Every year around tax season, entrepreneurial minded people try to think of ways to use their tax refund money to make more money. Black millennials, who are masters of side hustles, are among this large population of Americans looking to “come up” from the tax season year after year.
Here are some ideas on how to use your tax refund for entrepreneurial purposes:
Start an Online Store
eCommerce is one of the most convenient business ideas today. The sky is the limit with online businesses because close to 80 percent of the country's population shop online and that's just here. Just imagine the remaining parts of the world! Too much potential!
With a small startup budget for inventory, marketing, and administrative costs, as well as patience, you can sell a product to anyone worldwide via marketplace sites like eBay, Amazon, Etsy, or Craigslist.
For inspiring clothing designers, crafters, musicians, or other creators who have manufactured a product, sites like Big Cartel, Squarespace, and Shopify allows customized sites. With a great eye for what people want, a few bucks for marketing, a social media following, and a website you can set up shop online and start generating a consistent income without rent or lease costs or huge expenditures associated with a brick and mortar business.
Minimum Estimated Startup Cost = $100-$5000
Buy a home & turn it into a rental property
Investing in real estate will always be one of the most viable investments anyone could make because people will always need a place to stay. Throughout the nation, cities hold auctions for real estate properties starting with as little as $500. With a plan for renovations and unexpected costs like emergency repairs, real estate could take you into a world of generational wealth. Maybe if you found a partner, or two, or three, you'll spread the risk, lighten your load, and spread the wealth. Minimum Estimated Startup Cost = $500-$5000
Turn your trade into a business
Are you good at doing hair? Nails? Handy work? Tax preparation? Anything that you're skilled in, can be turned into a hustle going into the future. You can use your tax refund to buy supplies, equipment, pay for marketing, and even continuing educational materials for your given trade. With the internet and social media, you would be able to gain exposure fast and cheaply. Just make sure you have the skills to pay the bills.
Minimum Estimated Startup Cost = $100-$1500
Become a Media Star
If you are a creator (rapper, singer, comedian, or educator) you can use some of your tax refund to build a media platform to display your talents to the world. All you need is some social media accounts, grow a following, a YouTube channel, a high-quality camera, and you are positioned to gain some exposure and blow up.
Minimum Estimated Startup Cost = $100-$2000
What you need before you receive your tax refund?
Before you receive your tax refund, you should have both a business plan which maps out your upcoming moves and a financial plan (also known as a budget) which outlines your financial goals to fund your newly formed business, all while continuing to maintain a living. Your business is going to require money to start and operate but you still need funds to survive so make sure you have your roadmaps completed before setting up shop.
What NOT to do with your tax refund?
Many times, a person’s paper chase could lead them the wrong paths resulting in bad investments. Make sure you DO NOT:
Give money to a finesse artist
You don't need to give any money to your drug dealing cousin who tells you he can “flip” your money a few times when he couldn't flip his own money or your Instagram follower who tells you she can “turn $500 into $5000.” Your chances are much greater in taking a real entrepreneurial risk than investing in those types of schemes.
Pay off ALL of your debt
There's a high probably that your current debt (student loans, credit card, car payments, etc.) may far exceed your tax refund returns. Therefore, instead of paying out your entire check to debtors, you should set up a payment schedule to start paying your debts off in installments, which allows you to have the needed money to start your business.
Save it all
Some of the greatest financial minds and practitioners in world history, like Warren Buffett, will tell you, “money is the worst investment anybody could have!” We can't ignore the need to have cash on hand for emergencies, but if you believe that you are helping yourself by cashing your tax refund check, putting it into a savings account (or under the mattress) and leaving it alone will only work to your detriment. Real hustlers are going to always have some money invested in making more money.
The message translates to not just having money but putting it to good use. If managed correctly, anyone should be able to create an entrepreneurial opportunity out of the stimulus of funds we receive every year for tax season. Use that money to maintain but to also build an additional stream of income that will bring you one step closer to financial freedom and happiness.