It’s tax time people. That means all around the country people are lining up to send the nitty-gritty details of their personal and financial lives to the government in hopes of getting a tax refund. If you’re an entrepreneur tax time probably means your collecting piles and piles of papers, receipts and invoices to bring to your accountant – at least that’s how I do it.
I know I should have a better day to day bookkeeping system, but this is just my reality right now – despite being a self employed freelancer since 2009. As the IRS as my witness this year I promise to change. OK I take that back. I promise to make a solid effort to think about upgrading my accounting system.
If you’re one of the lucky Americans getting money back this year let me ask you a question, how are you going to spend your tax refund? My clients (I’m a Financial Planner) usually tell me they’re going to use it to take a vacation or start/finish renovations on their home. Some of my more disciplined clients tell me they are going to pay off debt. That’s always nice to hear.
All of those lovely ides probably change if your an entrepreneur. Budgeting on an irregular income can be tough and having a nice unexpected lump sum of cash opens a whole bunch of doors to better yourself and your business.
To all my fellow entrepreneurs out there, how are you going to spend your tax refund this year?
Invest in yourself
The average tax refund in America is between $2,100 and $2,500 according to Governing.com. Montana has the lowest average at $1822 and Nevada has the highest with the average at $2,749.
I think we can all agree that an extra 2k in our pockets is a nice chunk of change and it can be used to enhance your skills. If you’ve been meaning to learn something new, go back to school or take a course now’s the time to do it.
Put it into your business
Maybe you can spend your tax refund on improving your business – such as investing in a new accounting system (cough, cough taking my own advice). I’m a huge fan of the ABC TV Show Shark Tank, if we’re Twitter friends you already know this. When Mark Cuban fights for a company he always tells the entrepreneur that he will take over the website and enhance it on the back end to help increase traffic and drive sales.
I don’t even know what that means, but I would like to learn – or at least hire someone to do it for me. I don’t think $2k can buy the services of Mark Cuban, but improvements of any kind can never hurt.
Expand your service offering
If you want to expand your business you can also use the money to start a new product line or enhance your service offering as well as buy online ads to promote your services. Not too long ago my girl Sandy (yes Sandy of Yes I am Cheap) took a little cash and turned into a booming $25,000 Amazon business. You can learn all about how she did it right here. Just look to the left and click the image. Right there —>>>
Save it for a rainy day
When it comes to being self employed you just never know what the world is going to throw at you. Having a security blanket in the form of easy accessible cash (in a high interest savings account) is a good idea. Cash savings can also be used to make tax payments if you get audited and end up owing money to the IRS or in case you owe next year.