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FINDING A SMSF ACCOUNTANT GOLD COAST THE EASY WAY!
Mistakes to Avoid When Choosing an SMSF Accountant in Gold Coast
What are the Right Questions to Ask an Accountant?
Self Managed Super Funds (SMSFs) are often referred to as the DIY kind of super funds. These funds give its members or trustees complete investment autonomy. The trustees of the SMSF get to decide where to invest and in what assets. This is quite different to the other retail funds where your money is invested but in the assets of their choice.
Now the concept of total investment autonomy certainly sounds exciting which makes SMSFs quite a popular choice amongst Australians. The lure of flexibility and ability to control investments is quite attractive. But you need to know about what is required of you.
You cannot have that kind of autonomy and control without responsibilities and in this case the responsibilities are legal. A trustee is personally liable for the investment decisions made for the fund. Thus, it becomes your personal responsibility to ensure that you make investments in such a manner that they benefit the other members/trustees of the fund in the long run.
In addition to this, since this is a legally recognised superannuation trust structure, there are other legal requirements like bookkeeping, auditing, taxation, filing of returns, day to day management of the fund, etc. that need to be looked into. This means a trustee has to don multiple hats and fulfil more than one role in the SMSF. Sounds daunting and overwhelming right? It can be.
But here’s the good news. You can hire SMSF accountants to help you with your fund related responsibilities. So how do you hire SMSF accountant in the Gold Coast? We say with just a few clicks! Visit whichprofessional.com.au. Tell us what you need and what is your budget. We will collate your requirements and match them to the accountants in our network of professionals. The ones that are aligned to your needs will reach out to you.
Now there are a few mistakes that people are known to make when they are evaluating accountants for their SMSF. So let us look at a very real scenario where an SMSF trustee John is talking to accountant Matt for his SMSF. Let’s see what kind of mistakes John can make during his accountant qualification process.
Matt: “John, I believe you are planning to start an SMSF and are looking to hire an accountant.”
John: “That’s right. Are you a certified and licensed professional Matt?”
Matt: “Yes, I am. I am a certified CPA and licensed by Australian Financial Services Licensee also known as AFSL to provide advice on SMSF.”
John: “Well that’s great! I indeed wanted an AFSL licensed SMSF accountant in Gold Coast.”
Mistake: Here John made his first mistake. He is aware that from July 1, 2016 onwards AFSL licensed accountants are only allowed to advise SMSF trustees. But that’s not the whole story. What really matters is what kind of license the accountant has. AFSL issues two kind of licenses for SMSF accountants:
The Limited License allows accountants to advise an SMSF trustee on how to set up the fund, how to manage the day to day operations of the fund (even for existing fund), and which classes of financial products can be considered for investment. However, they cannot recommend any particular product for investment.
As opposed to this the Full License allows the accountants to do everything that an accountant with a limited license and can do and give advice on specific products to the trustee. So the extent of services that they can offer is larger than the ones with the limited license.
So John ought to have asked Matt which kind of ASFL license he has.
But what if Matt was not licensed under ASFL?
In this case, Matt could still provide his services to John but only for accounting, taxation, and day to day operation and management of the fund. But that is the most that he can do.
Mistake: The second mistake that John made was he didn’t check Matt’s license as a CA, CPA, or a tax agent. He could have done that by visiting the Tax Agents board website where the list of licensed professionals is available. Not verifying this could turn out to be a costly mistake.
Back to their conversation.
John: “So tell me Matt, how can you help me with my fund?”
Matt: “John, I would be advising you on your investments, taxation, accounting, auditing, and compliance of your SMSF. You can depend on me for everything related to your fund.”
John: “Well that would be really great!”
Mistake: Now what Matt claims to do here is only partially legal. SMSF accountants in Gold Coast is not allowed to give you any kind of direct investment advice. They cannot tell you where to invest and how much to invest. They cannot recommend any specific products for investment. That is entirely your burden to bear. However, what they can do is they can advise you on the consequences or outcomes of the investments that you decide to make. So if John decides to invest $10,000 in shares of a global oil conglomerate, Matt can tell him how that will impact the fund and what will be the concessional rates that he can avail. But Matt cannot advise John on whether he should invest in the shares or not or if he should increase the investment amount or not.
