Running your own business is immensely rewarding – but it does come with its own set of challenges. Not only do you have to keep your business afloat, but you also need to stay aware of your own financial health, never neglecting one for the other. The median weekly income for owner-managers in Australia was $1,028 in the 2016 Census, only fractionally greater than the average employee’s income ($1,023), and actually lower in some jurisdictions.
If you’re running a business and looking for ways to give yourself and your business an edge, read our tips below.
Understand how a financial planner can support you with your need for financial security. Get in touch.
Assistance for your business
A common reason business owners may make less money than their employees is that they’re channelling profits back into the business, rather than taking a larger salary for themselves. We’ll talk a little more about paying yourself below, but for now, we’ll discuss a few options that may be available to help your business grow without cutting your own pay.
There are a number of government grants available to growing businesses in Australia, including:
- Entrepreneurs’ Programme (Accelerating Commercialisation Grants): This programme aims to help entrepreneurs with productivity and competitiveness, offering grants up to 50% of business expenditure to a maximum of $1 million. Additionally, the programme provides Australian business owners with valuable support and networks. Find out more about the Entrepreneurs’ Programme here.
- The Research & Development Tax Incentive: Offering by the Australian Taxation Office, this incentive encourages research and development benefitting Australia with a tax offset up to 43.5% for companies with an aggregated turnover of less than $20 million. Learn more about The Research & Development Tax Incentive here.
- Export Market Development Grant (EMDG): Eligible businesses spending $15,000 or more on export promotion can be reimbursed up to 50% of costs exceeding $5,000. Discover more about the EMDG here.
Other government grants may be available depending on where you’re based and what industry you operate in. Visit business.gov.au to find a suitable grant for your company.
Some banks also offer grants to new or existing businesses – so be sure to check with your bank for funding opportunities.
The sky’s the limit with a solid financial plan for you and your business.
Paying yourself and your super
If your business is going to be sustainable, every time money comes in, it’s important some is going to your tax account, a financial buffer for your business, and your own pocket – even if it’s a small amount. Paying yourself an appropriate amount for the work you do helps you stay on top of your financial health and avoid burnout.
For this reason, if your business is structured as a company you might consider taking a regular salary with pay-as-you-go (PAYG) income tax payments to ensure you’re receiving a steady income. Drawing from dividends can complicate your tax requirements and super contributions.
When working as a sole trader or partnership, you also need to think about how you’re contributing to your super. Around 20% of self-employed people have no superannuation at all, according to the Association of Superannuation Funds of Australia (ASFA). This is because sole traders or partnerships generally don’t have to pay superannuation guarantees, so super is easily forgotten.
Likewise, if you’re taking a lower salary as the director of a company in favour to taking from dividends, you might consider making voluntary contributions from the dividends to ensure your super keeps up to speed.
Taking a regular salary to keep you living comfortably and growing your superannuation.
How a financial planner can help
There are a vast number of unique financial considerations for business owners – from your business’ tax structure through insurance, cash flow and succession planning. No matter what stage your business is in, seeking the help of a financial planner can help you ensure your personal financial wellbeing is looked after, so you can focus on driving growth. A financial planner will consider every aspect of your business and your personal financial situation to develop bespoke strategies that push you towards greatness.
The team at Invest Blue are experienced in planning for both personal and business success. With our Better Business Program, we’ll help you identify and manage risks, improve performance and develop strategies that protect your business while helping you achieve your personal financial goals.
To start the conversation, reach out to Invest Blue today or book an appointment with an Invest Blue Advisor.
What you need to know
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.