5 mistakes to avoid when managing your SMSF

admin

It’s estimated there are more than 1.1 million members of self-managed super funds in Australia, accounting for over $822 billion in assets. Those figures alone showcase the popularity of running things yourself, but there are challenges to setting up an SMSF – not to mention managing it.

To help you on your own SMSF journey, here are five common mistakes to avoid.

  1. Forgetting about insurance

There are quite a lot of moving parts when you start to set up an SMSF. When you are transferring your accumulated super from your existing retail or industry funds, for example, it’s easy to forget about death and disability insurance. Because most traditional super funds have these types of cover built-in, you will need to set up an appropriate level of insurance along with your SMSF.

  1. Breaching contribution caps

There are concessional and non-concessional contribution caps for SMSFs that you will need to be aware of. If your SMSF has multiple members, it’s not uncommon for these caps to be breached unintentionally. Be aware of how things like a member’s age, rollovers and both types of caps can affect your SMSF.

  1. Missing lodgment deadlines

When life gets busy, less-important things tend to fall by the wayside. But lodging your SMSF should not be one of them. The penalty for a late lodgment can be anything from a small fine up to several thousands of dollars in late fees. Moreover, if penalty units from the ATO accumulate you could face even worse sanctions. Always make it a priority to organise your lodgment and get it in on time every year.

  1. Auditing mistakes

Speaking of complying with the ATO’s rules, many SMSF owners make mistakes when it comes to auditing. Every SMSF must be audited annually. So, if an auditor requests verifying documents from you, then it is your duty to supply them within 14 days of that request. The ATO takes delays very seriously. Another common mistake is lodging your SMSF return without including the auditor’s details.

  1. Setting up an SMSF before speaking to an expert

One of the biggest risks of setting up an SMSF is jumping into it without the appropriate knowledge. Doing your due diligence is just one step of the process. Without expert advice, you could easily fall foul of the law and negatively impact your wealth strategy.

“There’s a range of benefits to running your own SMSF successfully, but it is not without its challenges,” says Daran Thomson, Managing Director at Hallmark Consulting. “The key is recognising those hurdles and ensuring you comply with all the latest regulations. Our SMSF specialists at Hallmark will support you through the ongoing management of your SMSF – to ensure you avoid mistakes and maximise every opportunity.”

If you would like to know more about SMSFs or believe you are ready to set one up, speak to the experts today. Contact Hallmark Consulting Finance or call 1300 135 295 to get started.