Tips for managing superannuation payments
Does it ever feel like you’ve just got on top of one set of payments and then another one arises? The obligations of small business are many and it can be a bit like bobbing in the ocean with waves coming at you. At ATB we recognise this. That’s why we want to help so you can take control of your business and do more than just keep your head above water.
Managing your workers’ super is a big responsibility. It’s maybe the most complex thing you’ll have to deal with. Not so long ago paying super was very time consuming and fraught with difficulty. Luckily with cloud based tools and online super administration systems, the job of super payments is much easier than it used to be.
Here’s our tips on how to ease the administrative burden of super payments so you can concentrate on your business.
1) Match your cash flows to your super payments
Super payments are another form of liability. As with any liability you don’t want it to suddenly sneak up on you.
We’ve spoken before about how crucial the timing of your cash flow is. This means making your super payments at a point in your cycle that suits you.
For instance, you may want to think about changing your super payments from quarterly to monthly if that works with your incomings.
It may be easier for your business to manage a monthly super payment than have a large three month payment suddenly appear on your horizon.
Example:
Naomi runs a small bakery. Her business is growing and she’s adding staff.
She has three full time and seven casual employees.
It’s all going well. Except that she’s suddenly been caught out by the miasmic swamp of super.
Naomi’s employees are all earning more than $450 per month before tax and so they’re all entitled to super. They all nominate different super funds. Naomi is trying to set up pay cycles for everyone but the super is another big consideration.
Her margins are pretty tight. Yet she’s found that quarterly super payments aren’t working for her.
So if she makes the super payments every month this is easier for her to budget and deal with all the many super obligations she has.
2) Use cloud based applications or tools
We mentioned cloud based systems earlier. There’s a great array of tools out there, which will make your life easier.
The better ones will take away the annoyance of manual data entry.
Instead they will have straight electronic processing; update employee’s details and information; offer flexibility with how you pay and easily set up new super funds for new employees.
The most important is Super Stream. Since 2016 it’s been mandatory by law for all small businesses to use Super Stream to pay super contributions to employee funds. It’s a faster and more efficient way of paying and reporting. Money and data are quickly transmitted and payments and rollovers are pushed through faster, efficiently and with few errors.
But if your business is not Super Stream compliant you may be fined or penalised. Luckily, there’s a number of great tools such as Xero Superstream which will make the whole process simple and streamlines. For instance you can make a single employer’s payment and the cloud platform will spread it across multiple funds if needed.
Cloud based tools revolutionise super payments and make them less of a formidable mountain. They’ll help you schedule when to pay and check the best time for our business.
Chat to us about what system will work best for you.
3) Make sure you understand about contractors
It’s easy to think that contractors are exempt from super. Not always. If your agreement is directly with someone to perform some labour or a service for your business and you’re paying them over $450 per month before tax then you may need to pay them super. It comes down to if they are considered a business or not. This is where it gets very tricky.
Be warned: this is one of the areas in which we see the most mistakes and interpretations. In particular where there is a payroll tax, super guarantees or workers compensation audit. The lines are often blurred. You may think someone is a contractor, only to discover that they are considered an employee because of the length of time they’ve been working for you, or other factors. It’s very easy to make a mistake and easy to get roles confused. If you’re not clear at all, please come and talk to us first, as mistakes can be very costly.
4) Talk to a team that can support you
ATB specialise in super advice. We can advise the best super strategy for your business and find ways of making those super payments more efficient and less taxing.
This allows you to concentrate on the bigger vision of your business and making it grow.
We can unpick the tricky technical issues for you so you can take control of your business again.
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