When Should You Outsource SMSF Administration?

The self-managed super fund or superannuation fund (SMSF) is a financial instrument that allows you to manage your own money, which you traditionally hand over to a professionally-managed funding manager. As a result, you get full control of your money and you can choose which investments to back.

While there are benefits, SMSF administration can be complex because of the structure and the rules that you need to follow, as well as government regulations you need to comply with. You may need help in delegating tasks and completing manual processes to make sure that your system is up to par with the industry standards.

Among the benefits of managing your own super include:

1. You are responsible for your own money
2. Wider investment choices, which include collectables, commercial or residential real estate, direct shares, and term deposits.
3. Convert pension into an income stream or minimise the tax payments
4. Use your super to pay for your life insurance
5. Protect your assets from bankruptcy or property lawsuits

However, most of the tasks involved in managing the SMSF can be repetitive such as end of the year financials, the tax audit and returns, as well as reporting to government regulators. You will benefit from outsourcing some of these responsibilities to a third-party service provider instead.

Here are some ways to know that you need to outsource your SMSF administration:

1. When the tasks take up most of your time — Smaller accounting firms might get overwhelmed with the enormity of the tasks involved, especially since they are typically understaffed. If all of your personnel are spending most of their time crossing the t’s and dotting the i’s, then it is high time you hire service professionals to unload your burden.
2.  When you find it difficult to keep up with the regulations — Since it involves trillions of dollars in assets, the SMSF industry is heavily regulated. So, you can expect new rules and legislation that will be introduced to help improve the services and the health of the funds. When you outsource the SMSF administration to experts, you do not have to waste a lot of time updating your knowledge at the risk of facing a penalty.
3. Easier access to information — Small practices tend to hunker down to do their numbers near the end of the fiscal year or the tax month. However, professional SMSF administrators will process and audit your transactions throughout the year. You can then ask them to pull out the figures that you deem necessary in the fulfilment of your duties.
4. Spend more time on value-adding services — Instead of wasting your time on manual and repetitive tasks, outsourcing will free you up to focus more on thinking of ways on how to grow your funds. The industry is very competitive, which means you always have to think of innovative ways to add value to your menu of services.

Not many are aware of it, but SMSFs make up about a third of the total retirement fund assets in Australia. The segment used to be the domain of retail, corporate, and industry funds, until recent years. For instance, the superannuation system in Australia is estimated to be worth over $2.3 trillion. Hiring SMSF administrators will allow you to protect your assets and have more time to focus on your practice or investment prospects.

Kenneth

Kenneth is a proud native of sydney, born and raised there. However, he pursued his education abroad and studied in Australia. Kenneth has worked as a journalist for almost a decade, making valuable contributions to prominent publications such as Yahoo News and The Verge. Currently, he serves as a journalist for The Hear Up, where he focuses on covering climate and science news. You can reach Kenneth at bloggerjohnsmith12@gmail.com.