If things work out the way they are planned, you may be receiving a second stimulus check in the coming weeks. Nothing is yet guaranteed, but there are certainly plenty of people who are banking on getting a financial boost from the government during this COVID situation. Any money that may be forthcoming won’t be life-altering, but there are smarter ways than others to use your next stimulus check. If you want to get the most value out of anything you do receive, consider the following suggestions for using your stimulus money.
1. Invest in the Services of a CPA
Whether you’re new to running a small business or you’ve just never considered CPA services good value, consider it now. Using your stimulus check to pay for the services of a CPA could reap you tremendous benefits in 2021. You could even get back the amount of your stimulus check (or more) in the form of found tax benefits or a tax refund. Consider the fact that CPAs save you money in several ways:
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They save you (or your bookkeeper) countless hours in trying to do your own taxes
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Find hidden deductions that you never even knew you were entitled to
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Ensure your business entity is set up for optimal success
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Minimize your chances for an audit
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Provide third party oversight for all your financial transactions
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Offer strategic advice during financial business challenges
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Make sure you’re correctly declaring income, losses, etc.
2. Invest in Capital Improvements
Have you been putting off making capital improvements to your business? Is there some piece of expensive equipment that would allow you to service a previously untapped part of your industry’s market? Spending your next stimulus check on capital improvements makes solid business sense. First, you would be making your business more solid and perhaps even enabling more growth. Second, capital expenses are tax deductible and could be depreciated over time. So you get the benefit of immediate use plus tax benefits – a win-win for your business.
3. Pay Off Debt
Do you have high interest business credit card debt, an installment loan or other debt? Once your stimulus check has cleared, it’s a good idea to pay off as much debt as you can. Debt only holds you back, whether you’re the owner of a thriving business or whether you’re still struggling to get a leg up in the world. Even though business interest is tax deductible, it’s still money down the drain. Another benefit to paying off debt is that it makes your business appear more solvent, which is a boon if you ever want to take on business partners in the future.
4. Shore Up Your Emergency Fund
If your business is already in fairly good shape and you don’t really need the stimulus money right now, you could make good use of it to shore up your emergency fund. Every business goes through tricky financial times every now and then. You might have cash flow problems in the future or need to replace a piece of vital equipment that suddenly fails. Storing your stimulus check in an emergency fund will give your business added security and someday might make the difference between holding steadfast or having to shutter your doors.
5. Add to Your Retirement Account
The financial impact of COVID has struck everywhere. If you’ve had to forego funding your retirement account this year due to reduced business income, it’s smart to use your stimulus check to add to your Roth or IRA. You have until the end of Spring to make your final decision, but rest assured this is a good investment. You’ll be glad you did, especially if this pandemic stretches into the new year.
6. Give Treats
In a time when many employers have had to reduce or eliminate workplace perks, wouldn’t it be wonderful to give each of your valued employees an unexpected treat? While you might not be able to give official monetary bonuses—and a typical stimulus check wouldn’t go far among several employees—you could offer something that everyone could enjoy. It would be a token of your appreciation and acknowledgement of their hard work during these tough times. Ideas that fit the estimated stimulus check amount as well as the existing social distancing requirements include:
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Amazon gift cards
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Barnes and Noble gift cards
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Prepaid gas cards
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Holiday food/gift baskets
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Instacart (or other food delivery service) gift card
7. Buy Promotional Merchandise
If you really want to spend your stimulus check the way it’s intended-as an economic stimulus, then you could pay it forward and benefit by buying some promotional merchandise. Usually businesses only buy promotional materials when they have excess marketing dollars-something that few businesses have these days. But now’s a good time to stock up on things like pens and pencils with your business logo, logo water bottles, baseball hats bearing your company name, etc. In fact, you’re more likely to stand out with these materials now since other businesses have reduced their advertising presence. Just remember to use these items judiciously. They don’t work just sitting in a box in your office; they need to be distributed to potential customers to be effective.
Since there’s no way of knowing whether this will be the last one or not, it’s best to put it to the best use you can think of. Your CPA may even have more ideas for smart ways to spend your stimulus check.