#selfemployed #superannuation #retirementsavings #tipsforcontractors
Self-employed, then you might not have a sufficient retirement savings plan organised. To plan for the future, make sure to set up a strong plan now.
When you are employed, then the employer will make the compulsory superannuation contributions. When working for yourself (either sole trader or in partnership), making superannuation contributions is not mandatory, but it is still important to consider.
Contributions to retirement savings are to set you up for your retirement. Usually, putting money into your superannuation will give better returns on investment than simply depositing into a bank account. Also, as your money is locked away until your retirement, there is not the temptation to withdraw from it before then.
If you have worked in the past for an employer you may have an existing superannuation fund already set up which you can add to. If you have never been employed by someone else, it is now time to create and set up a superannuation fund. Contributions can be made to suit your business cashflow – regular contributions or lump sum amounts deposited less frequently. Any contributions made will benefit from tax savings and these savings will add up.
Insurance is generally offered through superannuation retirement funds. Your superannuation fund may offer life and/or income protection insurance. Take time to understand the insurance policies, as the amounts paid out might not be enough to replace the business income. You might need to consider an additional top-up policy.
If your business employs staff, then you are responsible to make superannuation contributions for your eligible employees. There are serious penalties if you fail to make the payments, so ensure that you fully understand your business superannuation responsibilities.