I have just set up my own business and want to ask about super. I’m a sole trader and just starting out so do I have to make super contributions based on the income I earn or can I wait until the business is making more money
Congratulations and good luck with the new venture. The answer depends on how you will take money out of the business. If you pay yourself a wage, then you do have to pay yourself Super according to normal rules.
As a Sole Trader, no super is required on your profits.
While this is handy as a start up, there are tax advantages along with retirement planning advantages to picking up on the contributions before to long.
Regarding you business structure, please discuss with a CPA/ CA accountant that deals with business.
Good luck with the new business! Exciting and challenging times ahead, and extremely rewarding.
There is this technical concept referred to as mutuality, which means you cannot employ yourself. So a sole trader is not required to pay super under Super Guarantee legislation.
BUT SUPER IS THE BEST THING EVERRRRRRRRRR!!!!
I cannot stress enough how important it is that you make regular super contributions!!!! There is almost certainly going to be no reason for you to make super contrubtions for TAX reasons........but trust me if you dont make regular super contributions as a sole trader it is highly likely that your retirement plan is going to centre around the Age Pension, and that is not the best outcome after working your backside off for yourself for 30 years.
the thing that I try to impress on people embarking on a career working for themselves is that whilst being your own boss if wonderful, none of your clients will seek you out in your retirement to make sure you are happy and comfortable. You have to be greedy enough to make provision for your retirement whilst you are young. and that means making sure that you dont price super out of the equation when you work for yourself.
And dont kid yourself into thinking that your business is your retirement. Very few businesses are worth much more than the machinery and stock.....and it may not be enough for you to retire on.
hope that this frightens you enough to start thinking about a super plan without scaring you away from being self employed entirely......because working for yourself really IS good......you just need to havea long term plan which includes your retirement
it is almost certainly worth your while to sit down with a CA/CPA and develop a long term business plan. It would be money well spent at this stage of the business:)