Although an SMSF is regarding as a DIY (do it yourself) super fund, there are some functions of the fund that you simply cannot do yourself and instead they must be completed by a qualified professional.
There are a number of different types of admin and audit service providers in the SMSF industry, and the right one for you and your super fund will really depend on your own needs and objectives, and in some cases the type of assets you plan to invest in.
In today’s article we will look at some of the major types of SMSF audit and admin providers.
Traditionally accountants have been the main providers of services of SMSF holders. This has been an easy often for many people, as they can use the existing relationship with their accountant rather than having to go out and find yet another professional to deal with.
Using your own accountant has the benefit of dealing with someone who already knows the intricacies of your personal and business accounts. Generally the same accountant can handle the tax returns for your personal, business and SMSF entities, which can cut down on time and fees.
If there is a downside of dealing directly with an accountant, it is generally that they will charge more than some other services. Furthermore, the best accountant for your personal and business needs may not necessarily be the best accountant for your SMSF needs.
Online SMSF Services
There are an ever increasing number of online services offering SMSF audit and administration. These services are generally promoted on their reduced costs when compared to dealing directly with an accountant.
The reduced costs of online SMSF services have had a dramatic effect on the minimum amount of super required to make an SMSF cost effective. This has no doubt contributed to the dramatic growth in the SMSF sector over the last few years.
Although there are benefits to using an online service, there can be some major restrictions.
Online service providers often have a restricted range of approved assets that can be invested in by the fund. Some online providers will not allow an SMSF to invest in property, whilst others will allow property investment but have no facility to borrow for the investment purchase.
More exotic investment options are often limited by online SMSF providers. Investments such as art, collectables and internet domain names are more difficult for online providers to track and manage, so they will generally not be allowed.
Online SMSF services are able to reduce their fees further by automating a lot of the processes. This is great, however it means that most online providers restrict you to using bank accounts and online share trading platforms where there is a relationship between them and the SMSF audit provider.
This relationship allows the SMSF service provider to automate the process of compiling your transactions and trades, and therefore automate the audit and tax return process. This saves your SMSF provider a lot of time, which translates into lower fees for your SMSF, but it an added restriction which needs to be taken into account.
Which service provider is right for my SMSF?
This really depends on what you want to achieve with your SMSF. If you want more flexibility in terms of the available investments and platforms, then using a full service audit admin provider is definitely a better bet.
If on the other hand you are planning on investing in standard investments such as cash, shares, managed funds and maybe some property, and you are not concerned about being limited to certain platforms, then a low cost online provider could be a great option for your SMSF.
For more information we recommend you speak with your financial adviser or accountant. If you plan on going it alone and not seeking advice, then we strongly recommend that you take the time to plenty of research from reputable sources before making any decisions.