Are you worried about the consequences of paying your staff’s superannuation late?
In this blog post, we’ll discuss the extra money, time, and reputation damage that can come from paying superannuation late.
Let’s look at a couple of examples.
Let’s say a company has a tax liability of $10,000 and pays it on time. When superannuation is paid on time, the company can take full advantage of the tax deductibility and save $2,500 in tax, bringing the total out-of-pocket expense to $7,500.
But if the company pays the superannuation late, it loses the tax deductibility status, and the out-of-pocket expense is $10,000.
On top of that, the company will have to deal with the ATO, prepare and lodge SGC statements, and deal with unhappy staff, all of which can damage their reputation.
The ATO can also apply penalties of up to 200% for late superannuation payments, which can add up to an extra $20,000, bringing the total out-of-pocket expense to $30,000 – four times more than if it had paid on time.
So how can you make sure you pay your superannuation on time?
First, make sure your business can afford it before hiring someone.
Second, review your superannuation liability balance on a regular basis.
Third, transfer some money out of your main trading account into a separate account, so the money is there when the liability is due. And don’t dip into that money for other expenses, as this can be a very costly mistake.
Finally, pay the superannuation well before the due date and keep an eye out for bounce payments.
Paying superannuation on time is essential to saving money, time, and maintaining a good business reputation.
Follow these steps to make sure your business stays compliant and avoids costly penalties.
Now, if you are having cash flow issues, feel free to reach out to one of our team members to talk about your current situation, your goals, and the next steps to take.
Click this link to book a quick 15 minute call https://impalatax.com.au/discovery/
