SMSF calculating individual earnings

Hi,

I have set up a new SMSF this FY through an accountant. There are four members. One member adds his super every three months. Another member adds his super fortnightly. The other two members only add lump sums at the moment. I trade shares for the fund.

Is there a formula for calculating the percentage each member gets of the profits on a fortnightly or weekly or daily basis so that each member has the correct percentage of the profits?

I do not want to use proprietary super software as I want to keep costs to a minimum. I have set up my own excel spreadsheets to give a view of each member's inputs and for the overall fund.

Thank you.

 

OK - I assume you are running the same investments and investment strategy for all four members.

You should be able to work out a formula that applies the earnings on a daily basis based on what each member has contributed to the SMSF.

If you are after a specific excel formula - I am probably not the best person to ask.


The following information is NOT an answer to your question, but my comments on other parts of your post:

Your comment on saving money is valid, however be careful that doing so doesn't end up costing you more in the long run. Remember, as trustee you have a responsibility to have appropriate accounts prepared and to have those account audited.

Your accountant is going to have to prepare appropriate accounts to enable the auditor to do his thing.

In some cases a bunch of spreadsheets that make sense to you, may not be what your accountant or auditor needs and end up costing more in the long run.

I suggest having a chat to the accountant who set up the SMSF (assuming they are going to be doing the accounts + tax return) and be honest and say you want to make it as cheap as possible and what you need to do to make the process easier for them and streamline the whole thing.

If you seriously want to accurately keep track of your share trades while ensuring that the profit on those trades is correctly tracked and allocated to the specific members, you really have no choice but to use the propriety software.

If you do it correctly it should actually SAVE you on fees as you are doing a lot of the leg work yourself (it is a self-managed super fund after all!).

The industry standard for accounting for SMSFs in BGL Simple Fund. I am not saying it is the best software program, however it is the program used by the vast majority of accountants who have some experience or specialisation in SMSFs (i.e. the type of person you need to have advising you).

The cost for a trustee edition is $616 for the first year (12 month subscription) and $385 for subsequent years. There is a way to halve the annual cost - let me know if you want to know how.

The investment reporting in BGL Simple Fund is really good at tracking your investment holdings and performance. You will need to spend some time learning how to use the software - but it is not too hard and with the initial $616 training and 5 live support calls are included to get you out of trouble.

As I mentioned earlier - if you do it correctly, the program should save you more in accounting fees than it costs you in the software subscription costs.

As you are a new SMSF trustee, I am very interested to hear from you (or anyone else) in regards to what problems / obstacles you have faced or are facing with your SMSF.

Please feel free to reply or comment or send me a PM

I hope this has helped
SM

 

Yes I am running the same investment strategy for all members.

Do you know where I can get an excel formula for this? It would be a variation on compound interest wouldn't it?

Our fund is very simple atm. My accountant has given me a layout required by him. I know he will work out individual daily allocations but being a micro manager I want to do it myself as well so I can give members regular updates.

I have already made my own excel spreadsheets working out the majority of BGL's stuff.

I object to proprietary software systems on the basis that they:

> on principle annoy me (being a thrifty micromanager).

> unnecessarily complicate simple systems so it looks like they add value.

> require heaps of manual work filling in info which automaticaly updates in my spreadsheets. I'm pretty sure BGL's program will not link to my trading platform's layout nor my accountant's. (I will check which program he uses).

> waste paper on unnecessary reports.

> software crashes.

It is the first step towards having someone administer your SMSF which to me is almost the same as having a standard super fund.
It is not difficult but everyone tries to make out that it is just to put people off.

 

Yeah

Agree in some parts.

Within a decade a lot of transaction based / processing functions will either be 100% outsourced or taken over by more sophisticated automated software anyway - so it is almost a moot point.

Have fun with your excel formulas.

SM

 

Hi,

The method of allocating income in a fund is at the discretion of the trustees, unless it is specified in the trust deed. (this is a flaw of software such as BGL Simplefund if your deed specifies another method of income allocation.

The usual method allocates the income using a daily weighted average of the member benefits.

If you want i can send you what I use, or if you want to send me a copy of the spreadsheet you use i can see if i can suggest a way include an income allocation into your spreadsheet.

Superman is right. Talk to your accountant and make sure they will actually use what you give them. Otherwise you will pay them to do what you have already done. Im an accountant, so i can tell you that most will prepare the accounts from scratch using their software and will charge you in full.

Hope this helps.

David

 

Thanks SM. I may yet resort to BGL despite the whinging!

Hi David,

I have 4 members and the profit from share trading will be allocated equally. Each member contributes different amounts at different times and I would like to know what % of the realised profits is payable to each member daily.

Could you please send me the method you use (pm me if you like) and I will see if I can make it work. If I can't I will take you up on your very generous offer and send you my spread sheet.

I will talk to my accountant and find out what software he uses. I am not going to do all this work unnecessarily.

Thank you.

 

Yeah - BGL now has the ability to have full control over the distribution of income.

This was an area of professional criticism towards BGL, some competing software providers even went so far as to say that BGL was fundamentally flawed when it comes to the income distribution calculations.

The flexibility to distribute the income within the fund is very important for some cool strategies with SMSFs.

BGL Simple Fund is a strange beast - it works well but it does take a little bit to get used to. It actually does have a very good help menu and support system if you know what you are looking for.

A lot of the reasons accountants 're-work' information prepared by their clients when it comes to SMSFs is partly to do with the audit requirements - which can be quite onerous with some SMSFs.

I believe the best 'value' outcome is where the transactional based work is streamlined and as cheap as possible, this frees up the accountant/SMSF Specialist to spend more time giving advice to the trustees that will improve their outcomes (i.e. the stuff you actually want, not what you are forced to do!).

Many happy RETURNS

SM

 

Hi SUperman,

David gave me a formula to do what I want in excel. I am going to see my accountant to find out what program he uses.

I have not worked out yet whether I will leave it to the accountant to use his software using my excel worksheets or whether I will get the software and do it as far as I can and then let the accountant check it.

I guess it will depend on price. No use me spending $300 on software a year if it saves me $100 on accountant's fees.

I thought I had a basic fund but even without allocated pensions it is tricky but I can get a rough figure of each member's positions with excel spreadsheets. I am determined not to use an administrator but may still rely on my accountant to do the accurate member statements and tax returns as well as the audit.

Thanks for your help.

 

Thanks for your help. its really useful!!!!!


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