Getting a tax refund can make a big difference if you’re a small business owner. But what should you do with that tax refund? Understanding the cash needs of your small business is important to helping the business grow.
Save Your Tax Refund for Emergencies
For many Canadian small business owners, business is cyclical. You’re busier during certain times of the year.
To grow a business, you need to be prepared for slow periods. One of the best ways to do that is to put your tax refund into a savings account and only use it if you have an emergency.
Paying Down Debt with Your Tax Refund
Using a tax refund to pay off loans taken out to fund the business is another smart way to reinvest your tax refund into the business.
There are two different types of debt: good debt and bad debt.
Bad debt has a high interest rate; paying down bad debt means getting rid of high-interest payments and having more money at the end of the month to reinvest back into the company.
You could also have personal debt where the interest charged isn’t a deductible business expense. This is also bad debt.
Good debt could be any low interest loan where the funds are used to invest or grow your business. This interest is deductible.
Purchase Scalable Technology with Your Tax Refund
Two things small business owners wish they had more of is time and money.
Using a tax refund to purchase scalable technology can help streamline daily operations and free up valuable time.
Scalable technology that can help automate a small business and make it more efficient include new accounting, payroll, or e-mail marketing platform, or sales platform.
Buy Products Your Customers Want
As a small business owner, you know what your customers want. Use a tax refund to buy more of the highest-performing products or promote the most in demand services.
FBC, Helping Small Business Owners Grow Their Operations
Running a small business is a lot of work. Understanding how to reinvest a tax refund back into the business can help that business grow. If you think your business is going to get a tax refund, contact the tax experts at FBC.
Not only will the tax specialists at FBC help with your tax planning and tax preparation, they can also help you make smart decisions on how and where you can spend your tax refund. Whether to take a distribution, purchase new materials, invest in new assets, flow through the income personally, save it, etc.
As Canada’s largest and most experienced tax consulting firm for small businesses, the tax experts at FBC have worked exclusively with Canadian small business and agribusiness owners since 1952.
What sets FBC apart? FBC is unique in that it is the only firm in Canada that offers integrated tax services on a year-round Membership basis. For a fixed fee, you get access to our tax planning, tax preparation, business consultation, bookkeeping, accounting, and financial planning services.
To ensure our new Members are on the right track, FBC provides a review of their previous 3 years’ tax returns.
For more information on how an FBC tax consultant can help your small business, or agribusiness prepare and file your annual income taxes, call us today at 1-800-265-1002 or submit an online form and an FBC tax specialist will contact you at your earliest convenience.