Many small business owners put their super at the bottom of their priority list, but it’s a vital part of running your own business – and by taking action now, you can ensure you have enough money to live on when you stop working.
Super is one of the best routes to saving for retirement, and if you’re self-employed or work as a contractor, paying yourself super falls into your list of responsibilities.
A standard contribution of 9.5% of before-tax income will allow you to plan for life after work, and as an incentive for paying yourself super, you may be entitled to a full tax rebate on your contributions.
Super is an environment that gets preferential tax treatment, meaning you may pay less tax on earnings within super, and you can often get better investment returns than a bank savings account can offer. See the Australian Taxation Office’s webpage on super for the self-employed for further detail.
How do I pay myself super?
There are two ways to make your super contributions, depending on how you pay yourself.
- If you pay yourself a wage, set up a regular transfer into super from your before-tax income
- If you pay yourself from your business revenue, many super funds will let you send a lump sum when your cash flow is sufficient.
Understandably, many small business owners prioritise other financial responsibilities over paying themselves super, however if you have been an irregular payer and have an low-balance account, since 1 July 2019 new laws (known as the Protecting Your Superannuation Package) required superannuation providers to report and transfer these accounts to the Australian Taxation Office.
Want more information?
Read our blog post on changes to super for more information and detail on how the new laws may impact you, and contact us to discuss getting your super sorted, quick.