Seeing your first pennies roll in as a business owner is exciting. And then this happens...
However, once your tax bill comes in you soon realise all that gorgeous profit could be eaten up and the business will have nothing to show for that big outlay you just made.
So, it is important to keep in mind that, although dedicating a large proportion of your profit to fill your pockets may give short term gratification, you could ultimately be doing your business more harm than good. You do need to put food on your plate, but, look at where that money is coming from, and, more importantly, where it’s going to.
I often advise business owners to look at reinvesting as much of that potential HMRC payment as possible back into the company, so here are a few reasons why wisely reinvesting money back into your business is the key to growth and success this year and can save on your tax bill.
As a small business, you can deduct certain costs accumulated from the everyday running of your business from your taxable profit. These range from office supplies, stock, travel, and staff uniforms to the ultimate reinvestment – marketing and advertising. This means that by making the smart decision to build a new website, or improve on your current one, run a marketing campaign, Facebook ads, Instagram campaigns, or design a new logo, you can not only improve your online presence, attract more customers but also give your competition sleepless nights.
When building your own business, there comes a point when outsourcing is a necessity. While you may have your head screwed on when it comes to presenting your passion, nobody expects you to be a Jack of All Trades – accountant, award-winning designer and marketing maestro all at the same time. By investing in a professional to take over the areas you’re not so confident in, such as WordPress development or running social media campaigns, you can dedicate more time to focusing on the all-important nuts and bolts of your company and concentrate on what you do best.
Those gooroos say that the only time to stop reinvesting is when you are content with where you and your business stand, which (as many entrepreneurs will no doubt agree) is rarely the case. When it comes to putting money back into your company, especially in terms of online advertising and marketing, you need to take the moonshots, look at where your crowd hangout and understand the notion of ‘you get out what you put in’.
So, if you’re yet to conjure up a resolution for this year, how about a change in focus? Instead of licking your lips at how much profit you’ll potentially make this year, look at things from a different angle – reinvested money doesn’t have to be considered spent money, rather a step in the right direction towards your unique business goals and, potentially, reduce that frustrating end-of-year tax bill that swallows up all your sexy profit.
So, think about where you can reinvest wisely, for the best return, instead of giving it away to dear old HMRC, who have probably found ways in the 2017 budget to take even more from you...