Being self-employed has its perks – from flexibility in hours, working from home and taking more control over your income. However, there’s some downsides to self-employment too, in the possibility of irregular income, no sick pay, annual leave or automatic superannuation.
When it comes to your future and retirement, being self-employed means you have to be (more) disciplined with setting money aside yourself, for yourself.
Read more from your Gold Coast Accountant, Crest Accountants on superannuation for the self-employed.
The key difference between employment and self-employment
When you’re employed by a company or third-party, your employer makes compulsory contributions to your superannuation.
When you’re self-employed (say a sole trader or in partnership), making superannuation payments isn’t compulsory. Just because something isn’t compulsory though, doesn’t mean you should forget about it. Your future retired self will thank you for your discipline and forward thinking!
Why do I need superannuation anyway?
Superannuation, or retirement savings contributions, exist to set you up for a comfortable retirement.
Here’s a pro tip:
- Investing money into your super will generally provide you with better investment returns than just putting it into a bank account.
- Also, because it’s essentially ‘locked away,’ there’s little to no temptation to dig into it before your well-deserved retirement.
Our retirement should call for some rest and relaxation, hobbies and interests, and/or travelling to all those distant faraway lands we didn’t have time for in our youth. To properly enjoy our twilight years or have the savings for an early retirement, implementing good savings strategies now is essential, and is possible with Crest Accountants and Crest Wealth.
Self-employed superannuation made easy
Chances are, you’ve worked for an employer at some point in your career.
In 1992 superannuation was made compulsory in Australia, so employer(s) started putting contributions into superannuation funds. This means you most likely already have an existing superannuation fund.
If you’ve never been employed by someone else, now is the time to set up a superannuation fund.
As a self-employed person making your own superannuation contributions you can:
- Make contributions on a regular basis, or
- Make less frequent contributions to suit your cash flow.
The contributions you make will still benefit from tax savings, which will rise over time.
Make an appointment with your trusted tax advisor to discuss self-employed finances and setting yourself up for a comfortable retirement.
It’s so important that you have a retirement savings plan now. It can be very easy to think that you’re cruising through successful self-employment and making good money. After all, working for yourself does have some great perks. But you need to be accountable for your own money and your own retirement savings plan.
Need more help with superannuation and self-employment? Contact your Gold Coast Accountant, Crest Accountants, and financial planners Crest Wealth, today, for financial guidance on how to set yourself up for a comfortable retirement.