Year-End
Business Checkup
Sets The State
For Future Growth
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Defer crop insurance proceeds.
Defer or accelerate the selling or cutting
timber.
Defer or accelerate the sale of livestock
or grain inventories.
For many in agriculture, self-employment
tax and Social Security planning can get
overlooked, resulting in short- and long-term
ramifications. Make sure to thoughtfully
consider this aspect as well.
On the other hand, if you are a dairy
farmer, the tax planning strategy will be
drastically different.
Dairy income will likely be substantially
lower than it has been in previous years. And
unfortunately, losses can no longer be carried
back five years per the TCJA, which would
have helped secure dairy farmers a significant
income tax refund. Instead, per the TCJA,
a farmer’s net operating loss can no longer
exceed $250,000 ($500,000 for married
couples) and losses can only be carried back
two years – as long as certain criteria are
met, which is certainly cause for concern.
In the past, farmers could carry back losses
five years. Additionally, under the new rules,
farmers can only offset 80 percent of their
taxable income on the carry back, instead of
100 percent - which was allowed in the past.
To get to that mark, hold off on prepaying
expenses and don’t defer milk sales or
insurance proceeds into next year – especially
if you are part of a cooperative. If you are
a co-op member, you will want to create
enough taxable income to compensate for the
Qualified Business Income deduction, which
is allowed to fully offset your taxable income
– including the sale of culled cows. Failure to
take advantage of the entire deduction would
mean it would disappear permanently.
OTHER CONSIDERATIONS
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Consider your employees. Your
business cannot run without nurturing
positive relationships with your people.
Don’t overlook discussions about
performance, benefits and compensation.
It’s getting harder and harder to find
good employees. So when you do, invest
in their training and development and
earn their long-term commitment.
Reduce the risk of agricultural
fires and property losses. Increased
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knowledge and awareness are the best
way to minimize these costly risks. A
discussion with your insurance agent can
help you identify hazards and establish
measures to minimize risks.
Maintain a current estate plan. Where
your land ends up – in the hands of
family members or employees, gifted
to a church or in probate court – is up
to you. Without a proper estate plan in
place, you have little control over what
happens to your life’s work after you
are gone.
Stay abreast of agricultural and
regulatory laws. From environmental
concerns and GMOs to data ownership
and food safety standards – you want to
ensure you are up-to-date and compliant
on current legislation.
With your team of experts together in one
room, this is the perfect time to get your
ducks in a row and identify solutions that will
benefit your business as a whole.
Once you’ve had a thorough discussion about
the present state of your business and your
aspirations for the year ahead, you can also
take steps to consider your personal financial
wellness and the financial wellness of your
employees. For example, when was the
last time you reviewed your life insurance
policy or encouraged your employees to
review theirs?
READY, SET, PLAN
There are several strategies to consider and
tax law changes to keep in mind when you
sit down to meet with your advisory team. A
meeting with your advisors in November or
early December not only has the potential to
save you thousands of dollars, it can help put
you in a better position down the road. The
sooner you meet, the sooner you can put your
plan in place. Give me a call to set up your
year-end business checkup meeting today.
by: Todd Mizer,
CPA, Principal
122 Fourth St. NW
P.O. Box 1020
New Philadelphia, OH 44663
330.308.6826
[email protected]
Rise & Shine • Fall 2018
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