Since being introduced as a viable long-term savings option in Australia, self-managed super funds have solidified their place at the forefront of people’s minds as a way to save for retirement. With the right knowledge about these superannuation investments, like the information you’d find in a complete SMSF guide, the results can be extraordinary.
When you are an entrepreneur, however, there are other things to consider. Your income isn’t always guaranteed. You often work outside the traditional 9-5 hours and lack time to do your due diligence on investment opportunities.
Many entrepreneurs handle their own accounting. As opportunities increase in complexity, they may need to outsource or reach beyond a basic bookkeeper. So can you use a self-managed super fund as an entrepreneur? Do you do so with your business or as a separate entity? And if so, do you need an accountant to do make it happen? Here’s what you need to know:
What is a Self-Managed Super Fund (SMSF)?
A self-managed super fund is a long-term savings plan in a superannuation trust structure. Unlike other super funds, the members of the fund are also the trustees. You can have between one and four members, depending on the type of SMSF you choose.
The main reason people go this route is the few trustees and the resulting control. In larger-scale super funds, decisions are made to placate a large number of members bringing to mind the old saying “you can’t please everybody.” With a SMSF, you have more control over the decision-making process and fewer people to please.
Am I Eligible for a Self-Managed Super Fund?
As an established business, you must have a Tax-File Number, Australian Business Number, and bank account which allows for an influx of contributions and the ability to pay when pension time rolls around. There are similar programs worldwide, so be sure to investigate the local requirements for similar programs.
There are two trustee structures to choose from. The first is a corporate trustee structure, which may not be beneficial if your business is small or a startup. In this structure, your business acts as the trustee. Each member of the SMSF is a director.
The second structure is the individual trustee structure. You require at least two trustees to make this a reality, and each member is designated as a trustee. If your small business has a partner or employees, you may be eligible for a SMSF. If you’re an individual who is willing to enter into a SMSF with a partner, aside from your business, you may be eligible.
What are the Benefits of a Self-Managed Super Fund?
Self-Managed Super Funds have different benefits and incentives which increase your return. Spousal offsets, for example, can decrease your fees owing, benefiting your bank account. SMSFs also offer advanced layers of protection to keep your money safe.
As mentioned previously, the amount of control over the fund is the most appealing part of using an SMSF. Different initiatives allow you to make choices that will help you expand your scope of coverage and add co-contributors. The latter option allows you to share the opportunity and growth with family members.
As a part of the layers of protection added to SMSFs, no one is allowed to receive payment for acting as a trustee. People who are not a member of the SMSF cannot become a trustee. There are extra security measures and regulations in place to prevent fraud and exploitation.
Will I Need an Accountant?
While SMSFs are meant to live up to their name by being self-managed, it is always a good idea to have an expert accountant to assist you with your business as you explore these different investment opportunities.
A certified accountant with SMSF experience can help ensure you are reporting the right information based on your business structure, offsetting the chance of costly mistakes. They will also be able to point out benefits, like property acquisition, that you may not have considered before. With the right information, your SMSF can help you build the road to retirement as an entrepreneur.