By Brian Ravencraft
I’m pretty sure I mentioned before that I have a background in agriculture. A handful of the team I work with at Holbrook & Manter do this as well. From our childhood on the farms to their management to this day, we truly understand the challenges faced by those who work in the agribusiness. For this article, I asked a few of my colleagues to share their thoughts on the best accounting services that farmers and agribusinesses should look for, and why. First, I’ll share my thoughts below and then read on for their thoughts.
The main agribusiness accounting service needs that I see are as follows:
- Estate Planning / Retirement / Transition: Farmers approach this topic differently from other retirees. Planning for retirement for farmers may seem very different from planning for retirement for others who have only worked as an employee. Typically, retiring farmers depend on a combination of income from farm assets, savings and social security. Depending on the farmer’s dependence on the continued flow of income from his farming business, the final succession / transition to family members or other people may be affected. Careful planning is required, and the farmer should consider overall asset management and retirement readiness as part of the process.
- A need for accounting and software support: This is particularly important for those with larger operations. There are full-service accounting teams who can offer great help in these areas. You can hire as many or few of these services as you need. Many times these teams can provide an ideal solution if you need an accountant without the full time expense. Among other things, specialists can enter your income and expense data, perform bank reconciliations, bill payment and collection, payroll, develop custom management and tax reports, and update your software accordingly. .
- Year-end tax planning: The end of the year and the start of a new one is a time when farmers begin to prepare for the impending tax season. Get a head start tax planning for your farm may result in more deductions equivalent to lower taxable income and potentially more savings over the coming year. Year-end planning includes a detailed plan and consideration of expected tax liability results for the current year and subsequent years. The planning topics listed below should be considered as part of the overall plan:
- Purchase of machinery and equipment in conjunction with section 179 depreciation expense and bonus depreciation considerations
- Exchange of the same nature considerations
- Income averaging
- Advance payment of agricultural expenses
- Crop insurance proceeds and potential income deferral
- Retirement planning and financing (SEP IRA, 401K, SIMPLE plans)
I see these three services as the main areas that I see farmers have the greatest challenge and need the help of a professional accountant.
Bradley Ridge, director
Business owners in the food industry, as with any owner and especially family businesses, should have a confidential advisory relationship with professionals who know not only the food industry but also businesses in general. This is important for management along with the many important aspects of planning. Planning is not overrated. It is essential for navigating, among other things, planning for wealth, inheritance and inheritance.
The risks inherent in agribusiness require knowledgeable advisers and the element of extended time to plan appropriately. Getting a tax return prepared by a tax preparer is not advice. Many do not seek business management help or advice, or ask for it too late. My advice is to seek experienced advisers to help navigate the complexities of these various aspects of planning.
Justin Linscott, Director
I will give some advice from the owner’s point of view. You need to hire an accounting professional to successfully perform crucial exercises like contract management, cash flow analysis, projections, income statement, various tax matters, etc. Food and beverage professionals, especially those running family operations, really need an accountant who will be their team-mate and help them approach each of these issues with expert level execution.
Robert Buckley, Director
Challenges still exist in the food industry due to long-term succession planning and potential changes in the political environment. It is always wise to manage cash flow given higher grain prices and higher incomes while looking to the future to manage debt with the expectation that interest rates will rise over time. . It is always a challenge to manage capital expenditure.
Brian E. Ravencraft, CPA, CGMA is a Principal at Holbrook & Manter, CPA. Brian has been with Holbrook & Manter since 1995, focusing primarily on the areas of tax advice and management consulting services across several service areas of the firm, focusing on agribusiness and private companies and their owners. Holbrook & Manter is a professional services firm founded in 1919 and we are unique in that we provide the resources of a large firm without compromising the focused and responsive personal attention that every client deserves. You can reach Brian via www.agribusinessaccounting.com Where www.HolbrookManter.com.