← FarmCPA Home

Time for a Fiscal Checkup!

By: | Trackback URL | No Comments

February 2nd, 2011

One of the things that struck me about attending both the TEPAP and the Top Producer Conference is how many of our top farmers are still not taking advantage of all of the financial tools available to them.

For example, I would estimate that probably upwards of 90% of all farmers are still using the cash method of accounting to track their farm income and expenses.  For most, this is the method that they use to prepare their income taxes, however, it HARDLY ever gives an accurate picture of overall farm net income.  Ask yourself how much of the expense that you pay at year-end has nothing to do with this year’s crop or how much of your crop sales reported in this year was actually harvested in this year.

By using farm accrual accounting on an on-going basis (not simply making some adjustments at year-end), you can accurately determine how much income you generated off of this years crops and know what you really made for the year, not what you show to the tax man.  Some farmers hesitate since they think it will create more work for their accountant/CPA at tax time, however, to convert from accrual to cash for the tax return is usually very easy for a tax preparer to work out.

Since this is the time you are working with your tax advisor, make sure to discuss this with him now.  It is much easier to get switched over at this time of year than in the middle of planting or harvesting.  Once you make the switch, you will never go back.

Paul Neiffer

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

More Posts - Website

Follow Me:
Twitter

← FarmCPA Home

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Subscribe to this blog by:

Previous Posts

Events

View upcoming speaking engagements and other networking events for Paul Neiffer and CliftonLarsonAllen’s agribusiness team.

See All

  • Twitter Feed

    Corn does well in Washington state. 55 at night 95 during the day plus irrigation 24 hours ago

    If average cash rents drop $50 this fall and cash return is 2% equals drop in average land values of $2,500. We shall see. 1 day ago

    2 years ago corn + beans + wheat was almost $40. Now it is under $20. 2 days ago

    Great time with @MRRChip today on Market Rally talking about the new farm bill. 3 days ago

    Drove over 2,000 miles in last 12 days. Saw a lot of good looking corn. Beans not so much 5 days ago

    When you drive through Minnesota, South Dakota and Iowa this time of year you see a lot of corn and beans and not much else 2 weeks ago

    Possible another reason for high US corn yield estimates is acres switched to beans were lower yield corn acres 2 weeks ago

    Don't understand why nobody claims the USDA manipulates the data when the report is bullish 2 weeks ago

    USDA pegged lower corn production but if yields trends continue this will quickly change to production increase. 2 weeks ago

    The soybean YO-YO is well underway 2 weeks ago