Matt can support John in bookkeeping aspect of the fund and even help him with taxation. He can let John know when his decisions are not in compliance with law. However, auditing is something that Matt cannot do. An SMSF accountant cannot be an auditor for the same fund.
John: “So Matt how do you plan we start?”
Matt: “Well John, since you are yet to start the fund, let’s first focus on setting it up. We will take it from there as and when needed.”
John: “Ok that makes sense.”
Mistake: Although it was the most logical thing to do, to start with setting up the fund, what John should have really demanded is looking at a larger plan that covers the superannuation lifecycle.
Your Gold Coast SMSF accountant should lay out a plan as to how they are going to nurture your fund through the three critical phases: 1) accumulation, 2) pension, 3) transition from accumulation to pension.
Setting up of the fund is just part of the equation. Instead, John should have asked Matt for contributions or re-contributions strategy, and the contributions reservation strategy. He should asked Matt how he was going to be able to withdraw pension and how much. What was the transition phase from accumulation to pension going to look like and what if he decided to wind up the fund? John should have insisted on seeing a more holistic plan for his SMSF.
Accountants that can talk to you about such kind of information show that they are prepared for the long haul and understand the different complex aspects of superannuation.
Back to their conversation.
John: “Matt, do you have any clientele in the Gold Coast region?”
Matt: “In fact, I do. I work with 5 clients from Gold Coast. One of them is a school teacher from your neighbourhood. Here is that client’s card. You can check with him if need be.”
John picks up the phone and calls the school teacher who acknowledges that Matt is indeed his accountant for his SMSF.
John: “Well Matt, your client just verified what you said. So now we can move on to the fee discussion.”
Mistake: John did the right thing by calling up Matt’s client reference as a verification process. But just knowing that Matt is an accountant for the other client’s SMSF is not enough. Instead, John should have tried to find out the extent of services that Matt offers to the school teacher. It is highly possible that John is just looking into the taxation piece and is not really offering any kind of administrative services.
Secondly depending on just one client’s testimony is not a wise thing to do when Matt mentioned that he works with 5 clients from the region. John could have asked for one more reference to call and check.
Back to their conversation.
John: “Matt, tell me what would be your fee?”
Matt: “That will depend on what kind of service you avail from us. We charge $899 annual fee for filing tax returns, $1150 for administration of the fund, $500 audit fees. So it will depend on the service.
John: “Oh that sounds like a tad expensive. Can we work around it?”
Matt: “In that case, we can work with an hourly rate as well.”
John: “Yes, that sounds like a better option.”
Mistake: What John is doing here is that he is comparing apples to oranges. The hourly rate may look like a better option but in the long run it might turn out to be the more expensive one. He needs to understand that the fees that he ends up paying will also depend on the type of work that is being performed for his fund, the level of skill required, and the experience of the accountant working on it. A more seasoned accountant may be more expensive on an hourly rate basis.
So when you are trying hire an SMSF accountant in Gold Coast ensure that you put in some time and effort to understand the different fee structures like hourly rate, fixed rate, percentage of the value of the fund, etc.
Back to their conversation.
John: “If I get you on board for my fund, I won’t need anybody else, right?”
Matt: “That’s not entirely true. You may need to engage other professionals depending on the complexities of your fund.”
John: “Oh, like who?”
Matt: “Like a financial planner, an auditor, an actuary if need be.”
John: “Ok, I will look for them as well then.”
Mistake: Here John could have asked Matt to dig into his professional network and give him some references. An accountant is usually a part of a business community that consists of professionals from different walks of life. John could have leveraged Matt’s network and used his contacts to get more professionals on board.
The good thing here was that Matt did let John know that he is going to need other professionals as well. He was upfront about the possibility that the fund might get complicated enough at one stage where John would need additional help.
This was a snapshot of the kind of conversations that can happen when you are looking to hire an SMSF accountant in Gold Coast. However, there are a few more qualitative aspects that you should consider.
Firstly, your accountant should be able to build quality relationship with you so that you can discuss money matters with them. They should be proactive and not reactive. They should help you avoid problems and challenges instead of helping you address them after they have come up. They should also be updated about all the latest changes happening in the taxation and the accounting regime.
