Being a popular way of saving for your future, a self-managed super fund (SMSF) is a fund you set up for yourself, either by yourself or with other members who also serve as trustees. Although SMSF might often be considered too challenging and time-consuming to maintain for private individuals, the benefits might actually outweigh the disadvantages when it comes to business owners. To that end, here are just some of the major advantages small business owners might enjoy with an SMSF:
1. Increasing the value of your company
One of the most evident benefits of self-managed super funds is the option to allocate your resources towards the procurement of assets. Simply put, this means you could utilize your SMSF to obtain physical assets, mainly properties, that will add further value to your small business, accrue personal wealth, or help to achieve other financial goals.
Although all members of the fund tend to benefit from such investments, you will also have the opportunity to invest in individual business growth, such as buying or leasing the current location of your company, and thus building an income stream that will strengthen and diversify your portfolio.
2. Controlling the way your assets are used
Another reason for the increase in popularity of self-managed super funds is the fact that it allows for a significantly higher degree of asset management and control. In cases when assets are handed over to fund management companies, individuals tend to have little control over how their money is managed, where it is invested, and whether the management company will survive at all.
On the other hand, establishing an SMSF that you can oversee yourself gives you complete control of your funds and assets. Not only will this help to reduce the risk of potential losses and legal proceedings tied to management corporations, but it will also allow you to make smarter financial decisions that align with your goals.
3. Working with experienced professionals
If you’re thinking of setting up a self-managed super fund, it would be recommended to work with professional advisers and experienced accountants in an effort to achieve tax benefits and ensure legal compliance. By opting for the best SMSF setup and administration solutions, experienced professionals will help to make the entire process simple and straightforward, while offering additional benefits as well.
For instance, an SMSF specialist will be able to set up a fund, develop an efficient investment strategy, and make investment decisions that are most beneficial to you, while ensuring all legal requirements are met. They will also help with administrative obligations such as submitting declarations, appointing auditors, providing reports, and maintaining general financial records, thus being the best overall choice for your SMSF.
1. Financing retirement and insurance policies
While this might be a lesser-known fact, you could also get the opportunity to pay for your income protection insurance, life insurance, as well as total and permanent disability insurance policies through your SMSF. However, this might not be the wisest choice if you work with other investors in your fund, due to the potential risk of cancellation.
Similarly, when it comes to selling or passing down your business and retiring in the future, you can ensure an ongoing income through your SMSF as well. Whether you sell the business and benefit from a reduced capital gains tax, or even rent out the property and grow your SMSF with monthly payments, this fund represents a great passive income solution in retirement.
2. Building generational wealth in advance
Apart from being quite beneficial for your small business, a self-managed super fund can allow you to build a stable financial future for your family as well. By building your SMSF portfolio now, you can maximize your personal wealth in the future, easily transferring it to your offspring or your beneficiaries.
This fund represents a simple way of managing and building your wealth sustainably over time, by making wise investments with a professional team. Besides securing your own future, that acquired wealth can also be passed on to your next of kin once they’re of age or after you’ve passed away, thus being a brilliant method of building generational wealth and taking good care of the ones you love.
While SMSFs might not be suitable for every small business, they can deliver a number of financial benefits for many business owners. Before making the final decision to set up a self-managed super fund, consult a qualified financial advisor or a registered accountant, to ensure the option is right for you as well.