrain yourself from going on a shopping spree at the mall. Instead, there are several ways you can use this wisely to benefit your personal finances and your business.
1. Beef up or create an emergency savings fund.
So many Americans live from paycheck to paycheck. In fact, many have no money in savings whatsoever. You never know when something could happen in your life, so it’s a must to have an emergency savings fund in place. Experts suggest this fund should be able to help you get by for 3 months with the necessities – food, gas, mortgage, rent, and utilities. Even setting aside a few hundred dollars from your refund is still much better than nothing.
2. Invest in your career.
Moving up the ladder in your company or finding a better-paying job can both require learning additional skills for your resume. You could always use some of your money for continuing education to attain a Bachelor’s degree or certification in your field. These days, online education is so prevalent, so learn about what’s out there that you could do at night or on weekends from the comfort of your own home to advance your career – and beef up your paychecks.
3. Contribute to your retirement account(s).
If you work for an employer that does not offer you a 401(k) or other retirement plan, explore the possibility of opening up a traditional or Roth IRA. With these accounts, you will enjoy far more control over your investments and how much money you can save. IRAs also come with special tax-saving benefits.
4. Invest in home or vehicle repairs.
Perhaps you’ve just never had enough money to patch up a leak in your ceiling, fix a crack in your driveway, or replace the air conditioning in your car. Consider putting your refund toward long-awaited repairs that can help you live a more comfortable and enjoyable life.
5. Invest in a new business.
If you’ve always been tempted to crown yourself as a small business owner with the goal of achieving the American dream of self-employment, now just might be the right time to finally dive in to formal business ownership. Consider using your tax refund to pay for any business registration fees in your state, business licenses, and any other initial expenses you may incur to establish an LLC or corporation.
6. Promote and grow your business.
If you already have an established business, it’s the perfect time to increase your marketing budget to spread the word about your products or services. Have you always wanted to run commercials on a local TV channel? How about spending a few hundred dollars on Facebook Ads or Twitter’s Promoted Tweets? Using your tax refund for marketing purposes is an excellent way to test what you think are the most effective strategies to reach your customers. In the end, it could be a worthy investment to significantly drive sales and grow your business.
7. Upgrade your business equipment, or expand to a brick-and-mortar.
Business owners should surround themselves with high-quality equipment to improve efficiency in any industry. Consider investing in a new laptop or tablet for your home office. Perhaps you can upgrade the truck that you use to transport goods to customers. Maybe you need better kitchen appliances for your catering company. A few simple purchases can make your life as an entrepreneur so much easier.
Renting or owning a brick-and-mortar location can take a huge bite out of your business budget. However, by investing your tax refund in such an endeavor, you’ll be able to achieve this dream sooner than you otherwise could.
8. Save up to pay your taxes in the future.
With the 2016 tax season in the books, it’s almost time to turn our attention to 2017. Whether you only file one personal return, or you have several business filings each year, it’s nice to have some extra money tucked away to cover any future tax bills. Ideally, you may want to put it in a savings account that earns interest.