Tax refund can be sufficient capital to start a business on a shoestring budget, especially with cost-saving techniques like e-commerce solutions, payroll outsourcing, web hosting and equipment leasing.
Capital is tight these days, but a check may already be on its way to you–your tax refund. For a number of reasons, this might be a good time to put that tax refund into starting a new business.
Modern business techniques make entrepreneurship more affordable than in the past. E-commerce solutions with credit card processing capabilities have lowered the barrier to starting a new business; web hosting and office equipment leasing can help minimize fixed costs; online marketing such as search engine optimization (SEO) and pay-per-click can reduce the ongoing cost of promoting a business. With the job market not looking very bright, your best option may be to create your own job.
The Economic Power of Tax Refunds
Even with these cost-saving techniques, are tax refunds really enough to make a dent in the cost of starting a new business? Consider that a total of $261 billion in tax refunds were paid out in 2008–that’s enough to be thought of as something of a small business stimulus package.
In 2009, with incomes and investment returns down over the past year, many people will be looking at a lower tax liability, and therefore a bigger refund. This cash can be used to start a new business, or pump a little extra life to one that is struggling to get off the ground.
Examples of Low-Cost Businesses: Daycare to Web Design
The following are examples of businesses that can be started at relatively low cost, promoted via e-commerce solutions, and might be especially timely for today’s economy:
- Daycare. With many parents having to work longer hours to make ends meet, demand for daycare is a natural result. Thirty-five percent of daycare workers are self-employed, and most of these provide the service in their homes, so daycare is a natural for a low-cost start-up business. Licensing requirements vary from state-to-state, but in many cases, looking after small numbers of children does not require licensure.
- Home repair. If you are handy with a set of tools, you can translate this talent into a paying business. In a soft economy, people are looking to put off new purchases by making their existing equipment last longer. From cars to lawn mowers, or from furnaces to swimming pools, anything you can do to substitute an affordable repair bill for an expensive replacement can be a win-win situation. If you have the skills and the tools, this can be a low-cost business you can promote with SEO techniques such as linking advertisements to articles about repairs to specific items.
- Pet care. Sometimes, it isn’t children who need looking after as people pursue additional jobs, but rather their pets. From supervising and exercising pets during the workday to providing grooming services, helping people keep up with the responsibility of owning a pet can often be a welcome alternative to giving up the pet.
- Computer maintenance and repair. With so many job losses, people who relied on workplace help desks for laptop support are now on their own and need a technical lifeline. Providing this type of support requires expertise but little in the way of overhead.
- Gardening & landscaping. With an aging population, more and more people are finding it a challenge to look after their yards. If you are in good health and have something of a green thumb, this type of work can be good for your physical and mental health while also rewarding you financially.
- Tax preparation. Since this article is based on the power of tax refunds, it makes sense to point out that tax preparation can be a low-overhead business. If you have accounting expertise, you can help other people squeeze a little more out of their government refunds.
- Web design. Once you’ve mastered the art of setting up a business based on web and e-commerce solutions, you can use what you’ve learned to help others do the same thing. While job losses are painfully disruptive, one of their long-term benefits is that they do spark a new wave of business formations. Whether it is helping with general consulting on business formation, or tackling specific projects such as Web design you can position your small business to ride the general wave of new start-ups.
With all the news of government bailouts, many individuals have been left wondering where is their bailout from the government. A tax refund is no bailout–it’s money you have coming to you–but it can be an opportunity to make investments in a new or existing small business that could help you earn more in the future.