It’s that time of year again. The weather is changing, holidays are around the corner and our lives are going to slow down any day now. Right?
While we always have the best of intentions, the chaos tends to give us an excuse to put the less pressing things on the back burner. Things like updating the farm and ranch books after harvest and shipping; talking to your attorney about updates to your leases, employment agreements or wills; and even calling the accountant to make sure there are no New Year’s surprises.
Why tax planning meetings are crucial to success
The Tax Cuts & Jobs Act (TCJA) created pitfalls and opportunities for each and every one of us, depending on your situation. When you couple that with the state of the agriculture economy, planning meetings with your professional team have never been more important to your success.
When cash flows are tight, developing and maintaining a budget helps measure the necessary cash flow to cover your debt obligations. Planning out those obligations for the next three to five years helps to anticipate cash shortages. These steps also help determine your break-even point based on each year’s production. If you know your break-even point, that can reduce the pressure you feel when trying to gauge the best time to market your commodities.
Start the tax planning process early
Beyond the cash flow considerations, there are several benefits to starting the conversation and planning process, especially when it comes to your personal future and the future of your farm and ranch operation.
There are more options and opportunities when you start the process early. Advantages that allow you to develop and implement a structured plan to achieve your goals with less pressure, fewer missteps and, very likely, less tax consequences.
It’s not uncommon to need to establish new entities to achieve your goals or to restructure leases or employment agreements. But be aware that several of the options available to you need to be in process for a minimum of five years to allow you to fully benefit from the changes. The longer you wait to initiate these changes, the more likely you are to be rushed and make some costly mistakes.
As the end to another year fast approaches, help eliminate some unnecessary stress in your life and reach out to your accountant, attorney, financial advisor, lender and banker and make the time to meet and engage them to help you better understand all the opportunities for your future. Contact us today.
Or keep reading for more tips:
5 tips for how to talk about ag transition over the holidays
Six tips for working with your ag lender