Salary sacrificing into your super

Salary sacrificing part of your income into your superannuation brings about a lot of financial benefits. Employers in Australia are required to contribute the equivalent of 9.5% of an employee’s salary into a nominated superannuation fund. On top of these contributions, employees can request that their employer reduce their salary and direct the additional cash into their superannuation.

There are a number of benefit to salary sacrificing into your superannuation:

1. Reduce your tax liability: Superannuation contributions are taxed at the low rate of 15% (or 30% for individuals earning over $300 000). Therefore, by making additional contributions from your before-tax income, you are likely to decrease your overall tax liability.

2. It won’t cost your employer anything: Your employer will not have to pay any fringe benefits tax on your additional superannuation contributions, so it shouldn’t be an issue for you to make an arrangement.

3. Compound interest! The more that you contribute to your superannuation early in life, the harder your money will work for you. Even a very small additional contribution each week when you’re young can make a big difference to the final size of your nest egg.

Managing employee complaints

One of the toughest parts of running a small business is dealing with employees who are in some way dissatisfied or upset. While a lot of the complaints that you hear will be legitimate, or at least understandable, others may seem unfair on the employee’s part.

It is important for a manager to be able to communicate effectively with their employees. Effective communication means being able to discern the employee’s meaning as well as clearly articulating your own response. Here are three tips for dealing with employee complaints:

1. Listen: Always hear the employee out, making sure that they understand that you value their opinion, and their job satisfaction is important to you.

2. Ask questions: Try to get to the very bottom of what they are saying. In many cases, the real issue may actually not be what is initially addressed in the conversation.

3. Confirm a reaction: Make sure that you are clear when you inform the employee of your planned course of action in response to the complaint. You should also do this if you have no intention of responding, and you should clarify your reasons.

Don’t delay new business ideas

Many business owners have exciting ideas about where the future might take their company. These ideas may be concerning new products, internal improvements or new market segments.
It is, however, an unfortunate fact that the execution of these exciting plans often gets delayed. In the process, the growth of your firm is slowed.

One of the most common reasons that there is so often a delay in the execution of new ideas is limited time. Time is one of the most precious resources that a business owner has, and like all precious resources it is valuable because it is limited. If you have an idea that you think will make a significant improvement to your business, then you should make scheduled time in your week to work on it.

It is also advisable to discuss the idea with some of your staff members, and seek their advice on how you might be able to make your vision a reality.

ATO focusing on personal electronic devices

This financial year, the ATO has announced that it will be focussing on specific types of deductible claims. In previous years, the tax office has announced specific industries or professions that will be subject to particular scrutiny.

The biggest announcement this year is that deductions for personal electronic devices such as smartphones, tablets and laptops will be closely examined. Last year, Australians claimed almost $19.5 billion in deductible expenses, and personal electronic devices represent the fastest growing sector in this area.

In order to make sure that you are claiming the right tax deductions for a personal electronic device, you should make sure that you have a clear understanding of what qualifies as personal and professional use.

Travel expenses are another area that will be a focus for the ATO this year, especially claims for transporting large or bulky tools.

Income protection insurance: An often overlooked tax deduction

Many Australians overlook the fact that they can claim the premiums paid for income protection insurance as a tax deduction. Income protection insurance policies are designed to protect you in the event that you become unable to work due to illness or injury. Most policies will pay you a pre-determined portion of your previous income, meaning that you will be able to maintain necessities such as mortgage repayments and groceries.

It is advisable for everyone to think about whether or not they can afford not to have income protection insurance. However, if you are the breadwinner in your household or have a significant amount of debt, then income protection insurance is an even more critical investment.

The high premiums associated with income protection insurance policies can see a lot of people justifying not purchasing one. However, it is also common for taxpayers to be unaware that they can claim income protection insurance premiums as a tax deduction, thus making significant savings on their overall tax bill.

Savings strategy for over 55s

If you are over the age of 55 and are still earning income through employment, then you may be able to make significant tax savings using the transition to retirement scheme.

