Many think of farming as an idyllic, peaceful profession, somehow apart from the worries everyone else faces. But farmers know farming is first and foremost a business. Not only that, but laws and taxes regulating farming are some of the most complex in the nation. The financial complexities farmers deal with every day can be a major headache.
Luckily, you don’t necessarily have to be great at both farming and finances. By finding a knowledgeable financial advisor, you can avoid mistakes and make your farm as profitable as possible.
Cash Flow Analysis
One of the most important parts of any farmer’s financial planning is understanding your cash flow. It often takes large capital outlays to turn a profit. How much of that is financed by loans? Will profits from the new purchase be enough to pay off the loan?
If farming were free, profits would be almost guaranteed. Yet it’s possible to spend so much on inputs that even large yields aren’t enough to make a profit. As a farmer, you’re a business owner, and you’re used to managing the financial side. But a second pair of eyes can be crucial when it comes to cutting out wasteful spending and finding capital to make improvements without too much debt.
A financial advisor can help you see where you are making and losing the most money. Not only can they analyze your current cash flow, they can help you make future plans for profitability.
Farm taxes take normal business taxes up to the next level. There are many tax exemptions, deductions, and rebates available only to farmers. You may already have an accountant to manage filing your tax return each year. So what more could a financial advisor offer?
Financial advisors can help farmers plan their decisions for a lower tax burden in future years. They will be able to tell you which expenses you will be able to write off, what income is taxable, and how to qualify for various tax breaks. They can also help you choose the business structure that works best with a farm of your size. By doing all this planning at the beginning of the year, you’ll set yourself up for success at tax time.
Depending on the size of your farm, you may have no employees, only family member employees, or a large number of agricultural workers. How do you manage these people? You’ll need to consider wages, benefits, and the necessary taxes.
Employment laws can be slightly different on farms. For instance, you may find yourself hiring workers on temporary agricultural visas, or minors not normally old enough to work. What are the limitations on these kinds of employees? Does it pay off to hire them, or are you better off hiring a smaller number of more conventional applicants?
Financial advisors can help farmers manage employees in a way that’s both humane and profitable. By choosing the right people and taking good care of them, you’ll always have the best help on your farm.
Finding a Financial Advisor Expert in Helping Farmers
While any financial advisor is helpful for helping the average individual manage their budget, farmers need extra expertise. That’s why you need an advisor who already has experience helping farm owners. We can find the right advisor for you. Just contact us and tell us what kind of help you’re looking for.