Making your super work: what SME owners need to know
As a small business owner, it is your responsibility to look after every aspect of the business. From fronting your operations to managing employees, you are often so tied up in making sure everything is running smoothly that you overlook your personal financial situation.
One in three small business owners aren't contributing to their own superannuation plan.
Thinking bigger picture on the road to financial security can be challenging for SME owners, with many forgetting to plan for retirement or sort out their superannuation payments. Indeed, accounting services MYOB indicate over one third of SME owners aren't contributing to their own plan.
Making your super work is vital to good financial health – so here is what small business owners need to know about investing themselves in their superannuation scheme.
Super for employees, not for employers
All employers are legally obligated to contribute to their employees' superannuation – but many business owners are now forgoing contributions to their own plan.
In fact, MYOB shows nearly a quarter of all self-employed people don't have any super plan at all, and haven't sought advice from accounting professionals about their options. This is a dangerous decision which could cost you dearly down the track, so sorting out a superannuation plan that suits you should be a priority for all SME owners.
Separate work from personal life
There is a real issue with small business owners' ability to separate their work from home life too. Some use personal finances and superannuation contributions to address business cash flow issues, and the 'Suncorp SME vs ME Report' indicates 25 per cent of new business owners haven't paid themselves in the past 12 months.
Creating a firm financial plan ensures you keep your personal finances (and therefore financial security) separate from your business activities. This way, even if your enterprise is struggling, you will still be gaining from your hard work.
Making a financial change
The issues facing business owners that don't contribute towards a retirement plan are not immediate – but they will have a massive impact further down the line. "It's surprising that superannuation is not top of mind for all small business operators, given many contribute regularly to their employees' super," MYOB chief executive Tim Reed said.
''We need to support our SMEs in retirement planning and emphasise the importance of regularly contributing to their own super.''
For more information about superannuation or creating a financial plan for retirement, contact the Wilson Porter team for a consultation.