There are over 2.65 Million Small Businesses in Australia, according to 2025 ABS data. These businesses play an essential role in the economy by providing jobs, delivering services, and driving innovation and productivity.
Yet, managing a business effectively is a significant undertaking for their owners. Many struggle to reward their contribution to the business with a consistent market-level salary due to other financial commitments such as employee wages, inventory costs, business loans and other debt repayments and fluctuating cash flow.
Making regular superannuation contributions can be a low priority, especially as the self-employed are excluded from the mandatory contribution scheme.
The more pressing priority is usually to invest in the business, with the bigger goal of the business providing a form of financial security ultimately through its sale or succession.
Many groups have previously called for changes to the superannuation system, by introducing a payment obligation for the self-employed, perhaps at a lower contribution rate initially. As an example, Mercer Super points to Finland, where self-employed workers provide an annual salary estimate, upon which superannuation contribution calculations are made.
Superannuation can be both a tax effective and long-term planning tool as part of good financial management.
Over time, super investments create an alternate asset for the owner where its performance is not tied to the performance of the core business. Taking insurance within the super fund is another option to consider. These strategies can bring peace of mind along the journey.
Strategies to make owner superannuation a habit:
- Start with incremental contributions, perhaps monthly by direct debit
- Choose a platform with no or low administrative commitments such as the Small Business Superannuation Clearing House (SBSCH)
- Establish a goal of total contributions over a medium-term horizon
- Consider treating yourself as an employee (even part-time) therefore invoking mandatory super on top of your salary
- Understand your "Opportunity Cost" (i.e Your Super Return vs. Investing in the Business).
Having an SMSF provides more choice and flexibility (including having up to four members) and the ability to access investment options that would otherwise be unavailable such as property.
On the flip side, managing an SMSF is a significant commitment. As the trustee, you need to ensure your fund complies with all relevant laws. There are ongoing costs and management is time consuming. However, when structured well the benefits can outweigh the obligations.
Learn more in our SMSF and Property Guide.
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