Part 1 of Our Series: Advice from Team Members With Agribusiness Backgrounds
Holbrook & Manter isn’t your run of the mill accounting firm. We have been in business as a continuous firm for more than 101 years. Our team is comprised of experienced professionals from all walks of life. The walk for some of our team members has included real-life experiences in agribusiness and in the farming environment.
From growing up on farms, to managing them to this day, our team members truly understand what is needed to run a successful operation. You would be hard-pressed to find a team more compassionate about the industry and more qualified to assist those looking for long-term financial success.
Real-World Answers To Your Very Real Questions
In this blog series, we will ask some of those team members to answer certain prompts designed to leave our valued readers with tangible advice. Review the prompt below and take some notes as you read through their answers. Then, reach out to us with any questions you may have. We would be happy to assist you:
As someone with personal and professional knowledge of the challenges those in agribusiness face, please discuss the top accounting services those in this industry should seek out and why.
Brian Ravencraft, Principal
The top agribusiness accounting service needs I see are the following:
- Estate/retirement/ transition planning: Farmers approach this topic differently over other retirees. Retirement planning for farmers can look very different from retirement planning for others that have worked in just an employee setting. Typically, retiring farmers rely on a combination of income from farm assets, savings and social security. Depending on how reliant the farmer needs to be on the continued stream of income from his farm business, the ultimate succession/transition to the family members or others can be affected. Careful planning is needed, and the farmer should look at overall asset management and retirement readiness as part of the process.
- A need for accounting and software support: This is especially important those with larger operations. There are full-service accounting teams that can offer great assistance in these areas. You can hire as much or little of these services as needed. Many times these teams can provide an ideal solution if you need a bookkeeper without the full-time expense. Among other things, specialists can enter your income and expense data, perform bank reconciliations, bill payment and collections, payroll, develop custom management and tax reports, and update your software appropriately.
- Year-end tax planning: The end of the year and the start of a new one represents a time when farmers begin preparing for the imminent tax season. Getting a head-start on tax planning for your farm can result in more deductions that equal less taxable income and potentially more savings in the coming year. Year-end planning encompasses a detailed plan and consideration of intended tax liability outcomes for the current year and subsequent years. Planning topics listed below should be reviewed as part of the overall plan:-
- Purchase of machinery and equipment in conjunction with depreciation section 179 expense and bonus depreciation considerations
- Like-kind exchange considerations
- Income averaging
- Prepaying farm expenses
- Crop insurance proceeds and potential deferral of income
- Retirement planning and funding (SEP IRA’s, 401K, SIMPLE Plans)
I see these 3 services as the top areas I see farmers have the greatest challenge and need for assistance from a accounting professional.
Bradley Ridge, Director
Business owners in the agribusiness industry, as with any owner and especially family-owned businesses, should have a confidential advisory relationship with those professionals knowledgeable not only with agribusiness but with business in general. This is important for direction with the many important aspects of planning. Planning is not overrated. It is essential to navigating, among other areas, wealth, estate and succession planning.
The risks inherent with agribusiness require knowledgeable advisors and the element of extended time to plan appropriately. Getting a tax return prepared by a tax preparer is not advice. Many either don’t seek business managerial assistance or advice or seek it too late. My advice is to seek experienced advisors to assist in navigating the complexities of these various planning aspects.
Justin Linscott, Principal
I will provide some advice from a landlord perspective. You must enlist the help of an accounting professional to successfully execute crucial exercises such as contract management, cash flow analysis, projections, P&L, various tax matter, etc. Agribusiness professionals, especially those running family operations, really need an accountant who will be their teammate and help them approach each of these matters with expert level execution.
Robert Buckley, Principal
Challenges still exist in the agribusiness industry due to long term planning for succession and potential changes in the political environment. It is still wise to manage cash flow given the higher grain prices and higher income while still looking to the future to manage debt with the expectation that interest rates will increase over time. It is always a challenge to manage capital expenditures. No matter what type of challenge you face, H&M can help you tackle any matter head-on.