3 Steps to Prepare Your Agribusiness for 2019

1. Compile documents and records of your operation. As the year wraps up, begin compiling documents and records of your operation from the past year. This will include balance sheets, accrual income statements, schedules such as accounts receivable, accounts payable, and inventory and equipment lists. Your financial advisor, CPA, and ag lender (if you are looking for financing or refinancing) will need to review these documents to analyze your financial posture.

2. Create goals and a business plan. Take the time to step back and analyze what did and did not work for your operation this past year – and in previous years – to assist you in creating new goals and strategies for the upcoming year. Having a business plan in place for your operation that contains key metrics related to productivity, inventory, finance, and administration will position your operation for success in the long-term. Moreover, utilizing data and insights such as commodity pricing and the market outlook, will help you set a realistic budget and attainable goals to prepare your agribusiness for the new year.

Learn more: How Farms Make Decisions

3. Prepare for change and measure progress. If there are any planned changes for your operation you can make in advance of the new year, begin those now, in order to stay ahead. As the year progresses, maintaining detailed, accurate records of your operation, staying-up-to-date on trending topics and issues in the market, and addressing the financial health of your operation will be important for success in 2019.

Pressing issues such as trade uncertainty, the future of the Farm Bill, and budget cuts to USDA programs are likely to remain top-of-mind for the agricultural industry. Farmers and ranchers will need to conduct consistent evaluations of their operation, to look for ways to reduce expenses and increase efficiencies. Your success will be dependent on your ability to assess and streamline your operation and create efficiencies throughout the year.

Year-End Tax Tips

Not sure where to start when it comes to tax preparation? Here are three tips that may help reduce your stress, save money, and feel financially secure going into the new year.

1. Report all income and resale of livestock. This includes sales of livestock, produce, grains, and other products you raised, distributions from a cooperative, agricultural program payments, crop insurance proceeds, federal crop disaster payments, income you received for custom hire or machine work, and gasoline or fuel tax credit or refunds. Additionally, according to the IRS, if you sold livestock or items that you bought for resale, you must also report the sale when filing your taxes.

2. Consider deductions wisely. You can deduct ordinary and necessary business expenses - an ordinary expense is one that is common and accepted in your trade or business, and a necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. Moreover, you can deduct your employee wages – or wages you paid to your operation’s full- and part-time workers - keeping in mind that you must withhold Social Security, Medicare and income taxes from their wages.

   Other common tax deductions include maintenance of your operation, claiming deductions on items such as, veterinary costs for livestock, feed, depreciation, seeds and plants, chemicals, fertilizers, and insurances (other than health), mortgage interest, and storage and warehousing.

3. Benefit off a net operating loss. If your expenses are more than your income for the year, you may have a net operating loss. You can carry that loss over to other years and deduct it. You may get a refund of part or all the income tax you paid in prior years, and you may be able to lower your tax in future years.

For more tax tips, check out the Farmer’s Tax Guide.

Plan for the Future of Your Agribusiness with AgAmerica

Although no one can be sure what 2019 will bring for those in the agriculture sector, there’s no denying that being prepared is the best course of action. AgAmerica Lending is here to help support the industry – including farmers, ranchers and land owners – with our low interest rates, long amortizations, and an outstanding 10-year line of credit. For more information on how to financially prepare your agribusiness for the new year, contact us at info@agamerica.com or 844.516.8176.