Financial Planning Steps for Farms
22 Dec 2020 Accounting Services
Leskun & Son Accounting has been specializing in accounting for farmers across BC since our inception, and the farming community in the Fraser Valley remains one of our top focuses in the work that we do. A big part of our business consulting services for farmers includes helping them put together the proper financial planning steps to ensure their farms’ profitability. Whether you are preparing to hand down the farm to the next generation or need a comprehensive strategy that allows you to achieve your goals, our experienced team can help.
Find out more about business succession and retirement planning for BC Farms.
Financial Planning Steps for Farms
If you own a farm, it is important to have a proper financial plan to ensure you know where you are going and to ensure that the farm does not go into the red. While it is usually best to get the help of an experienced accountant when putting together a financial plan, it can help to be prepared by knowing some of the steps they will take.
1. Compile Financial Records
Every good financial plan starts by looking at the numbers for where the farm currently stands. Past yearly budgets, costs, taxes, and other numbers will all factor into the plan for the farm’s future.
2. Set Financial Goals
Having goals is important. Whether you are saving up for a retirement property, a series of vacations, or anything else, turning these hopes into measurable, timely goals helps to give the financial plan an incentive.
3. Create Monthly Budgets
Look at monthly expenses and make projections for different months based on the seasons of growth and profits. From these projections, make a budget for labour, maintenance, insurance, and resources.
4. Plan for Emergencies and Taxes
Planning for taxes is extremely important, as they can play a large role in a farm’s yearly budget. It is also vital to have an emergency fund in case a piece of machinery breaks, a building is damaged, or any other kind of unforeseen disaster strikes.
5. Factor in Debt
Make sure that you factor in any debts owed for property, equipment, or anything else so that payments can continue as needed.
6. Consider Market Volatility
Make sure that you consider market stability and volatility in what you are farming. Even if you have a consistently reliable crop, it is important to consider options for diversification of resources, even if the conclusion that you come to is that it is better to stick with your current farm setup.
If you have any questions about financial planning steps for farms, or to find out more about the accounting and business consulting services that we offer, please reach out to the team at Leskun & Son Accounting.
