Australia’s financial landscape is changing and it is key to the survival of your small business that you understand what those changes mean. Preparing for what’s to come is vital, but it doesn’t have to be an overwhelming task. So in this blog, we’ll take a look at ensuring your business is financially prepared for the future rises in superannuation.
To make life a little less complicated, we’ll look into SuperStream next time. And if you don’t have employees – or maybe you’ve been skipping out on your own super contributions – how you can be prepared to sell your business when retirement comes knocking.
Are you prepared for the rises in superannuation?
Australians have about $1.6 trillion in their superannuation accounts. While that’s great news and perhaps a surprising figure to some, as a business owner you need to start preparing now to meet the scheduled rises in super coming your way. Now, the rises aren’t huge or sudden, but when they hit, they might sting if you’re not prepared. So rather than having it be a challenge, we thought you might think of it as more of an opportunity – for you and your small business.
In 2013, in an attempt to raise the level of retirement funds accessible to Australia’s ageing population, the government announced its plan to increase annual superannuation contributions for Australian workers.
However, in 2015 business owners were given a little reprieve with the government pushing back the timing of the rises. This means the superannuation guarantee rate will remain at its current rate of 9.5 % until June 30, 2021 and then increase at a rate of 0.5% per year until it reaches a high of 12%.
Now whilst that sounds like ages away, you know how quickly business moves and how far out you need to be thinking. 2021 is only 6 years away! And only half a percent doesn’t sound like much but 2 percent over a four year period could knock your profitability for a bit of a six if you’re not prepared.
What’s the answer? Start putting that extra .5% of payroll away now – that way you’ll have extra cashflow building up and you’ll not miss it – and at the end of the year, you might pay yourself a bonus or put that extra into your own super (as long as it doesn’t push you over the super contribution limit – as always, we suggest you seek independent advice before doing that).
That way, instead of finding yourself shocked when your business’ payroll increases by .5% per year, you will have a significant competitive advantage as other businesses struggle with cash flow and profitability issues as they accommodate the rises.
And, if by chance the government delays the changes again, you’ll find yourself ahead of the game and with some extra savings to boot.
In the next blog, we will be looking at SuperStream: What is it? And what do you need to do to be prepared? As well as the “Sell my business to top up my superannuation” plan. Sound familiar?
It is never too early to prepare your business for the future. In fact, you might want to start right now – and we’d love to help. You can call Kerry on 6023 1700, drop us a note or connect with Kerry via LinkedIn.