Accounting: Making Sure 2 + 2 = 4

Deciding if Self-Managed Super Funds are Right for Your Business

15 January 2024

Dwayne Barnes

As a business owner, it’s important to consider all of the options available to you when it comes to managing your company’s finances. One such option is setting up a self-managed super fund (SMSF). An SMSF is a private superannuation fund that you manage yourself, and it can offer you more control over your investment decisions and potentially greater returns. However, it’s not the right option for every business. In this blog post, we’ll explore the pros and cons of SMSFs and help you decide if it’s the right choice for your business.

Control and Flexibility

One of the main advantages of an SMSF is the level of control and flexibility it offers. Business owners can choose where to invest their money, whether it be in property, shares, term deposits or a combination of these and other options. This can allow for diversification and tailored investment decisions to meet specific business objectives. However, as a business owner considering an SMSF, it’s essential to educate yourself on the requirements and obligations associated with managing a successful SMSF.

Lower Fees

For businesses, keeping costs low can be the difference between success and failure. SMSFs, on average, have lower fees than other types of super funds since there is no requirement to pay commission and you can choose the investments you want to make.

Capital Requirements

SMSFs entail significant investments upfront, which may not be feasible for every business. It’s important to determine if your business has enough capital to set up and run an SMSF effectively.

Time and Expertise

Managing an SMSF takes time and expertise, so it’s essential to determine if your business is equipped with enough resources to do so. There will be responsibilities and ongoing tasks, including financial planning, investment strategy, risk management and compliance with superannuation and tax regulations. Setting up an SMSF also often requires the assistance of qualified financial professionals and advisers.

Risk Management

With SMSFs, businesses must ensure they comply with often complex superannuation and tax regulations, which come with a range of risks. The potential for non-compliance with legal obligations can result in significant penalties and other financial losses. It is essential that you are aware of all the regulations and obligations before you decide to proceed with setting up an SMSF.

In conclusion, setting up an SMSF can offer businesses enhanced control over their investments, lower fees and greater tax benefits. However, it is not the right option for every business. As a business owner, it’s essential to consider the capital requirements, time, expertise, and risk management associated with managing an SMSF successfully. With an informed and educated approach, you can determine if an SMSF is the right choice for your business.

For more information about self-managed super funds, contact a finance professional in your area.

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About Me

Hello. When you are at school, maths can seem so complicated at first. But then you learn about numbers and all of sudden everything seems as easy as 2 + 2 = 4. I used to be pretty good at maths so when I started my own business, I didn't think I needed to hire an accountant. After all, why should I pay someone else to do something that I could do myself? However, I very quickly learnt two important lessons. Lesson one was that accounting and doing the books will take a lot longer than you might think and, secondly, it is actually pretty complex stuff. In the end, I decided to hire a professional accountant. He is great and he has taught me a lot of cool stuff.