9 benefits of outsourcing SMSF accounting and tax reporting
Outsourcing SMSF Accounting and Tax reporting allows you to manage your funds without stress and worries. Want to know how? Read on.
Self-managed super funds are a popular retirement saving option in Australia. They give you full control over your superannuation investments. You can manage and grow your funds as per your own preferences. The growth and the expansion of your fund depends on how you manage your fund.
But managing your own funds also means being responsible for accounting and tax reporting. SMSF accounting ensures that your fund functions within you needing to maintain detailed records of your financial transactions. These may include documenting all income, expenses, and assets.
Tax reporting is equally vital. Your SMSF needs to comply with Australian tax laws. Failing to report taxes correctly can result in penalties
Why is accounting and tax reporting important for SMSF management?
Both accounting and tax reporting keep your fund compliant and your finances accurate. Together they
- Keep your SMSF compliant with government regulations.
- Help you claim tax benefits with ease.
- Enable you to maintain clean and organized financial records.
- Allow you to submit accurate annual audits.
- Facilitate long-term financial planning.
What happens if you don’t manage your SMSF accounting and tax reporting properly? You attract penalties. You miss growth opportunities.
This is where you should consider SMSF accounting outsourcing and SMSF tax reporting outsourcing.
Do you prefer handling these jobs in-house? You may face these limitations:
- Cost: Full-time accountants and tax consultants are expensive. You need to pay their salaries, benefits and bear the expense of other overheads. Can your small or mid-sized SMSF business
afford that?
- Limited requirement: As an SMSF Administrator, you may not require constant accounting and tax reporting services. Your needs are often periodic, such as when you need to audit or when you need to submit your tax reports. Considering this, hiring full-time accounting and tax staff may be an unnecessary cost.
- Lack of expertise: Does the staff that you hire start working from day one? You can never be sure. They may not have enough experience. They may need to acquaint themselves with SMSF accounting and SMSF tax reporting. You will need to spend time orienting them. Even after spending money and resources on hiring accounting and tax consultants you can never be sure that they will be the right fit for your SMSF business.
- Inflexibility: Having full-time staff requires you to pay a fixed salary to them even when you don’t require their services all the time. This specialization may be limited, and they may be reluctant to improve themselves. They may not be able to perform their duties without expensive infrastructure.
Managing SMSF accounting and tax reporting in-house or choosing an outsourcing partner is your decision, but there are multiple benefits of outsourcing these two functions. Below we explain individual benefits of outsourcing SMSF accounting and tax reporting.
1. Immediate access to industry expertise
When you outsource your SMSF accounting and tax reporting needs, you immediately get access to industry experts. These are the people who are already working with multiple SMSF owners, and they have faced practically every situation possible.
Facing a peculiar SMSF accounting or tax reporting problem? There is a great chance that the agency you are outsourcing too has already, successfully, tackled this particular problem, multiple times.
So, no need to spend hours and days orienting and training your staff.
2. Accurate maintenance of records
Of course, this goes without saying that you need to maintain your records accurately using standardised, approved times, templates and formats. What are those templates and formats?
An experienced SMSF accounting and tax reporting agency is already familiar with these templates and formats, and it can start accurately recording and maintaining your records from day one.
3. Regularly reconciliation
Reconciliation in accounting is the process of ensuring that there is accuracy and consistency. An experienced agency performs frequent checks to review financial records against your bank statements and other documentation. This nips potential discrepancies or errors in the bud. This further save you from expensive oversights and accounting mistakes. Through regular reconciliation the agency you’re outsourcing your accounting to maintains accurate financial statements. This is essential for compliance and better financial health.
4. Yearly assessments
Yearly assessments for an SMSF may involve annual audits and filing annual returns. Without working with a competent agency, these activities can quickly turn into a nightmare because the data throughout the year may not be preserved in an appropriate manner. But when you work with an agency, trained accountants and auditors examine your financial statements and ensure that your records are maintained in compliance-friendly formats. The same happens with your annual returns. Since the data will already be preserved and processed using recommended formats, filing your annual returns will be a breeze.
5. Better time management
Shouldn’t you be spending your time managing your fund rather than getting trapped in the nitty-gritty of preserving and processing financial records and worrying about tax returns? You can outsource your complex tasks and then focus on other priorities. Your time will be better spent streamlining your operations and enhancing efficiency. This is because although maintaining your SMSF accounting and tax data may be quite complex, a lot of it is repeat job. You need to scour through scores, or maybe hundreds of transactions, enter them into the system, and then process them. Why not get it done from people who have got the expertise?
6. Error-free reporting
Since an outside agency (to whom you decide to outsource your SMSF accounting and tax reporting) manages multiple SMSF accounts, they have a foolproof system. This ensures that your financial reports and statements are accurate and error-free. After all, their livelihood depends on maintaining accurate records to help their clients avoid penalties and compliance issues. They use advanced software and strict quality control measures to make sure that all your data is in pristine form.
7. Cost efficiency
As mentioned above, hiring full-time staff or private consultants can be a costly undertaking. But when you outsource your SMSF accounting and tax reporting, you not only avoid expenses related to recruitment, training, salaries, and benefits, you also avoid paying ongoing salaries even when the operations are far between and there is no need to pay the professionals. When you partner with an outsourcing firm, you pay just for the job, and nothing else.
8. Technological proficiency
Accounting and tax reporting these days is done using state-of-the-art software. There is a multitude of technologies available to make sure that your accounting and tax reporting are accurate and up-to-date. Learning these technologies on your own can be a huge challenge and a big drain on your finances, time, and other resources. Additionally, if you hire staff, you can never be sure that they will be sufficiently trained in the latest accounting and tax software. If not, you will be spending money and time training them. On the other hand, if you outsource your SMSF accounting and tax reporting services you can rest assured that your financial records will be handled by professionals who use the latest technology.
9. Scalability
One of the biggest advantages of working with an outsourcing partner for your SMSF accounting and tax reporting is that you can scale your requirements as per your needs. As written above, when you hire in-house staff, whether you have work for them or not, you pay salaries, you pay for expenses, you need space, you spend money on hardware and software, they use office resources, you pay other expenses, and there are many unforeseen expenses. When you outsource your requirements, the service is completely scalable. Whether you require SMSF accounting and tax reporting service for a couple of days, for a few weeks, or for a couple of months, you pay for just that, and nothing more.
Deciding to outsource your SMSF accounting and tax reporting needs is going to be one of the best decisions you make while managing your super fund clients. Outsourcing provides access to specialized expertise. It ensures compliance with complex regulations. It significantly reduces the risk of errors. You save costs. It gives you enough time to focus on core activities such as growing your SMSF business. In the long run, it gives you scalability. Your SMSF business can grow without needing additional in-house resources.
Thinking of outsourcing your SMSF accounting and tax reporting needs? Contact us today to discuss how we can help you with that.