4 Things You Need to Know about Small Businesses & Superannuation
Superannuation has been mandatory since 1992. It’s a pension program that helps reduce pension liabilities. Given that they’re a requirement, Australian small businesses must know about supers and what they need to do about it.
No matter how long you’ve been in business, it’s good to have a refresher every now and then. Here are some things you need to know about superannuation as a business owner:
Employees are Entitled to Superannuation
All employees are entitled to superannuation, and this means the superannuation will be on their income. Essentially, it’s a part of your employees’ salaries. The super rate is currently at 9.5%. Over the next couple of years, it will increase to 12%, which will have an impact on business performance and wage growth. With that, keep in mind that this isn’t your money but that of your employees.
Another thing to keep in mind is that this isn’t an extra payment. Instead of paying it in the payroll, you’re saving it for your employees and placing it into a special account for them.
Employees are Entitled to a Super Choice
When employees land a job in your business, you are responsible for providing them with a Super Choice Form. Your staff must complete the flow with their Tax File Number Declaration and other HR documents. When these things are done, they need to submit them to you. On the other hand, if the employee doesn’t return the Super Choice for or they don’t want you to contribute it to a certain fund, you still need to pay their super.
This is where a Default Fund comes in. This is where you will deposit contributions for employees who don’t have a specific fund where you can deposit it to. Even if the employee doesn’t tell you where to put your contributions for their super, you still need to pay it.
Handle Super Stream
Payroll software is crucial because it will handle the Super Stream. Essentially, you need this to submit some data online to the super funds. This will tell them who the contribution is for, the amount, and the type of contribution. The Super Stream helps speed up the processing of contributions at the super fund level.
Have Single Touch Payroll (STP) In Place
STP is for employees, and it transmits data to the Australian Taxation Office (ATO) at each pay run. This means that if you pay your staff on a weekly basis, your data will be sent to the ATO every week as a signal that people are being paid. This also includes the amount, the tax withheld, and the super amount.
The ATO will then cross-check your business’ Activity Statements, Tax Returns, and Payment Summaries. In addition to that, they can match it to your Super Stream data to ensure the super is being paid on time and to pre-fill your tax returns every end of the year.
Ready to Get Those Superannuation Going?
As a small business owner, it’s crucial that you contribute to your employees’ superannuation, as this is mandatory. However, things can get complicated, especially if you’re new to being a business owner. Therefore, knowing how it works and getting professional help are two things that will help you through the process.
New Wave Accounting is your small business accountant in Gold Coast. We will help you with end-to-end accounting and bookkeeping services to help scale and grow your business. Contact us today!