Starting a business through SMSF

Hey experts I've maxed out my SMSF borrowing capacity and was contemplating my next move. I was considering buying an established or starting a mortgage brokerage. I would be hiring an experienced broker to run the business and I'd be more of a lead generator as it works hand in hand with my other job. At the moment I average 2-3 leads a week to a current broker in my network. Worse case scenario would 2 converted leads a week be enough to sustain a full time employer and a small income.

 

It would likely be non arms length income. The income would even if it was acceptable, also be preserved. Likely a inhouse asset the way you describe lead generation too. It may be more practical that a maximised contribution strategy be adopted from a independent business.

 

I have seen this work - it is very complex and difficult.

The costs and complexity would most likely outweigh the benefits you would enjoy. You would also need an appetite to fight the ATO which is fine - you just need to be prepared and understand what your getting into.

I would not bother if i were you. Just go plain and vanilla.

 

Thanks for the reply Ross and Paul. That's a shame. Do you know of many SMSF's running businesses? If so any success or horror stories you would like to share?

 

A SMSF should NOT run a business despite it being tolerably permitted in some cases. A SMSF is a investment vehicle. It may own a business that produces income but is that always wise ? . It would be very unwise to operate a buisness directly. Legal recourse on the SMSF assets contrary to SISA could even occur. What is the investment strategy etc. A simple thing like obtaining trade credit may fall foul.

Carrying on a business in an SMSF