In this Tax Tip Tuesday, we look at a question that all business owners ask. How do I pay myself a salary?
This is part of our three part series on how do I take money out of my company?
One way to take money out of your company is to pay yourself a salary, so essentially you are now an ‘employee’ of your company. Although you may be a Director, the same rules here apply whether you’re a Director or an employee.
As an employee, tax will need to be taken out of your salary on pay day. A good tool to work out how much tax to take out is to use the ATO Tax calculator.
As an employee, there are also other on-costs you need to consider. The two main ones are superannuation and worker’s compensation insurance. Generally speaking (although, there are some exemptions), your company will need to pay superannuation when you earn at least $450 per month. The current rate of superannuation is 9.25%.
A Worker’s compensation policy insures your company against any claims to compensation for injuries in the workplace. Worker’s compensation insurance may need to be paid when you are classified as an employee. Different states have different rules so check the guidelines that your state has around this.
This Tax Tips Tuesday is brought to you with love by Nudge Accounting. You can read other Tax Tips here.