New Year’s is a time for “out with the old and in with the new,” and that pertains to your farm or ranch as well. Since most agribusinesses utilize a calendar year, the end of the year signals a time to dot your “i”s and cross your “t”s concerning business matters like taxes, and to make plans for the upcoming year. Make sure you check the items off both sets of these Fiscal Consideration lists:
To Do Before the New Year
Gather information for an Accrual Income Statement. This document shows the profitability of your agribusiness for the year. It should include revenue, expenses, changes in value of grain and livestock inventories, accounts receivable and payable and prepaid expenses. Basically, the Accrual Income Statement compares money in with money out—including monies that still have yet to be paid either way—and the value of the agribusiness’s commodities. Considering you keep good records, it’s time to file December receipts and use the records from the entire year together for the income statement and your business’s taxes.
Gather information for a Balance Sheet. This Balance Sheet measures the operator’s—that’s you—level of equity and/or ownership in the agribusiness. Information for a Balance Sheet include the tax liability for your portion of farm income that is due, Social Security taxes due, principal due on short and long-term debt and a detailed machinery listing if needed. This shows the business’s short-term cash flow needs.
To Do After the New Year
Make a plan for better recordkeeping. If getting your yearly records in order is an annual chore, then you need to come up with a better strategy for keeping track of records. Choose a filing method to keep receipts, invoices, bills and more together and organized, and get it ready to go for the first week of January. Then, resolve to keep a record or log on a monthly, weekly and even a daily basis.
Set long and short-term goals for the year. Want to buy new machinery, get a land loan, expand your yields or explore farm diversification ideas? Putting the ways and means of such ideas to paper is the first step in making them a reality.
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