Think of your super as your retirement plan
Running your own business can have a lot of benefits, like being your own boss and working whatever hours suit you. But there’s a lot of challenges too: balancing the books, managing your personal time and — if you ever plan on retiring — making superannuation contributions. While it might not seem important now, you should know your options and why getting your superannuation in order is important for your future.
Why should I keep paying for superannuation if I’m self-employed?
Superannuation isn’t an unnecessary expense or waste of money. Instead, you should think of super as your retirement plan, otherwise you’ll have to live off your remaining savings once you decide to stop working.
Unlike the 10% of Australians who are self-employed, most employees have 9.5% of their ordinary earnings paid into a super account by their employers (this is known as the Superannuation Guarantee). These regular contributions help create a financially-secure future.
If you’re self-employed, you can still have a regular superannuation account with a super fund, and you can make contributions to one on a regular basis. These can be a regular 9.5% of your pre-tax income, which will help to reduce your overall taxable income, or you can choose to spread out payments with lump sums taken from your business revenue. You may be able claim a full tax deduction on these after-tax contributions.
Even if you’re not self-employed, voluntary super contributions are a great way to boost your super.
Is it difficult to pay super if I’m self-employed?
If you’ve set up your own business, you’ll likely know plenty about managing your income and are probably aware of the importance of superannuation. Thankfully, super doesn’t need to be difficult, and you can choose a super fund that works best for you.
Explore your options and find an Industry SuperFund that suits you. Industry SuperFunds have low fees, a range of investment options and are run to profit members, not to generate dividends for external shareholders. They’ll help you through the application process, can help you uncover the attractive tax concession that you could be eligible for and will show you how you can pay into your super account.
Three simple tips for choosing a super fund if you’re self-employed
- Make sure your super fund has your tax file number, otherwise your contributions will be taxed, they won’t be able to accept personal contributions and it will be more difficult to keep track of your super.
- Select a fund that makes it easy for you to work flexibly, and importantly, make sure they understand the industry you work in.
- If you’ve had other super fund accounts in previous jobs, make sure you consolidate your accounts.
This article was first published in February 2018. The information referred to may change from the date of publication and care should be taken when relying on such information.