(J.M) CAN YOU SHARE SOME YEAR-ROUND TAX TIPS FOR FARM BUSINESSES?
(W.R) The best advice I can give isn’t just to farmers, it’s to anyone filing taxes — get organized. The best way to do this is to maintain a system to keep all financial information in one place. This will help keep the necessary tax documents as complete as possible, and helps your accountant out too.
WHAT’S THE MOST OVERLOOKED AREA OF FARM BUSINESS ACCOUNTING?
Everyone has heard this before, so it’s no surprise when I say planning ahead for significant life events is the most overlooked aspect relating to farm business accounting and taxes. I can’t stress enough how important it is to make plans for events like the unforeseen death of a family member, entry of family members into the business, exit of family members out of the business, marriage difficulties, and transfer of control within the family farm business. Some of these life events can be difficult to talk about, but they’re important to the sustainability of the farm business. And your accountant can help with the planning, necessary considerations, and tough conversations.
WHAT ARE THE MOST CHALLENGING ISSUES YOUR FARM BUSINESS ACCOUNTING CLIENTS ENCOUNTER?
Measurement – Many of our clients maintain their records on a cash basis, and as a result, often measure their performance in terms of net income on a cash basis without reference to accruals for receivables, payables, and inventory. They rely on us to make these adjustments and often have difficulty reconciling these adjustments to the performance of their business.
Income projection – Similarly, many clients struggle to understand all of the various adjustments to accounting income that are used to determine their income for tax purposes. And as a result, clients cannot complete any type of tax planning before year end without completing a projected statement of income and expense.
Paperwork – Some of our clients also struggle with all the reporting required to meet the needs of many different levels of regulation including Canada Revenue Agency, Ministry of Finance, Agricorp, Municipal Property Assessment Corporation, lenders, and local authorities.
Management – This isn’t unique to farm businesses, but many of our farm clients face the same struggles people in other businesses have when it comes to planning, communication, and time management.
WHAT ADVICE CAN YOU OFFER TO HELP FARM BUSINESS OWNERS IMPROVE THEIR RELATIONSHIP WITH THEIR ACCOUNTANT?
Farmers that have the best relationships with their accountants are usually the ones that get engaged in the process by asking questions, while also making themselves available to answer questions regarding any aspects of their farm business. Accountants love to see their clients succeed and any role we can play to contribute to that success makes our job so much more satisfying. •