Monday 30th January 2012, 1:58 pm
By Marcela Dias
When you are generating a solid and steady income it is tempting to take a further step towards independence by investing in a self managed superannuation fund, rather than relying on others to do what is best for you. To run a SMSF successfully you realistically need around $200,000 because the running costs will be disproportionately expensive otherwise. There are benefits to a self managed super, just as there is an added workload. This article will seek to educate on what a self managed super fund is and whether it is wise to create one.
What is a Superannuation Fund?
There is a simple need for every Australian to prepare for retirement throughout their lifetime. In most cases this takes place through payments to a managed super fund. A super fund is a body of money which is received upon retirement with the purpose of sustaining you for the rest of your lifespan. It is estimated that the average 20 year-old Australian today will need between one and two million dollars in their super upon retirement to sustain a comparable lifestyle to that which they enjoyed during their working life. It is also estimated that around one in two super funds will run out before they are no longer needed.
What is a Self Managed Superannuation Fund?
A normal super fund is paid into by both employer and employee and it is managed by a board or company to ensure there is a larger amount available upon retirement than has been paid into the super. This is achieved through investments but the individual has no control over the process. In a self managed super fund, however, the individual has full control and is able to determine exactly where to invest their money. This offers some obvious advantages and disadvantages:
Advantages
- Greater control of your money.
- Greater ability to monitor investments.
- No operating fees.
- Greater ability to diversify investments.
- Independence and control.
Disadvantages
- Greater input required from the individual.
- Large personal risk.
- Greater understanding required.
- Time consumption.
What are the legal implications?
The legal implications are that you take responsibility for your super fund and all that is involved in it. There are serious penalties for misusing the funds because they are intended for future use, not current enjoyment. It is thus vital that all of the funds in your self managed super fund are kept distinctly separate from all of your personal funds. There is also a need for solid accounts to be provided and audited so you will almost certainly require the services of accountants in Sydney to enable compliance with the rules and regulations.
Is it worth it?
Generally speaking, you will get a far larger return from a self managed superannuation fund than you will from a normal super fund. There is a great deal more effort involved in the management of a self managed super fund than one which you can pay into and forget about but it does give you a far greater level of control. The decision basically depends on two elements: whether you have enough money to invest, and whether you have the time and ability to self manage a super fund. Whatever you decide, be sure to follow regulations closely and seek audits and advice from financial advisors before making any investments because you are building your foundations for your future and cannot afford to make mistakes.
Monday 30th January 2012, 10:28 am
By Paul Davis
Its right to expect the best from your staff, but do you know how to achieve this? Try these ten top tips to show you how…..
1. Do it first. If you can tell your team that you’ve been there, done that; you have more credibility and will gain more respect for what you want.
2. Take the best of what you’ve done and improve it. After you’ve established your credibility, sort through the best of your experience and improve it to suit your current situation.
3. Be reasonable in your expectations. Remember that it took you a long time to get to your current expertise level, so be reasonable about what you expect others to accomplish for you. Continue reading →
Monday 30th January 2012, 8:23 am
By Marcela Dias
Everyone dreams of financial security but most people don’t actually know what it is. If you asked 10 people on the street what they think they would need to bcome financially secure, and never really have to worry about money again, you will get answers ranging from $1 million to $50 million. Whilst it is good to aspire to make this kind of money there is little chance that the majority of us will ever reach these figures.
- Even if we consider having $1 million in the bank, there would not be a huge amount left after buying a house now that the average price is upwards of $250,000.
- If we consider having $10 million in the bank then we are looking at a more realistic $500,000 a year of income without any work. Continue reading →
Monday 30th January 2012, 8:18 am
By Marcela Dias
When running a business there are numerous regulations and requirements that you have to meet in order to comply with Occupational Health and Safety and Food Hygiene standards. In addition to these there are elements such as tax, insurance and superannuation that need to be completed accurately. This article will consider some of the ways to make sure you comply with tax and insurance regulations amongst others.
Insurance
Having business insurance is an absolute must for any business. Whether you are a freelance designer or a piano teacher, if you are a business then you need to be insured. Insurance can cost a large amount for any business, no matter how small you perceive the dangers to be. It is possible to avoid paying large premiums to insurance companies, however. There is an option to operate self insurance, which would greatly reduce the cost and constraints of insurance payments. Becoming a self-insurer need not be a difficult task but it is important to carry out a safety audit to ensure that you are able to demonstrate safe working practices. In the case of self-insuring, you will become responsible for the management of your own internal claims and administration of insurance claims.
Taxes
Taxes are a challenge that everyone has to face during their working life but it is far more complicated for self-employed business owners. Running a business immediately makes your accounts more complicated because you will find yourself paying for GST and Medicare costs which normally would have been paid for by your employer. Having staff and having premises which you rent for your business will also immediately complicate taxes further. It is almost essential that you get an accountant to help with your taxes when running a business. Even if you are confident about being able to do your family accounts, it is wise to seek assistance for business accounts because mistakes can be costly.
Having a well organised record system from the start of the financial year will ease this process massively. Rather than having to spend hours looking for a missing receipt to complete your taxes, it is best to have everything neatly organised from the start. Your accountant will appreciate this and you will too when your taxes are less painful than anticipated.
Superannuation
When you are employed your employer will deal with your superannuation fund for you. Unfortunately, this means that when you run a business you will be required to carry out superannuation on behalf of your staff and on behalf of yourself. Superannuation will be an additional cost that needs to be considered on top of the cost of each member of staff that you hire. It is essential that you put this money aside throughout the year so that you are able to make the payments when they are required. Failure to pay into a superannuation fund for your staff could lead to severe penalties. If your business is large enough it may be worth considering running a self-managed superannuation fund for you but this requires a lot of work and understanding of the stock market.
