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Beginning Farm Business Arrangements. Testing Stage p. 1. Employer-employee arrangements Operating agreements. Employer-Employee Agreement p. 1. Compensation: Cash Wage and income share Incentives Bonus payments Fringe benefits Commodities. Operating Agreements p. 3.

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Presentation Transcript
testing stage p 1
Testing Stage p. 1
  • Employer-employee arrangements
  • Operating agreements
employer employee agreement p 1
Employer-Employee Agreement p. 1
  • Compensation:
  • Cash
  • Wage and income share
  • Incentives
  • Bonus payments
  • Fringe benefits
  • Commodities
operating agreements p 3
Operating Agreements p. 3
  • Beginning operator
  • May furnish some personal property such as livestock or machinery
  • May provide some management as well as labor
operating agreements p 31
Operating Agreements p. 3
  • Agreements should cover topics such as:
  • Job responsibilities
  • Contributions of assets
  • Distributions of income
  • Method of settling disputes
  • Dissolution of the agreement
joint operating agreement p 3
Joint Operating Agreement p. 3
  • Operators are sole proprietors
  • Each contributes assets, management and labor
  • Income is shared based on inputs
  • Each pays expenses of their assets
  • Operating expenses are split
joint operating agreement p 31
Joint Operating Agreement p. 3
  • Complete inventory should be taken at the beginning
  • Sale triggers recognition of gain
  • Could be transferred by gift
  • Could allocate income to pay for inventory
  • Could repay at end of agreement
enterprise agreements p 5
Enterprise Agreements p. 5
  • Beginning operator’s income is all from one enterprise
  • Labor for other enterprises may be a source of conflict
total farm operating agreements p 6
Total Farm Operating Agreements p. 6
  • All income and operating expenses are split
  • Beginning operator acquires more assets over time
leasing considerations p 6
Leasing Considerations p. 6
  • Allows effective use of limited capital
  • Short or long term
  • Land, buildings, machinery or livestock
real estate leases p 6
Real estate leases p. 6
  • Leases for more than a year must be in writing
  • 90 days notice is required to terminate a year-to-year agricultural lease
real estate leases p 7
Real estate leases p. 7
  • Cash leases
  • Crop share leases
  • Livestock share leases
farm building leases p 8
Farm building leases p. 8
  • Leasing from builder or bank
    • An alternative to financing
  • Leasing from a neighbor
    • Be careful about cost of repairs
livestock leases p 8
Livestock leases p. 8
  • From leasing company
  • From retiring farmer
    • Advantages for retiring farmer
    • Advantages for beginning farmer