The establishment of an SMSF is a legal process. It consists of laws and formality. You can't jump any parts of it. Here are 11 concise steps for registering your fund properly.

Step 1: Choose Your Structure

The question is who will manage the fund. You have two main choices.

Independent Trustees A typical size is two to six trustees. All members act as trustees. It is cheaper to set up. If, however, a member leaves or dies you would have to retitle everything. This can get expensive and nerve-wracking down the road.

Corporate trustee This is where a company is set up to administer the fund. All members are the directors of the business. It costs more to set up. There is a cost for registering the company. Membership changes are also easier to handle.

Step 2: Appoint Trustees

Your trustees need to be appointed properly. Trustee is not for everybody. They must be eligible. They cannot be a "disqualified person."

Consensual acceptance by all trustees in writing is required. They also have to sign a consent. Each trustee also must sign a "Trustee Declaration." This change is to be made within 21 days of the appointment. This means they know what they should do. You need to keep this document for a minimum of 10 years.

Step 3: Create a Trust Deed

The trust deed functions as the rulebook of your fund. It is a legal document. It lays down the relative powers and responsibilities of the trustees.

You'll want to rent a professional chastity writer for this. It has to comply fully with all laws as they now stand. Each trustee must also sign and date the trust deed. It has to be duly performed in order to be effective.

Step 4: Check Residency Status

Your fund needs to be an "Australian Super Fund." This is what provides it with tax exemptions.

The fund has to be based in Australia. The central management and control must be in Australia (s136(2)). Active members are eligible for residence in Australia. These rules can change if you move abroad so you will need to check them carefully.

Step 5: Hold Assets

Your fund needs to have some assets for it to be legally established. A small initial contribution is generally accepted by the trustees. This activates the trust deed.

Make sure that you are holding these assets in the right name. They must be trustee in the fund. You cannot hold them in your own name. This proves the fund is real.

Step 6: Register the SMSF

You will need to register your fund with the ATO. You need to register for an ABN. You also need to obtain a Tax File Number (TFN).

The Review Move: ATO will review your application. They check your history. They look for any previous bankruptcy or convictions. They want to make sure it's the real deal.

Be accurate you will need to be as accurate as possible. If you are behind on your personal tax returns, the ATO could withhold your registration. The procedure halts if your specifics are incorrect.

Approval Registration is not instant. Your fund will show up on "Super Fund Lookup." At least at first, it may say "Registered." It needs to show "Complying" before you can get employer contributions. This can take time.

Step 7: Set Up a Bank Account

You need to set up a bank account strictly for your SMSF. This is just the money of the fund. It allows you to keep the fund's cash separate from your own.

You will need this account to receive contributions. You need it to pay expenses. The bank will request your ABN and trust deed.

Step 8: Obtain an Electronic Service Address (ESA)

The ESA is like a digital postbox. It is not an email address. It is the language for SuperStream data.

You also need an ESA in order to get employer contributions. You can't be paid super by an employer without it. You also want it to allow you to roll money from other funds. An ESA can be purchased from an SMSF administrator or software provider.

Step 9: Formulate an Investment Plan

You need a written plan for your money. That's what investment strategy is. You cannot just guess.

This is where you document your financial goals. It considers risk. At stake is how easily you can get to cash (liquidity). You do need to revisit this strategy regularly.

Step 10: Plan for the Future

You must think about insurance. Trustees should also ask whether members require life insurance. You must document this decision.

Also take a look at your death benefit nominations. These are instructions to the trustees with regard to who receives your money upon your death. A binding nomination constrains the trustee to act according to your desire.

Step 11: Prepare an Exit Plan

And, finally, you need to prepare for the end. An SMSF is not necessarily for life.

You should also know how to unwind the fund. You'll want to agree about what happens if trustees get into a fight. And you should anticipate what to do if a trustee becomes incapacitated. A well-defined exit strategy helps avoid ugly court fights down the road.