And last but not the least, they should be comfortable with technology. You want them to be able to deal with emails, software, digital registries, and online repositories so that they can take care of a few things for you remotely.
Now that you know how to choose an SMSF accountant in Gold Coast, just visit our website whichprofessional.com.au. Take a few minutes to fill up our form where you tell us what your needs are and what is your budget. We will match these to the large network of accountants that we have and get you in touch with the ones that meet your needs. The responses of the accountants will directly land in your inbox! Our website helps you save time and effort. It also gets you connected with a larger pool of professionals. And it is as simple as a click!
If you are looking for more information on SMSFs, visit the MoneySmart website at https://www.moneysmart.gov.au/superannuation-and- retirement/self-managed- super-fund- smsf or the Australian Taxation office website at https://www.ato.gov.au/super/self-managed- super-funds/.
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Rule 1: Check the License of the Accountant
So far, any accountant was able to advise SMSF trustees. However, the rules have changed now. From July 1, 2016 onwards only those accountants that are licensed by Australian Financial Services Licensee (AFSL) are allowed to advise SMSFs.
So what kind of licenses can an accountant hold under AFSL and what does each license allow accountants to do with regards to SMSFs? Here is a quick list for you:
- Limited License: Accountants with limited license can advise clients on setting up of a new SMSF, day to day operations of existing funds, and on certain classes of financial products.
However, they cannot advise the trustee on investment in any particular product.
- Full License: Accountants with full license can do everything that limited license permits and recommend specific products to the trustee.
Accountants that are not AFSL licensed are not authorized to advice SMSF trustees. However, they can provide accounting, taxation, and administration services to SMSFs.
You also need to ensure that the accountant is licensed by CA or CPA and is a licensed tax agent. You can do that by looking them up on the Tax Agents board website.
So when you are choosing an SMSF accountant on Sunshine Coast, make sure that you check their license first.
Rule 2: Verify the Legality of the Advice
The rulebook says that an accountant is not allowed to give you investment advice or strategic investment ideas. But that does not mean that an accountant can’t assist you with other things. What you need to know is what is allowed and what is not allowed as per the law.
Accountants are allowed to help a trustee with:
- Administration services for day to day operations of the SMSF
- Accounting and record keeping of the fund
- Taxation of the fund
- Compliance of the fund with the SMSF laws and regulations
Accountants are not allowed to help a trustee with:
- Any investment recommendations
- Any financial planning ideas
This shows that accountants cannot advise SMSFs which product to invest in and how much to
invest. However, they can advise the SMSFs on the consequences of the investments that they make and the taxation outcomes.
So when an accountant tells you ‘you ought to invest $17,000 in debentures’ it is pretty much a violation of law and an unlicensed advice. However, the accountants can tell you ‘given your age, the concessional contribution cap for the year is $25,000.” What they are doing here is that they are merely passing on the information about what the law permits.
Accountants can also look into your existing funds and tell you how much contribution you have made so far to it.
So when you are choosing an SMSF accountant in Sunshine Coast, ensure that he gives you ‘licensed advice’ only.
Rule 3: Ask the Accountant for Superannuation Lifecycle Nurturing Plan
SMSFs usually require long term involvement of the trustees. So it is always good to have a superannuation lifecycle nurturing plan mapped out for you.
Your SMSF will have three primary stages:
- Transition from accumulation to pension
There are different sets of tasks that are involved at each stage. During accumulation stage, you have to set up the fund, draw out a contributions and re-contribution strategy, create contributions reservation strategy, and plan investments. Then you have to transition the fund from accumulation to pension. Once in the pension stage, you have to plan withdrawal amounts and timelines. And not to forget the winding up of the fund.
Whew, sounds exhausting isn’t it? This is precisely why you need your accountant to step up here and present a plan that covers all the stages of the fund. This plan should also be customized to your needs and should not be a one-size- fits-all kind of a thing.
Rule 4: Dig Into the Accountant’s Client References
The number of returns lodged by SMSF accountants in Sunshine Coast is high. However, the value of these returns is not that stellar. In some cases, the value of the returns is negligible. This can be because the accountants are not competent enough.
