Self-managed superannuation funds (SMSFs) are gaining popularity among individuals seeking greater control and flexibility over their retirement savings. However, setting up an SMSF involves several important steps to ensure compliance with legal requirements and to establish a solid foundation for future success. In this blog, we will walk you through the process of setting up an SMSF.
Step 1: Check if It’s Right for You:
Before you begin, make sure an SMSF is a good choice for you. Think about things like how much money you have saved up. You used to need at least $200,000, but now that’s not a must. Still, you should know about the costs of starting and running an SMSF. You should also know what being in charge of an SMSF involves. Talk to someone who knows, like a financial advisor. At Easy Super, we’re here to help you figure out if an SMSF is right for you.
Step 2: Create a Trust and Choose Trustee option:
An SMSF works like a trust. So, the next thing is to establish a trust. Your financial adviser or accountant will be able to do it for you. They’ll make sure it follows the rules and covers everything you need. The trust could have the individual trustees (up to six members) or a corporate trustee arrangement (a company serving as trustee).
Step 3: Register with the ATO for ABN, TFN and GST (if applicable):
All SMSFs must be registered with the ATO. Your adviser or accountant will obtain a Tax File Number (TFN) and an Australian Business Number (ABN) for your SMSF.
Step 4: Develop an Investment Strategy:
Every SMSF requires a well-defined investment strategy tailored to the members’ risk appetite and retirement goals. This strategy should outline asset allocation, diversification, and risk management principles. Seek advice from a financial adviser to create a solid investment plan that aligns with your long-term objectives.
Step 5: Open a Bank Account and Roll Over Superannuation Balances.
Open a separate bank account exclusively for your SMSF. This account will be used for receiving contributions, allocating funds, and making investments. Next, consolidate your existing superannuation balances into the SMSF. Contact your previous superannuation funds and request the necessary rollover forms to transfer the funds. At Easy Super we can assist you with your rollover so you don’t have to spend this time on contacting your superfund.
Step 6: Keep Good Records:
You need to keep good records of everything. Keep track of the money going in and out of your SMSF. Engage a right SMSF accountant who will be available to answer all your questions and prevent you from breaching the SIS Act.
Step 7: Think About Insurance and What Happens After:
It’s wise to have insurance in case something happens to you. You can also plan who gets your money after you’re not here anymore. Find the insurance adviser to make sure you and your family are covered.
Step 8: Regular Review and Ongoing Compliance:
Setting up an SMSF is not a one-time task. Regularly review your investment strategy, monitor fund performance, and stay informed about changes in legislation. Engage the services of an SMSF expert to assist with ongoing compliance obligations, including annual audits, reporting, and adherence to regulatory requirements.
Starting your own SMSF might seem like a lot, but it’s not too hard if you take it step by step and rely on the professionals. By following these simple steps and talking to SMSF experts, you can make sure your retirement money is in good hands. At Easy Super, we’re here to help you every step of the way. Let’s work together to make your retirement dreams come true!
At Easy Super, we helped thousands of clients to grow their wealth via SMSF. We would love to assist you in your journey to a happy retirement. Book a free discovery call with our SMSF Specialist, Natalia Clack here.