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“The Dollars and Sense of Financing a Small Farm” Southeastern Massachusetts Agricultural Partnership (SEMAP) So You Want to be a Farmer 4/4/2012. Presented by Roy Henshaw, CPA Partner: Rucci, Bardaro & Barrett, PC. A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

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A member of russell bedford international with affiliated offices worldwide

“The Dollars and Sense

of Financing a Small Farm”

Southeastern Massachusetts Agricultural Partnership

(SEMAP)

So You Want to be a Farmer

4/4/2012

  • Presented byRoy Henshaw, CPAPartner: Rucci, Bardaro & Barrett, PC

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM


I decide what kind of farming you want to do
I. Decide what kind of farming you want to do

  • Animals

  • Land Crops

  • Orchards

  • Aquaculture

  • Timber

II. For Profit Farming – Making Money

III. Hobby Farming – Personal Enjoyment

IV. Not for Profit Farming Activities

Wednesday April 4, 2012

2

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM


V setting your goals starting a farm business
V. Setting your goals: Starting a Farm Business

  • Determine if you can afford to go into farming

  • Establish a Financial Plan for your Farm Activity

  • Make sure all permits and licenses are in the farm name and you’re compliant with town ordinances

33

Wednesday, April 4, 2012

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM


Vi establishing a system of recording information
VI. Establishing a System of Recording Information

  • Obtain a Federal Identification Number (Federal form SS-4)

  • Open a Business Checking Account

  • Record all income and expenses for the farm

    • Cash receipts journal

    • Cash disbursements journal

  • Keeping track of Barter income and expenses

  • Recording out of pocket costs

  • Recording and using credit cards for farm expenses

  • Recording loans made by the owner

Wednesday April 4, 2012

4

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM


Vii prepare financial reports
VII. Prepare Financial reports

  • Income Statement

    • Sales

    • Expenses

    • Profit / Loss

  • Balance Sheet

    • Assets

    • Liabilities

    • Owners Capital

Wednesday April 4, 2012

5

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM


A member of russell bedford international with affiliated offices worldwide

  • Manual System of Accounting

    • Safe Guard System

    • Monthly Bound Accounting Ledgers

  • Computer Accounting Systems

    • Quickbooks

    • Peachtree

    • First Pioneer Farm Credit System of Accounting

Wednesday, April 4, 2012

6

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM


Viii filings for a farming activity
VIII. Filings for a Farming Activity

  • Prepare an accurate income tax return annually

  • Prepare a Schedule F (income and expense from a farming business)

    • Income from farming activities

    • Expenses incurred to run the farm

    • Office in home schedule

    • Farm use of personal assets

Wednesday April 4, 2012

7

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM


Ix operate your farm inside an entity
IX. Operate your farm inside an entity

Wednesday April 4, 2012

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM


X financing a farm
X. Financing a farm

  • Basics for borrowing money

    • Borrow only 50% of Value

    • Use your cash for the rest

    • Borrow money inside of a farming entity

    • Minimize personal guarantees

    • Negotiate a loan before you need it

    • Collateral farming assets only

Wednesday, April 4, 2012

9

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM


Types of financing
Types of Financing

  • Mortgage Loans

  • Line of credit

  • Operating loans

  • Equity line of credit

  • Installment debt

  • Leasing Arrangements

  • Equipment Financing

10

Wednesday, April 4, 2012

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM


Sources of financing
Sources of Financing

  • Grants from MDAR (Mass Department Agriculture Resources)

  • Farm Banks

    • First Pioneer Farm Credit

  • Conventional Banks

  • Equipment Companies

  • Family Members

  • Outside Investors

Wednesday, April 4, 2012

11

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM


Xii work as a team
XII Work as a Team

  • Communicate with owners

  • Keep Track of Agricultural Production Annually

    • Degree days and production per acres

  • Encourage your help to assist customers

  • Outside team members

    • Lawyer

    • Insurance professional

    • Accountant

    • Financial Advisor

Wednesday, April 4, 2012

12

A MEMBER OF RUSSELL BEDFORD INTERNATIONAL

WITH AFFILIATED OFFICES WORLDWIDE

THE RIGHT SIZE ACCOUNTING FIRM