So what you can do here is first of all ask the accountant to share some client references. Then reach out to these clients and see if they are happy with the accountant. Try to find out what kind of services they are availing from the accountant and how they have benefitted from those.
You don’t want to end up having an accountant who has all the licenses in place but does not have good client references.
Rule 5: Ensure That the Accountant is Updated
SMSF accountants in Sunshine Coast are primarily going to help you with accounting, taxation, and day to day management of your fund. But the accounting and taxation regimes are dynamic and at times see annual changes to rates and ceiling caps. Your accountant needs to be aware of these changes as and when they get rolled out. He needs to be updated, especially when it comes to taxation so that he can give you the true picture of the consequences of your investments.
SMSF accountants may not be allowed to give direct investment advice. But that does not mean they can get away by not being updated about the financial changes. They can always share information about how certain class of products are doing and what market trends are to be expected in the future.
Rule 6: Evaluate the Ability of the Accountant to Build Relationships
Choosing an accountant for SMSF is like entering into a long term partnership. If that is the case, then you would want your accountant to be proactive rather than reactive. You want him or her to step in and help you navigate the complexities of the fund. A good SMSF accountant will:
- Pay attention to your needs
- Be compassionate and help you deal with challenges
- Give you proactive support
- Focus on long term benefits and not just quick fixes
The accountant should also make you feel comfortable. Although all discussions that you have with the accountant will be private and confidential, you would still need a certain level of comfort to discuss money matters. Since SMSF will also involve your family members, you would want an accountant that can build a quality relationship with you.
Rule 7: Compare the Fee Structure
The SMSF accountants in Sunshine Coast follow different types of fee structures. While some levy an hourly fee, a few others charge a fixed rate. Then there are some that follow structures of base fee, percentage of the fund value, number of transactions and whatnot. What ends up happening here is that when you compare the services and fees of different accountants during the selection process, your comparison gets skewed. You compare fixed rate with base fee which is not correct. It’s like comparing apples to oranges. You need a more apples to apples kind of comparison.
Secondly, you also need to the see the extent of services that you would get. An accountant who is charging a lower rate can quite possibly be giving you a very limited service.
Rule 8: Check if the Accountant is Comfortable with Technology or Not
Technology would not be a real deal breaker here. But we say that it is a good to have skillset in your SMSF accountant in Sunshine Coast. There is no denial that the world is moving towards digitalization. It is not wise to try to swim against the tide. With government records getting digitalized and documents getting stored on cloud servers, it is advisable for accountants to have a certain amount of comfort with technology. For annual taxation and filings they should be able to work with software. Having an archaic accountant who still prefers manual way of doing things is not going to make your life easy.
Rule 9: Look Into the Professional Network
An accountant should be a well-connected professional. He or she should know a lawyer here, an actuary there, a financial planner again somewhere. In a nutshell, the accountant should be a part of a very diverse business community.
You may not see it right now but chances are you are going to need the services of a few other professionals for your SMSF. Your accountant’s network should give you references to these professionals. Let’s say tomorrow you need a financial planner for your fund. Your accountant should be able to point you to the right person. You should be able to leverage the network of your accountant for your benefit.
Rule 10: Consider the Attitude of the Accountant
Your accountant needs to be forthcoming when it becomes apparent that you need to hire a few more professionals. Sometimes the accountants may hesitate to advise you to hire the services of certain other professionals for the SMSF. But SMSFs may get complicated enough at some point of time and you may need to engage other professionals like auditor, a financial planner, an actuary, a valuation specialist, so on and so forth. Your accountant should not hesitate to tell you to get these experts on board when the time is right.
Although the SMSF funds are considered to be ‘DIY’ kind of funds, they are not indeed that easy or simple. Day to day operations of the fund can bring up challenges and questions that an average person would not be prepared for. It is always good to have an accountant to help you.
To start connecting with SMSF accountants on Sunshine Coast visit our website whichprofessional.com.au and complete one simple the form. The ones that meet your requirements will get in touch with you. You get to nominate how many will contact you.
For more information on self managed super funds, you can visit the MoneySmart at https://www.moneysmart.gov.au/superannuation-and- retirement/self-managed- super-fund- smsf. Alternatively, you can visit the Australian Taxation office website at https://www.ato.gov.au/super/self-managed- super-funds/.