If you follow us on social media, you might have seen a post recently on accounting for nonprofits. For those of you that didn’t read it, here is what you need to know: accounting for nonprofits is highly specialized. Your accountant should know the ins and outs of how your nonprofit differs from that of a “regular” business when it comes to bookkeeping and taxes.
However, this blog is not about nonprofits, it’s about farming. When it comes to accounting, farming is EXACTLY like nonprofits — highly specialized! As Liam Neeson would say in the movie Taken, “I have a very particular set of skills, skills acquired over a very long career…” The accountant you choose to handle your farm’s accounting should be the Neeson of farm accounting.
Did you know that Wisconsin is home to over 64,000 farms? Those farms cover over 14 million acres of land and provide over 435,000 jobs in the state! And we aren’t just about cheese — well we are a lot about cheese — but Wisconsin farmers also produce beef, grain, nursery products, hemp, soybeans, and more. Ok, you get it, farming is a HUGE part of Wisconsin. Shouldn’t the accounting firm you choose house professionals who specialize in something that is such an integral part of our state and culture?
Take a look at five things Vesta professionals think you should consider when it comes to accounting and your farm:
- Keep track of costs for maintaining your land. Consider the costs to keep your fields productive and profitable like soil management, fertilizer, and irrigation. Those aren’t cheap, but they are very important. If you are on the fence about something, ask your accountant. It’s better to keep track of these expenses than not pay them attention.
- Know what accounting method you use. Do you know that the accounting method has a huge impact on the result when it comes to tax? What methods are available? Your accountant should stay abreast of new tax laws and suggest a change if it means more tax incentives to you. If you aren’t sure, ask.
- Pay attention to incentives and law change. Watch for government incentives to change the use of your land or current trends—what’s hot, what’s not. In 1950, hemp farming in Wisconsin was non-existent and illegal for that matter. Over the last year, applications to grow hemp in the state have increased six-fold. Make sure your accountant knows regulations on taxation of new industries so, if you do make a switch, you don’t hit any tax roadblocks.
- Account for losses. That means in your fields and your flocks. Every animal has a value, the same as every acre does. If you record any losses, there’s the potential to reduce your taxes. After all, why pay taxes on something that was destroyed or lost.
- Account for gains. We don’t just mean cash gains here, but also appreciation in the value of your equipment. Be sure your accountant understands the delicate balance of offsetting purchases and depreciation to maximize your tax potential.
Vesta farm accounting professionals appreciate the challenges in the industry today. We want to do everything possible to keep farm businesses viable. But if your farm becomes financially unsustainable, be sure your accountant knows the ins and outs of Chapter 12 when it comes to bankruptcy and farming. Changes in debt limits for farm bankruptcy have occurred as recently as August of this year!
Farming is unique – name another business that relies so heavily on mother nature. The industry’s accounting is equally as unique, and a good accountant can leave you stress-free when it comes to bookkeeping and taxes. With less time spent managing your finances, you have more time to do what you do best: farm. Contact your closest Vesta office, located in Fond du Lac, Sheboygan, Plymouth, Markesan, and Minocqua, to consult with one of our farming experts.