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How to use your tax refund to grow your small business

Using your tax refund to invest in your own business is a smart move, but where is the best place to put it?

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Investing your tax refund

The pain of tax season is over, and some businesses have yet to take advantage of their refunds – where should that money go?

Carla Freberg, Vendor Services Manager at Balboa Capital notes that not only is it one of the most stressful times of the year for small business owners, it involves a great deal of time and effort to compile the necessary paperwork. CNBC reported that half of small businesses in the United States will spend at least $5,000 to come to terms with their tax bills. Ouch.

“If you run a small business, the best thing you can do is present your accountant with organized financial statements, receipts, expense reports, etc. Doing so can help you maximize your tax deductions,” Freberg notes. “Now that Tax Day 2015 has passed, many small business owners are looking at tax refunds. If Uncle Sam is sending you a tax refund, you might want to use it to grow your small business.”

In her own words below, Freberg offers three ways you can invest your tax refund back into your company:

1. Mobile Technology

Small businesses are using smartphones, tablets and other types of mobile technology to assist with a variety of functions. A recent survey conducted by the Small Business and Entrepreneurship Council reveals that 74% use it to manage social media marketing, 71% for email marketing, 34% for mobile websites and 18% to manage operations. Now is thetime to embrace mobile technology, because it gives you and your employees the ability to manage things quickly, and with greater cost-efficiency. Popularmobile technologies in 2015 include point-of-sale (POS) software, mobile credit card processing, and customized small business apps.

2. Cloud-Based Technology

Advances in cloud-based technology are changing the way small businesses operate. As you know, the cost to purchase and maintain office equipment such as computers, monitors, software, printers and servers can chip away at your bottom line. Moving software and certain IT functions to the cloud can reduce your expenses and enable you and your employees to work with more mobility. There are cloud-based services available for a whole host of small business tasks, such as data storage and document sharing, and they are scalable. You can easily upscale or downscale your cloud computing requirements based on your company’s needs.

3. Cybersecurity Solutions

Just because you run a small business doesn’t mean you can hide from hackers who want to compromise your website. In today’s world, cyber thieves from all over the world scroll through the Internet looking for vulnerable websites. A cyberattack, computer virus, or internalsecurity breach would turn your small business upside down and result in decreased productivity, lost revenues and frustrated customers. Investing in cybersecurity solutions can help protect your company’s online infrastructure from malware, spyware, worms and more. Commonly used solutions include dataloss prevention (DLP) software, hardware firewalls, software firewalls and antivirus software.

Start Preparing for 2016

“If you manage your tax-related paperwork throughout the year, you won’t need to rush to get everything ready at the last minute, which can result in costly mistakes,” said Freberg. “All you need to do is establish an organized bookkeeping system with accurate records and receipts, and update it as needed. It’s a great way to prepare your company for a successful and stress-free 2016 tax season.”

#TaxRefunds

Marti Trewe reports on business and technology news, chasing his passion for helping entrepreneurs and small businesses to stay well informed in the fast paced 140-character world. Marti rarely sleeps and thrives on reader news tips, especially about startups and big moves in leadership.

Business Finance

How small companies can compete with free shipping

(BUSINESS FINANCE) When running a smaller shop online, how can you compete with free shipping from giants like Amazon that can afford it?

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It’s hard enough for small businesses to compete with big retailers. But online shops also have to consider the additional cost of shipping. With stores like Amazon and Walmart.com offering very cheap or even free shipping, how is a smaller shop to compete?

Shopify, an e-commerce platform for online shops and point-of-sale-systems, posed this question to Thea Earl, product manager for Shopify Shipping. On the AskShopify blog, she offered some tips for managing shipping costs.

First, Earl points out that while “free shipping is an excellent marketing tool,” if you can’t afford to offer free shipping, it helps to offer a “really clear flat rate.”

Customers who think they’re getting a good deal may balk if they’re surprised by an exorbitant cost to ship. If you can consistently offer a flat rate, and let the customer know right off the bat, they’ll “know what to expect when they hit checkout” and won’t get sticker shock at the last minute, causing cart abandonment.

If you want to offer free or very cheap shipping, consider raising the prices of your products, even by a dollar or so, to help cover delivery costs. Note the ratio between the profit margin and the cost to ship.

Perhaps for highly profitable items, you can afford to absorb the shipping costs, while slightly raising the prices of less profitable products to offset the balance.

Lastly, Earl realizes that small business owners have no control over whether or not a carrier raises its prices to ship.

You do, however, have control over the packaging. Be smart about the types of packaging you use. Measure products and buy envelopes and boxes that are just the right size to save money on weight.

Paper and poly envelopes are lighter, and therefore usually cheaper than cardboard boxes. Also, Earl points out that most carriers have at least a few options for free packaging. Utilize these free options whenever you can.

