Author: Greg Taylor

Business finance: Self employed

In his weekly business banking post our CFO Greg Taylor says self employed people have to be really careful with their money and shares some tips for managing cashflow and business income.

It sounds like a dream – being your own boss and dictating your own hours. Our region has a large number of self-employed people, which will continue to grow given changes in technology, family structures and attitudes to work.

According to Independent Contractors Australia about 2 million people or 17 per cent of the Australian workforce are self-employed. About half of self-employed people employ other people. Almost three-quarters are men.

Back to the subject of living the dream (or not), more than half of self employed people work more than 40 hours per week and almost half work weekends.

Being without the backup of a regular wage or salary requires the self employed to be very careful managing their money. To make the most of self-employment you need to keep control of your cash, and draw a line between your personal and business' money.

The Australian Securities and Investment Commission’s Money Smart website ( offers some good business finance tips for the self employed.

Managing cash-flow is critical. Even if you have a high annual income it can be weeks or months between pay days. Paying yourself a wage rather than treating your business income as spending money can help. Set up a personal budget and a business budget and put your business income into a high interest savings account.

The other golden rule is “set aside.” You need funds to cover a lack of holiday pay and sick pay, as well as quiet periods. Remember to set aside for tax (income tax and GST) and major bills too. Separate savings accounts are useful here.

Lastly, save for retirement. Super can be a great way to do this and save on tax. You can manage your own fund or join one. According to research by the Australian Super Funds Association (2008) a quarter of self-employed Australians had no superannuation. Don't rely on selling your business to fund your retirement.

Money management is an essential skill for the self-employed.

For more information or help talk to The Greater's expert business banking team or call into a Greater branch. Please share your money management tips for the self employed below.

This post is based on Greg’s weekly column in the Newcastle and Lake Macquarie Post.