An SMSF is a private fund which you manage yourself. It can be set up in several ways, most people use brokers or financial planners to help control their SMSFs. When you take care of your own SMSF, you decide what to do with your money. You control every aspect of the project and you select the investments and the insurance.
Here are some top tips for helping beginners set up an SMSF.
Creating a Trust
Before you invest your money in any sort of property, you will need to establish a trust. When taking this step, you must register an SMSF with the ATO. Anyone who decides to set up a trust must have all the following:
- Intention to create a trust
- Specific beneficiaries
If you have decided SMSF loans are right for you, you will need to obtain trust deeds to outline the rules and conditions under which the SMSF will operate. This document is vitally important, so it is advisable to have it done by someone who understands the complexity of SMSFs. The deeds should be designed to give trustees maximum control and flexibility. As a trustee, to avoid any problems, it is essential that you understand the strict rules that apply.
As a trustee, you have various duties and obligations. Before you sign a declaration, you must familiarise yourself with your responsibilities. The declaration can only be done on an approved form and this document screen monitoring software must be submitted with 21 days of you becoming a trustee to a SMSF.
Lodging an Election Notice
An election must be lodged with the ATO within 60 days of a person becoming a trustee. This document cannot be amended, and it informs the ATO that you will follow all the right practices and procedures.
Creating an Account
The trustee of an SMSF usually sets up a cash account so they can accept contributions from other members, rollovers, and earnings from investments on the portfolio. This account also covers numerous other tasks such as taxation and accounting fees.
Setting up your own SMSF can be a challenge, when applying for a loan, you can get help from your broker. Having an SMSF ensures you take control of your future, putting the power in your hands. You choose your trustees and you decide what investment property to target. Before setting up an SMSF, make sure you are committed to the project.