If you are looking for a way to secure constant income once you are retired, a Self Managed Super Fund is the right choice. However, managing a SMSF is real work. It includes keeping your transactions recorded. This process of keeping your accounts in order is called bookkeeping.
Since its inception, Australians have embraced SMSFs quite well. This has been shown by the increasing number of SMSFs that are operational every year.
Good bookkeeping is one of the most important parts of accounting, and this is extremely important when it comes to SMSFs. However, in order to make sure that you are carrying out bookkeeping you need to follow a number of tips. These will help you make sure that your SMSF generates more saving, thereby making your later life more comfortable.
Regular Recording and Loop Mechanism
Certain financial transactions entail significant change. These changes need to be administered almost immediately. Therefore, in order to keep track of these important developments, it is necessary that you record each and every transaction in the books of accounts. This will lead to more precision and help your SMSF actually lead to better future savings.
Apart from this, it is also extremely essential to keep your SMSF trustees in the loop when recording every transaction. This will lead to more transparency, benefiting the smooth running of the superannuation fund. This will also ensure that everything is on paper and can be used as proof or be justified as and when needed.
Segregation of Accounts as per Each Investment
The main purpose of an SMSF is not to keep the member’s money saved somewhere without much use. On the other hand, the preliminary objective is to invest it where benefits can be maximised. As and when investment opportunities present themselves, it is vital to open different bank accounts for every investment made. This will help segregate accounts based on performance. Such meticulous organisation makes it easier to drop investments that only generate losses in the long run. Other than this, it is always easier to manage a chunk of money than manage all the funds as a whole. Hence, segregation makes it easier.
Invest in the Right Accounting Software
A reliable accounting software makes things easier. These automate a lot of functions and make bookkeeping a lot more facile and efficient. An accounting software makes it possible to handle large sums of money held within SMSFs with much precision. It also shows future projections and statistics. Apart from this, accounting software helps you save money by avoiding large salaries to employees or accountants. You can pay a one-time cost and manage your own financial statements more effectively. Nonetheless, sufficient research on accounting softwares to find the one that suits your SMSF needs is important. An accounting software also helps save time and deteriorate manual labour, making it possible for people to be more productive by indulging in tasks of value.
Compliance to Taxes
SMSFs are usually exempt from a number of taxes. Even so, there are certain legal obligations pertaining to these. Such fees need to be accounted for and paid on a regular basis by any superfund. This ensures that the programme is successful without being targeted by legal suits and keeps you on the right side of the law. Other than this, certain investments made by trustees are subjected to a number of taxes. These taxes need to be listed well, complied and paid off in order to ensure smooth functioning of the SMSF and subsequent realisation of the goals.
Receipts are record keepers. These are needed at the end of every transaction in order to make sure that each one is accounted for. These may be needed to check out transactions through the years as and when needed and tally the accounts. Since a SMSF deals in many businesses at a single time, it is the responsibility of a bookkeeper to keep receipts organised. One thing that can be ensured is that the last 5 years of receipts are maintained with the bookkeeper. This will help greatly in the future as and when things need to be verified.
Transacting without Cash
Cash transactions are risky. On top of this, they are also difficult to record and keep track of. Therefore, when it comes to operating an SMSF, it’s best to avoid making cash transactions. A better way would be to use debit and credit cards. The plus point of this is the fact that you have data available more easily. This acts as a backup when things aren’t recorded in the books or when data is misplaced. Moreover, since there are many transactions that happen through superannuation funds, when done in cash, the large quantities may be more cumbersome to keep in the records. In certain circumstances, this can even lead to money scams.
Hire a Professional Bookkeeper
The last tip in order to excel at SMSF bookkeeping would be to hire a professional. A DIY approach can only get you so far. A professional bookkeeper will have through understanding of accounting and the market in general. Hence, he can help you keep your SMSF books updated in a better manner. Moreover, a professional bookkeeper can also advise you such that you are able to generate more money through your SMSF. They may also give you a second opinion on your decisions. However, before hiring a bookkeeper it is best to make sure that they are good at what they do and are reliable.
All of the above can help you manage your SMSF bookkeeping in the best possible manner.
If you are looking for bookkeeping in Australia, Zimsen Partners can help. Our knowledgeable professionals have a thorough knowledge of SMSFs and its functioning. They can thus help you keep your accounting books updated, organised and profitable. Call us now to avail our services.