The business of farming can be unpredictable and complicated. But with strategy and advice, you can have more control over your wealth and make a success of your agricultural business.
As a farmer, you know better than anyone just how hard it can be to track the numbers and figure out what to expect next season. The high cost of materials and supplies, taxes, climate concerns, and the expense of your family’s daily needs are all worrisome factors that make your whole job more complicated than you think it needs to be.
To help you avoid getting overwhelmed by it all, we’ve compiled this list of accounting tips for farmers in Australia.
Choose the right accounting software
Farming is a business and, as with any other business, you need to keep track of every dollar. Accounting software is essential to your business since it makes it easier to crunch the numbers, store and organise financial records and plan cashflow for now and the future.
Accounting programs help farmers and their farming businesses to:
– Accurately lodge tax returns
– Identify cash drains
– Track expenses
– Design a budget to make funds last during times of little income
– Save towards future plans
– Compare financial patterns by month, season or year
Some accounting programs are cloud-based which lets you access the information digitally from any device without relying on one file cabinet or one computer.
Are you intimidated at the thought of selecting accounting software? A savvy accountant can help you to choose and navigate the right system.
Consider off-farm investing
Farming is what you know and love, but it shouldn’t be your only source of income.
Investing in diverse assets such as stocks or properties in the city can provide you with another income stream that won’t be affected should your farm experience setbacks or challenges.
Off-farm investing can provide a fallback in times of hardship and it can even help fund your retirement or grow wealth for your children if they won’t be carrying on the family farming tradition.
Manage your current assets well
Farming is all about making the most of the land you have. Try not to neglect any of your land. Regularly evaluate your property to see if there is some way you can make it more productive. This means keeping yourself informed of the current value of your land.
Utilising your land means more than just knowing which crops will grow well on your property. As time goes by, your land may yield benefits such as previously unknown natural resources or a topography that attracts paying campers and hikers.
While you should be open to changing the way you use your land, make sure you discuss with an adviser what the impact of such a change would be. Repurposing your land will cost money and you’ll have to compare the numbers to see if the payout will justify the investment.
Keep a careful record of your losses
Naturally, losing livestock to disease or a crop to a natural disaster represents a loss of money. But you don’t want to have to pay for that loss twice by paying tax on lost assets. Keeping a careful record of your losses will help you claim all the tax deductions that you’re owed.
Remember to claim home office expenses
You probably already remember to claim those obvious farming expenses like depreciating equipment, fuel, maintenance costs and so on. But remember, you are also a business owner with expenses connected to the administrative aspect of your business.
This means that you may also be able to claim deductions for expenses such as:
– Paper and postage expenses
– Computers, fax machines and scanners
– Home office requirements like a desk and chair
Specialist accounting advice for farming and agribusiness owners
Contact Nitschke Nancarrow, experts in all aspects of accounting, financial planning, investment and business. We operate in Adelaide, Sydney, Melbourne and throughout Australia. Managing partner Kym Nitschke is available for a free initial discussion about your situation. Call us on (08) 8379 9950 or send me an email.
– Kym Nitschke
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.