The Unique Perspective of Agribusiness
by: Rachel Godwin
When we put on a t-shirt, we rarely think of the field that produced the cotton bolls that were picked, ginned, and manufactured to produce the fabric. When we are enjoying a tailgate party and eating boiled peanuts, we don’t think of the effort that went into growing them. We all enjoy the results of agricultural success. However, few realize the amount of business aspects that are involved in farming and other agricultural operations.
In a few decades, the changes in farming operations have been astounding. Some of my earliest memories are being at my grandparents’ house watching my grandmother doing the bookkeeping for the farm manually in her big ledger book and on her old-fashioned adding machine. A couple of my uncles had some of the first peanut and cotton pickers in this part of south Alabama and northwest Florida. To compare those early models to the equipment of today such as the tractors with GPS guidance systems, 12-row planters, and cotton pickers with built-in, automated module builders, it is amazing to realize how far technology has come for this industry.
Because of these fast changes and the technology available, agribusiness faces many of the same challenges as traditional businesses, but they also have some special concerns and opportunities. Below is a list of some of the areas our firm has identified that we can support our agriculture clients to enhance their success:
We can help our agriculture clients prepare for their tax situation by advising on the following:
- Managing income and deductions,
- Maximizing farm depreciation where necessary,
- Using income averaging,
- Deferring or accelerating income using contracts,
- Prepaying farm expenses,
- Utilizing domestic production credits,
- Determining crop insurance taxation and deferral,
- Assistance in selecting the correct entity selection.
Cloud software such as Xero or QuickBooks Online allows for real-time accounting transactions to be captured and recorded properly which saves time and creates better understanding of how the business is doing financially. We can work with our agriculture clients in a variety of ways regarding their bookkeeping needs such as:
- Bookkeeping services,
- Bill pay,
- Maintaining depreciation and loan schedules,
- Payroll (full services as well as after-the-fact),
- Tax compliance (payroll, unemployment, etc.).
Utilizing the benefit of the real-time solutions, we can help clients understand their cash flow so that they can make informed decisions on purchases and when to sell their products. We will be glad to discuss debt structure and recommend improvements such as consolidating debt or other restructuring.
Every business can face the daunting challenge of proper succession planning. However, this can be especially difficult for an agriculture operation that has been part of a family for generations. There are times when children may not want to work on the farm or be part of the company. Sometimes one child does while others do not. We can help provide advice and insights on how to properly manage the transition of farm ownership and operations to the next generation or to other potential successors.
Similar to succession planning, estate planning for agriculture businesses can be difficult to appropriately consider without help. Often land is one of the largest assets for a farm and families want to preserve that asset from one generation to the next. Some of the common goals in estate planning are transferring ownership, reducing estate and/or gift taxes, securing the desired financial future, developing management skills for the successors, and keeping the productive land in agriculture. We can be part of the team of advisors to help agribusiness clients properly plan for their legacy.
This is just a summary of the various ways we can support our agriculture clients in their business needs. We believe in being a proactive and innovative business-solution provider helping our clients take advantage of opportunities and plan for the continued success of their businesses. For more information on our agribusiness services, please contact hb&k’s leading advisor in this area, Vance Kilgore at 251-867-3801 or firstname.lastname@example.org.