Hug your accountant, and maybe even your lawyer
As farmers, most of us love to visit and compare. It’s a great way to learn about new products and practices, marketing possibilities and potential pitfalls.
During these sorts of conversations, I’m sometimes surprised by the accounting and business advice that some producers are receiving or not receiving.
I’m amazed at how many farm operations with significant holdings and sales are not incorporated, or at least evaluating this option. There are pluses and minuses to incorporation, but some producers seem unduly struck by the negatives and what some accountant or business advisor told them years ago.
It’s also surprising how many farm-owning couples haven’t taken all the necessary steps to double up on their lifetime capital gains exemptions. For instance, on land held outside of a farm corporation, is the title in joint names?
Most of us, me included, don’t fully understand farmland rollover provisions, determining adjusted cost base on farmland and how the rules differ between a sole proprietorship, a formal partnership and a corporation.
But I do know enough to get good advice and ask lots of questions. The money our farm has spent on professional accounting and legal advice has been a wonderful investment. I’m happy to pay my fair share of taxes, but I’m certainly going to use all the available tools to minimize the tax burden.
Taxation rules are complicated and steadily changing, every farm is different, and different professionals may provide somewhat contradictory advice.
But make sure you’re getting solid advice that matches your objectives – advice that’s current with the changing dynamics of your farm. That means regular meetings with your accountant and perhaps your lawyer. And it also means doing a bit of your own research so you can ask good questions.