Are you due for a tax refund this year? Before you book your next holiday or enjoy a frivolous shopping spree, consider how you can best use your tax refund to further your career goals. Whether you’re a freelancer or sole trader, a little extra cash can go a long way in improving your business. Here are 6 smart ways to use your tax refund.
1. Pay off your debts
If you owe money to suppliers, have outstanding invoices, or a loan on your credit card, now’s the time to try and minimise your debt. Paying off your debt can not only improve your cash flow but hopefully make your business more profitable in the long run. While it may not seem as exciting as making a big purchase, it’s a smart way to use your tax refund.
2. Create an emergency fund
There’s something to be said for simply locking your money away for a rainy day. Maybe this year, your tax refund could be the start of an emergency fund. That way, if you have any equipment that fails or unexpected business expenses, you can dip into your emergency fund instead of having to go straight to your credit card.
3. Invest in your business
Another smart way to use your tax refund is to invest in your own business. You could choose to purchase a new piece of equipment, upgrade your software or redesign your website. Perhaps you could sign up to complete a course or extra training so you can grow your skills and knowledge as a small business owner.
4. Contribute to your super
Why not take your tax refund and make a voluntary contribution to your super? It may not seem like much of a contribution now, but over the years, your money will grow. If you’re feeling particularly inspired, you could commit to making contributions to your super every year. Keep in mind that you may be able to claim your super contributions as a tax deduction.
5. Donate to charity
It’s not often that you have extra money that hasn’t been already accounted for. This year, why not use your tax refund to donate to a local charity? Giving money to a worthy cause is a great way to share your good fortune. If you give on behalf on your business, you can also keep your receipt and potentially claim your charity donation as a tax deduction next year.
6. Create a savings account
While it can be tempting to make an impulsive decision when you’re handed a lump of cash, you may be better off simply putting your money away in a savings account. Not only will your money grow over time with interest, but it will give you time to decide how to best use your refund. Starting a savings account or adding to your existing savings can be a no-fuss way to prepare for the future.