Smart Uses for Your Tax Day Refund

by | Apr 18, 2022 | Business Finance | 0 comments

Tax day is upon us. For many small business owners and self-employed individuals, this could mean that you will owe the federal government money. On the other hand, a refund may be coming in for some. How do you maximize your tax day refund to benefit your company the most? In other words, how do you go about getting the biggest bang for your tax refund dollars? In this article, we look at some ways that entrepreneurs might be able to use their tax refunds more strategically to better position their businesses. After all, especially in this challenging financial climate, making intelligent choices with every dollar you have is essential to your organization’s overall health and well-being.

Put Aside Money for Estimated Taxes

What are estimated taxes? As many people know, come tax day, your tax bill will be pretty hefty if you have not been making quarterly payments toward what you will owe for the year. Not to mention, you could be facing some penalties and additional interest costs. If you make your estimated payments on time, your tax bill comes tax day will be pretty manageable. You might not even owe anything. Some businesses even receive a refund. Taking some of your current tax refunds and putting this money aside for those upcoming estimated tax payments could be the smart move here.

Pay Off Credit Card and High-Interest Debt

If you’re in a position where you are carrying quite a bit of debt in the form of credit cards or other higher-interest loans, you might want to use your tax refund to pay these down or even off if at all possible. This clears up some of your liabilities, but it also helps build your credit score. The lower your debt, the better your score has the potential to be, generally speaking.

Put Some Money Aside for Your Emergency Fund

Every small business should have an emergency fund. This is money used in case things arise that are unexpected and thus unaccounted for within your daily, weekly, or monthly budget. For example, let’s say you discover that your building needs a new roof. Odds are, you didn’t budget money precisely for this. This is where you might want to tap into your emergency fund to cover the cost of that roof if needed. Taking your tax day refund and adding some of that money to your emergency account will certainly help your business in the long run and ensure that you have those surprise expenses covered without seriously impairing your operating cash flow.

Use the Money to Grow Your Business

You could use your tax refund to help grow certain aspects of your small business. You might want to buy some new equipment. You could launch a new marketing campaign. Or perhaps you might even hire on some more staff. Think strategically about what would best benefit your company over the long term. Put your tax refund dollars to help your business get to that next level.

Pay Down a Mortgage

If your company owns a building or some form of property and you currently have a mortgage on that property, then it might make sense to use some of your tax refunds to pay down that mortgage. If possible, minimizing your liabilities will also put you in a better position for obtaining future funding. Again, it is about lowering the overall debt that your business has.

First Union Lending is Here to Help

We work with small businesses across the United States. Our goal is to see you thrive and ultimately grow. We offer short-term loans, merchant cash advances, and SBA loans, among other financing types. Even if your credit score is less than ideal, we might still have a financing solution for you. We walk you through the process from start to finish, and our representatives are always on hand to address your questions and concerns. Call today and let’s get started.

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