The Farming Mistake that YOU are Making
If I’ve said it once, I have said it a thousand times.
Your farm is a business.
When you own a farm, you own a business.
Congratulations. You’re a small business owner.
Small Farmer = Small Business Owner
This blog post is going to be short, sweet, and to the point.
When you start any business, one of the most important items to check off your long list of things to do— is to open a business checking account.
You can do this literally at any bank that offers business checking accounts. Chances are, the bank that you have your personal accounts with, will also offer a business account.
Why is it so important to have a business checking account set up? A couple reasons.
When tax season inevitably rolls around, there is nothing quite so painful as trying to separate business money from personal money. PLUS you miss out on a ton of opportunities to save money by categorizing your expenses and writing certain expenses off.
For example. In a typical day you boost a Facebook post, deliver some carrots to a local school, take a customer to a cool local restaurant that serves your pasture raised chicken and then go on a date with your significant other.
Facebook boost -$5
Carrots +$20
Lunch -$40
Date -$50
Miles Driven: 30 business and 10 personal
When everything is garbled together in your personal account… this means exactly the face value. It’s hard to track the money you made and the money you spent is just gone.
The IRS isn’t a fan of this and you shouldn’t be either. Did you know that the current going deduction rate for business miles on your car is 0.58/mile? This saves you money.
With a business account and proper tracking, here’s what that should look like.
Facebook Boost -$5 (Advertising)
Carrots $20 (Sales)
Lunch -$40 (Meals and Entertainment)
Miles 30x.58= ($17.40 saved)
Second reason why you NEED a farm bank account.
It forces you to have your business set up and in order.
At my bank, in order to open a bank account you need a few things
Proof of your business structure (my farm is registered as a LLC, so I had to bring in my Articles of Incorporation)
Operating Agreement
Tax License
Essentially, they make sure you’re set up as a business before allowing you to open a business account. Why is this so important?
I’ll say it one last time for the people in the back.
YOUR FARM IS A BUSINESS!
