Smart Ways to Use Your Small Business Tax Refund. This example is a great case study on how a small business tax refund can be used smartly to boost business. But what are some other ways that a windfall from Uncle Sam can benefit small business owners?Smart Ways to Use Your Small Business Tax Refund

by Iris Dorbian.

 

Smart Ways to Use Your Small Business Tax Refund A year ago, John Fratrick, owner of J.F. Improvements, a small home repair business based in New Berlin, Wisconsin, had a problem. The rate of gaining new customers for his business, which he had been operating since 1992, had slowed to a mere trickle. And to generate leads, Fratrick was still relying on old-fashioned marketing standbys, such as postcard mailings and ads in the yellow pages. On the plus side, however, he was due to get a small business tax refund.

 

With business at a stalemate, Fratrick attended a webinar on how to increase sales with social media and soon after contacted the speaker, Sonny Ahuja, a web designer and the CEO and founder of an international online perfume retailer, GrandPerfumes.com, for tips on attracting clients. Smart Ways to Use Your Small Business Tax Refund

 

“As I got to know about his business, I advised John to use the [incoming tax refund] to build a better website,” recalls Ahuja. He also suggested that Fratrick launch a Google Adwords campaign to rev up business for J.F. Improvements. (Google Adwords is a program that creates ads and keywords pertinent to your business).

 

Fratrick then asked Ahuja to redesign his site, which he did, charging less than his regular fee. Ahuja also set up the Google campaign, since, as he tells it “most people do it wrong therefore they lose a lot of money without generating any business.”

 

Fast-forward to October 2012. “John had to pause his campaign as he was completely booked until the end of February 2013 from the business he received as a result of his new site and Google Adwords campaign,” says Ahuja, who prefers to funnel his tax refunds into growing or marketing his business. “J.F. Improvements would be still struggling if John had not invested that money into a new approach of lead generation that he was not used to.” Smart Ways to Use Your Small Business Tax Refund

 

Certainly, this example is a great case study on how a small business tax refund can be used smartly to boost business. But what are some other ways that a windfall from Uncle Sam can benefit small business owners?

 

Improve promotional/marketing copy

As a small business owner, you know that if you want to promote and grow your business, then marketing is essential. Without leveraging multi-channel resources at your disposal, whether it’s digital and word of mouth marketing, print ads, or TV/radio campaigns, customers and prospects may never learn of your company’s existence. However, if you have a limited budget, it’s imperative to get the most “bang out of your buck.”

 

Nash Haywood, managing partner of Netset Media, a five-year-old web marketing business in Baltimore, Maryland with many small businesses clients, suggests using your refund to hire a copywriter or designer to tweak website or document copy. Haywood says the potential payoff from this tactic, which could run anywhere from $100 to $300 an hour for a one-time fee, should not be underestimated. Smart Ways to Use Your Small Business Tax Refund

 

“Many people get turned off if a business doesn’t have a professional looking and sounding identity,” he explains. Smart Ways to Use Your Small Business Tax Refund

 

Add video to your website

Another way of increasing a healthy stream of revenue and prospects to your company is investing in adding video to your website, says Alfred Poor, author of “Power Marketing for Small Business: How You Can Boost Sales with Low-Cost Video.”

 

To bolster his point, Poor, who frequently speaks to small business owners about marketing, cites a 2011 study by video hosting platform Brightcove that found a video clip on a website is “53 times more likely to show up on the first page of a Google search.” Also, based on the same study, visitors will spend 344-percent more time on a site with video than one that’s video-free.

 

And for the budget-conscious small business owner, adding video can be a very cost-effective marketing tactic, one that can be covered by even a modest tax refund. “A professional short video can cost $500 or less,” Poor says, “and you don’t even have to own a camera or a computer.”

 

Explore direct mail

Yes, this tried-and-true marketing strategy still has plenty of value, particularly if it’s part of an integrated marketing initiative, notes Ahuja.

 

“Many businesses can’t afford direct mail anymore so there’s less competition now,” he says. “Direct mail has become sexy again. Now the key is to do a multi-step campaign while making sure the ingredients of ‘higher opening rates’ are added.”

 

Start or fund a retirement plan

If you are enjoying a steady and healthy cash flow and have loyal, hard-working staff, then you may want to consider using your small business tax refund to create a new benefit that improves employee retention. Christopher Tasik, managing director of Tasik Financial, a certified financial planning firm based in Stamford, Connecticut that works with many small business owners, says one good use of a tax refund might be “to pay any start-up expenses that might be incurred by establishing a 401(k) plan.”

 

Tasik further adds that if the refund is large enough,“it could also help offset the matching contributions that [small business owners] might need to make if they did a safe harbor plan,” he says. (A safe harbor plan allows employees to contribute part of their salary to a retirement plan, while requiring the employer to contribute matching funds.) “In addition, under certain circumstances the IRS provides for a $500 tax credit (Form 8881, Credit for Small Employer Pension Plan Startup Costs) in each of the first three years of the plan as long as certain requirements are met.” Smart Ways to Use Your Small Business Tax Refund

 

Streamline your accounts receivables

Why adhere to a regimen of sloppy bookkeeping when you can improve your paperwork by using state-of-the-art online accounting software? Haywood strongly advises using software like Freshbooks or Zoho, both of which he says are “perfect for many service-based businesses.” Each software system boasts automated features that can help small business owners “stay on top of cash flow and get paid quicker.” Not only that, but according to Nash, they’re fairly inexpensive, pricing at usually around $200 or so a year.

 

 

Pay down your debt

Of all the tips offered here, this is one that not only makes the most sense—but also is the most obvious. Start with bills that have the highest interest rate, suggests Tasik. At the same time, “the business owner should also work to develop a cash flow projection-based budget” to avoid paying bills now only to see the same debt appear again in the next few months. Smart Ways to Use Your Small Business Tax Refund

Published On: August 31st, 2022 / Categories: Uncategorised /

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