And of course, you could always join a group like Shopify to take advantage of their bulk mailing partnerships with carriers like UPS, USPS, and DHL.

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Business Finance

Calculator for what your freelance rate should be

(FINANCE) When every second on the clock counts and saving is imperative, where can you go to figure out your optimal freelance rate?

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The issue of what your freelance rate should be is daunting for most, but is especially stressful for those who aren’t particularly mathematically gifted. When every second on the clock counts and saving is imperative, where can you go to figure out your optimal rate? A new calculator has an answer.

What Is My Day Rate is a salary calculator which determines the hourly (and daily) amount you’d have to charge in order to meet your optimal salary.

The calculator itself is intuitive enough: upon landing on the What Is My Day Rate webpage, you simply enter your preferred annual income and wait for the results to load. You’ll see both a daily and an hourly sum appear shortly thereafter.

The process of figuring out how much to charge is simple, but that doesn’t mean the process is simple.

What Is My Day Rate draws from similar geographical, workplace, and demographic data to give you a number which reflects post-holiday, post-fee, post-non-billable work results.

By clicking the “See how we calculated this” link at the bottom of the page, you can see a specific breakdown of how What Is My Day Rate determined your rate.

You’ll notice that they take into account weekends, holidays, sick leave, bonuses, benefits, and more.

If division is a strong suit for you, you may also notice that What Is My Day Rate operates on a 40-hour workweek model, meaning your rate might even be optimistic for your standards.

One problem with the calculator is that it doesn’t account for taxes of any kind; while it factors in a rather generous benefits percentage and adds in things like mandatory vacation time and unpaid sick leave, there’s still a noticeable gap between the calculator’s projected expenses and what you would probably have to pay.

On the plus side, tax brackets change, so you’ll be able to plug the day rate results into a separate tax calculator without worrying about accuracy issues.

What Is My Day Rate is a valuable tool for any freelancer looking to establish their daily freelance rate without necessitating a spreadsheet and several hours of botched accounting—or a more expensive alternative. If you’re worried about undercharging, head over to their site to lock in your rate ASAP.

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Business Finance

7 ways to quickly get outstanding invoices paid to you

(FINANCE) It’s easy to feel uncomfortable bringing up money with your superiors, but for a freelancer, it’s more important than ever to bring up the issue. Here are 7 tips to get your invoices paid quickly.

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For many, an awkward topic of conversation revolves around money. Whether asking for a raise or asking to borrow money, people often feeling uncomfortable when talking money.

This is equally, or possibly even more so, true for freelancers who are solely in charge of their finances. Without a system of weekly direct deposit, freelancers have to work overtime to keep their earnings in order.

The issue with this is that clients also have a lot on their plates, and something as simple as a freelancer’s paycheck is common to fall through the cracks. This causes freelancers to have to work friendly reminders into their repertoire.

However, freelancers may not always be knowledgeable of the best ways to keep their finances in check (no pun intended). Below are seven ways to enhance payment methods.

  1. You have to be willing to make billing a priority. Due to the fact that money is awkward to talk about, as aforementioned, many let this fall by the wayside. The best way to do this is to keep up to date with your invoices and send them as soon as they are done. Making a calendar specific for billing can help with this idea.
  2. This second bit dates back to when we were young and learning our manners: it is crucial to be polite. Not only is it the right thing to do, but it also increases speed in payment. Using “please” and “thank you” in invoicing emails are said to get you paid five percent faster.
  3. It is best to try and keep a complicated concept like finance as simple as possible. Make sure you are creating specific due dates. This will help to signify importance of payment.
  4. Now that virtually anything can be done online, it would make sense to use electronic payment verses an old-school check. Accepting online payments will get a user paid, on average, eight days faster as opposed to a check.
  5. This is an important notion to keep in mind for any aspect of your business life: be professional. Invoices are often seen by many eyes so it is best to include your business’s logo on said invoice. This has been found to increase chances of being paid on time by 10 percent.
  6. Specificity is urged again in the form of transparency. Make sure you are giving detailed descriptions on each invoice so that anyone looking at it knows exactly what you are being paid for. By doing this, you are 15 percent more likely to be paid on time.
  7. While you may be invoicing month by month, try to avoid sending on the 30th or 31st. Being that everyone, generally, sends their invoices in on these dates, it takes 10 – 20 percent longer to be paid. With everyone sending it at the end of the month, it has a tendency to back up payroll.

The most important thing to remember is that while the topic of money may be awkward, it is your money. If you let a few invoices fall behind because you are uncomfortable reminding your client, this has a way of adding up. Be sure to keep on track with your finances to earn what you are working for.

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