When you use the transition to retirement strategy, you have two superannuation accounts. One account receives your employer’s contributions and any additional contributions that you make (concessional or non-concessional). The other account is your retirement income account, where you place a portion of your savings and pay yourself a pension.

The advantages to this strategy are that you can enjoy the tax benefits of making contributions to your superannuation while drawing on a tax-free pension from your retirement income account. You can use the transition to retirement strategy to grow your nest egg or to reduce the number of hours that you work without impacting your income.

Understanding your business’s trajectory on social media

We all hear about how important it is for businesses to be on social media. The notion that if you’re not marketing yourself on social media platforms you’re not really in the competition is commonplace, and advisors will throw all sorts of statistics out to prove this point.

However, many small business owners find themselves attempting to kick-start a social media presence, only to discover that it’s hard than it looks. Detailed below are the three basic stages of social media marketing that every business should be aiming for. Understanding these stages can make starting your social media accounts a little less daunting and can also illustrate how success can be achieved step by step.

1. Audience: Simply building up your audience so that when you get into your serious marketing, you’re actually speaking to potential customers!

2. Engage: You need to engage with audiences on social media. Remember, it is a very different platform to print, radio or television.

3. Convert: Convert your social media marketing into sales or click throughs! Success!

Improving your company culture

Many people dismiss the concept of company culture as being too ambiguous for the serious world of business, preferring to focus on specific and quantifiable performance indicators. This can be a costly and short-sighted mistake.

Company culture will define the nature of leadership, work ethic, productivity, collaboration and innovation within your business. An underlying issue in your company culture can completely undermine the hard work that you and your employees have been putting into making your business a success.

On the other hand, cultivating a positive, supporting and inspiring company can be a game changer that sees you reach new levels of success. Here are a couple of tips for improving your company culture:

1. Always praise contributions: If your employees offer contributions to the business, for example, suggestions for new products or ways to improve productivity, you should make a point of publically praising them for it. You should do this even if the suggestion is impractical or inappropriate. This will encourage your staff to contribute above and beyond what is expected of them.

2. Encourage collaborative work processes: You should do everything you can to encourage your staff members to work effectively as a team. Some potential ways to promote teamwork include: assigning joint projects, holding workshops, and conducting inter-departmental meetings.

3. Have open channels of communication: The more that everyone in the workplace can communicate and share their opinions and issues, the better your company culture will be. There is nothing more damaging to morale and productivity than issues and grievances that go unresolved.

Superannuation balances boosted by international shares

Findings of a study conducted by research firm SuperResearch reveal that in 2014 investment in international shares provided superannuation accounts with impressive returns.

Superannuation funds reported an average 7.5% return in 2014, with international shares providing a significant contribution. The falling Australian dollar, which tumbled almost 8% against the USD last year, has also benefited super balances.

By contrast, the SuperResearch report found that investments in Australian shares had yielded modest returns, averaging just 1.4%.

Making your super last

When Australians reach retirement age, they have the option of withdrawing their superannuation as a lump sum or taking a pension that will be a reliable source of income for a number of years.

Taking out your superannuation as a lump sum can be incredibly tempting, especially if you reach retirement age with some debts that still need to be paid off. However, blowing through your superannuation is easier than you think. If you choose to withdraw a lump sum, then you find your superannuation is insufficient to fund a comfortable retirement.

Industry experts estimate that a single person needs an income of approximately $43 000 per annum to fund a comfortable retirement while a couple needs approximately $58 000. The age pension, at its current rate, only just exceeds half of these amounts.

If you are nearing retirement age, you should carefully consider your options when it comes to withdrawing your superannuation. If there is some reason that you need to make a lump sum withdrawal, for example, a daunting mortgage, then you may care to investigate a variety of strategies. Remaining in the workforce for an additional few years will boost your superannuation savings and the transition to retirement program offers over 55s some significant tax breaks.