how to boost your superannuation if you’re self-employed

No matter how far away you are from retiring, superannuation is something every sole trader should be thinking about. While others receive super contributions from their employer, it falls onto freelancers, business owners and self-employed people to pay it to themselves. As finicky as super contributions may feel – especially if you’re young – the reality is that sooner or later, it’s a super-big deal. Fret not – we’ve got some tips and tricks to quell your worries and help you establish healthy super habits. 

SUPERANNU-WHAT? In simple terms, superannuation – aka super – is an investment in your future. Australia has a unique approach to superannuation thanks to a compulsory savings regime that ensures earners are able to retire with a nest egg – meaning, they’re less reliant on government money when they’re no longer earning it themselves. Super is a long-term investment that employers contribute a percentage of a salary or wages to. But what if you are your own employer? Sole traders don’t legally have to contribute any of their earnings to their super, but they most certainly should. Basically, every little bit extra you put into your super now beefs up your retirement down the line. A small amount goes a long way the sooner you contribute – the bigger your super is earlier on, the more time it has to grow even larger. For a more detailed explanation on how to set up contributions to your super as a sole trader, Tamara-Lee Beveridge provided us with a helpful how-to guide.  

A LITTLE GOES A LONG WAY An easy place to start with contributing to your super is to borrow from the logic of other employers and add a one per cent superannuation fee to your invoice rate. It might not be a lot – and it’s certainly not enough in the long-term, keeping in mind that the current superannuation guarantee is 12 per cent – but it is at least something. If you’re feeling bold, you can go higher than one per cent, although one per cent is an easy way to ensure that at least some money is going straight into your super on top of your earnings, and it’s not so hard of a hit for who you’re invoicing that they should have a problem with it. 

TAX TIME IS SUPER-HELPFUL An important part of being a sole trader is to make sure you’re setting aside money throughout the year – like through a PAYG method or with the help of an accountant – so that you can avoid paying a lump sum of tax at the end of the financial year. Ideally, you’ll want to have frequent PAYG installments that overcompensate the amount of tax you think you’ll need to pay. Not only will this mean that you won’t have to fork out extra money when you do your taxes, but this is also a top-notch way to contribute to your super in one easy go. Think of it like this – any money that you receive back in your tax return has already left your wallet, so you may as well funnel it straight into your long-term piggy bank: your super.  

UTILISE YOUR BIG GIGS Just like contributing to your super from your tax return, securing a lump sum of money from a high-paying gig or sale is another easy way to add dosh to your super without feeling a burn. If you’re ever in a position where you come into a lot of money all at once, it’s a good idea to immediately parcel off a portion of it to your superfund. If you can contribute a fair amount of money to your superannuation, an important thing to note is that the limit on how much before-tax contributions you can add to your super this financial year, without being subject to extra tax, is $30,000 – also known as the concessional contributions cap. 

IT PAYS TO KNOW With all of this in mind, it’s a good idea to know what you’re actually contributing your hard-earnt dollars to. Set a reminder – whether it be every six months or once a year – to sit down for a moment and look through your super. Just by gleaning your balance and the predicted amount you can retire on, you’ll have a better understanding of how your investments can pay off. Understanding the hard numbers isn’t as scary as it seems, either. The MoneySmart website is a nifty tool to work out how much you need to be squirrelling away in order to retire comfortably. The more you know about how your money is working for you, the better. Plus – it might even inspire you to contribute a little more. 

FUTURE-YOU WILL THANK YOU If you’ve ever saved up for a holiday, a new garm or a vehicle, you’ll already know the joy that is sparked by past-you looking out for future-you. Super is like this, but on steroids. Future-you won’t just be skirting around in a jazzed-up ride or cruising along a beach on the coast – you’ll be living the comfortable life you deserve after a career of hard work. It’s like eating your daily veggies or sweating bullets on a morning walk – this small but vital commitment to your long-term financial health will help you live better in the long run. 

*Quick financial disclaimer. The information above doesn’t constitute financial advice, and it doesn’t account for your specific circumstances or financial goals. Make sure you get some independent guidance from a professional you trust. 

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