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6 Benefits Of A Self-Managed Super Fund For Small Business Owners

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January 20, 2022

Some people have the notion that SMSF services are time-consuming and difficult to manage. However, as a small business owner, the benefits are way more in number than the disadvantages. Having an effective SMSF enables you to invest in commercial properties within your personal super fund, which not only has several ongoing benefits but also increases your super fund’s value. Read on to know the six key benefits of having a super fund as a small business owner.

Reduction In Capital Gains Tax

The ability to include their commercial premises in their fund is one of the many benefits small business owners get from SMSF. The superannuation law prevents a person from transferring his or her residential property to a fund, but this does not apply to commercial properties. Office spaces and buildings can easily be transferred to an SMSF and help reduce the capital gains tax.

Similarly, if you need to sell a commercial property held in your SMSF, you would have to pay a highly reduced capital gains tax on the property sale. It not only cuts down the extra costs but also boosts up the super fund.

Increased Value Of The Business

Self-managed super funds can be utilized to procure several assets that would enhance the value of your business. For example, you can use your SMSF to acquire physical assets like properties that would strengthen your position in the market and also provide you with the option of expanding your business.

You will also have the option of leasing the properties you buy using your SMSF, thus creating an extra income stream that will boost and diversify your portfolio.

Tax Deductions On Money Earned From The Fund

Any earnings on SMSF fund investments are taxed at 15%, which is also applicable to commercial properties. So, the fund sees a commercial property as an investment, and any money earned on the property like rent will be taxed at 15%. Now for business owners, this is a perk as they can claim tax deductions for the business on the rent amount paid to the SMSF while the fund itself will pay 15% tax on the amount.

In this way, a small business owner can make necessary tax deductions and make significant contributions to the retirement fund as well.

Controlling How The Assets Are Managed

Self-managed super funds significantly allow a higher degree of asset control and management. When assets are invested in fund management companies, individuals have almost negligible control over how their fund is managed, where it is being invested and whether the management firm will survive or not.

However, with an SMSF, the scenario is totally different. It gives you total control over the management of your funds and assets. That way, you not only have lowered risks of potential losses and legal proceedings linked to management corporations but also have the independence to make your own financial decisions that would align with your goals.

Financing Your Retirement And Insurance Policies

Often people miss the fact that they can also enjoy the opportunity to pay for their life insurance, income protection insurance and even total and permanent disability insurance policies through their super fund. However, this option should be avoided if you have investors in your fund, which increases the potential risk of cancellation.

Likewise, when it comes to passing down or selling their business and retiring in the future, people can benefit from an ongoing income from the self-funded superannuation setup. You sell your business or enjoy the benefits of reduced capital gains tax or even rent out your property and keep growing your SMSF with monthly payments, this fund acts as an invaluable passive income source in retirement.

Making Generational Wealth In Advance

Apart from benefiting your business, a self-managed super fund also allows you to build stable finance for your family and your upcoming generations. By strategically creating your SMSF portfolio now, you ensure to maximize your personal wealth and then easily transfer it to your beneficiaries.

The fund acts in a simple way in managing and sustainably increasing your wealth over time by making systematic and sensible investments. Apart from securing your own future, the acquired wealth can also be used by your next generation after you pass away, thus acting as an effective solution for building generational wealth and securing the lives of your loved ones.

Final Words

You must have a clear idea by now on how your self-managed super fund in Australia can help you with your business and simultaneously keep growing on its own to secure your and your family’s future. If you want to set up your super fund and need expert guidance on all the investment options and effective management of your fund, approach one of the top-rated SMSF consultants – GW Capital Group and get started with your SMSF.

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