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When you’re running your own business, superannuation can feel like an afterthought – something for employees, not entrepreneurs. But here’s the truth: super is one of the most powerful investment vehicles available to sole traders and business owners in Australia. And it’s not just about retirement – it’s about building wealth, protecting your future, and taking advantage of some of the most generous tax incentives in the financial system. Let me show you how.
Meet Sarah: a sole trader who made super work for her
Sarah runs a successful graphic design business in Melbourne. For years, she focused on growing her client base and reinvesting profits into her business. Super? “I’ll worry about that later,” she used to say.
Then, during a routine chat with her financial adviser, she learned that by contributing just $10,000 into her super fund through a concessional (pre-tax) contribution, she could reduce her taxable income and save over $3,000 in tax. That was her turning point.
Sarah started making regular contributions, and within five years, her super balance had grown significantly—thanks to compounding returns and lower tax on earnings. Today, she sees her super not as a burden, but as a strategic part of her financial plan. A way to diversify if her business does not work out, giving her reassurance with the knowledge that her superannuation is working for her in the background.
Why super makes sense for business owners
Unlike employees who have super paid automatically by their employer, sole traders and business owners need to take the initiative. But the benefits are worth it:
– Tax savings: concessional contributions (up to $30,000 per year) are taxed at just 15%, which is often much lower than your marginal tax rate.
– Compounding growth: super funds invest in diversified portfolios—shares, property, fixed interest—allowing your money to grow over time.
– Asset protection: In many cases, superannuation is protected from creditors, offering a layer of financial security.
– Retirement planning: building super early means more freedom later. Whether you want to retire at 65 or scale back at 60, super gives you options.
Case study – a family business with a smart super strategy
John and Priya run a small café in regional Victoria. They’ve always reinvested profits into equipment and staff, but after speaking with a financial adviser, they realised they could use super to diversify their wealth.
They set up a self-managed super fund (SMSF), allowing them to invest in commercial property – including the building their café operates from. Now, instead of paying rent to a landlord, they pay rent to their own super fund. It’s a win-win: they control the property, build retirement savings, and enjoy tax advantages.
The power of compounding: what the numbers say
The average super fund in Australia has returned approximately 7.6% per annum over the long term. When compounded monthly, this return can lead to significant growth, even with modest contributions.
The graph below compares after-tax returns for two monthly contribution levels – $300 and $800 – invested either inside superannuation (15% tax) or outside superannuation (30% tax) over 30 years:
What this graph shows:
– $300/month in super grows to nearly $400,000, compared to about $300,000 outside super.
– $800/month in super exceeds $1 million, while the same amount outside super reaches only around $800,000.
This visual clearly demonstrates how superannuation’s tax advantages can significantly boost long-term wealth – even with the same monthly contribution.
Getting started: it’s easier than you think
If you’re a sole trader or business owner, here are three simple steps to begin your super journey:
1. Open a super account: choose a reputable fund with low fees and strong performance. Many offer tailored tools for self-employed individuals.
2. You may already have a super fund, therefore checking your MyGov – ATO under the superannuation tab will tell you whether you have multiple funds. Seek advice before combining these funds, as there may be insurance within your super to consider.
3. Make contributions: you can contribute regularly or in lump sums. Use concessional contributions for tax savings and consider non-concessional contributions if you want to boost your balance further.
4. Claim your tax deduction: notify your fund and your financial adviser to ensure your contributions are treated correctly.
5. If you are unsure of what fund to choose or need more information on superannuation, talking to a registered financial adviser is going to leave you in the best position and better informed.
Don’t wait for retirement to think about super
Superannuation isn’t just for the end of your career, it’s a tool you can use now to reduce tax, grow wealth, and secure your future. As a Provisional Financial Adviser, I’ve seen firsthand how business owners transform their financial outlook by embracing super early.
So whether you’re a tradie, a consultant, or running a family business, take a moment to think about your super. It might just be the smartest investment you make this year.
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The Money & Life website is operated by the Financial Advice Association (FAAA). The views expressed in this article are those of the author and not those of the FAAA. The FAAA does not endorse or otherwise assume responsibility for any financial product advice which may be contained in the article. Nor does it endorse or assume responsibility for the information.
