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QuickBooks tips and tricks to cut your bookkeeping time in half

By Brian E. Ravencraft, CPA, CGMA is a Principal with Holbrook & Manter, CPAs

It is not uncommon for business owners to find themselves knee-deep in the daunting task of “catching up on the books.” At our firm, we often see clients spending more time than is required doing so because they are not aware of some very handy features of the accounting software. There are several tips and functions within QuickBooks — a popular choice for many business owners — that can save hours when preparing financials and performing bookkeeping functions. Some of the most common and most time saving functions are listed below.

 

Memorized transactions

For transactions that occur every month and are the same amount, QuickBooks can memorize these transactions and book them automatically on a certain day of the week, month, or year, saving a significant amount of time entering the same information over and over.

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Mr. President, do not take farm vote for granted

I know that many people involved in agriculture, myself included, were thrilled to see President Donald Trump take time out of his very busy schedule to visit the American Farm Bureau Federation Annual Meeting in Nashville in January.

In that speech, we found out that the President is hearing about and working on so many issues that will affect farm country. From a new farm bill, to NAFTA, immigration reform, infrastructure, or countless regulations that are currently hindering progress in our industry, Mr. Trump mentioned the many woes facing agriculture as he spoke directly to thousands of farmers and ranchers from that stage in Music City.

The elephant in the room when it comes to rural America and politics at the highest levels of government is whether President Trump will truly take into account why he holds the title of Commander-In-Chief. If not for farm country, the oval office décor would have a completely different vibe.

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When to call an accountant: Know the signs

Outside help of any type can be hard for any business owner to weave into day-to-day operations. The thought of sharing business practices and financial information with outside service providers is an unsettling one to many. However, the day usually arrives when partnering with others to lighten your load is the right thing to do. In regards to accounting, the reasons to form a relationship with an accountant are varied. Let’s take a look at some of the signs that indicate you need to give this move serious consideration.

 

1.) Numbers are not your thing (no matter how hard you try)

Many business owners try and handle the books by themselves, at least early on. Some succeed. For others, the frustration brought about by handling the accounting tasks is enough to make them think about throwing in the towel all together. The financial tasks associated with keeping afloat are many — from handling payroll and receivables, to closing the books and tax reporting.

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Farm income averaging can be a useful planning tool

As we all know too well, farming incomes can fluctuate from year to year depending on yields, market conditions, and of course in Ohio, the weather. In certain years a farmer could have large profits subject to higher tax rates and the following year have a loss or little profit that results in a minimal tax liability. Due to the uncertain variables that affect farming, farmers should consider using farm income averaging.

 

What is Farm Income Averaging (FIA)?

Farm income averaging (FIA) is a tax management tool that can be elected after the end of the tax year. In simple terms, farm income averaging allows you to spread a certain amount of your farm income over three years. If you are in a higher tax bracket in the current year and the three preceding years in a lower tax bracket, you will be able to reduce this year’s federal tax liability.

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Year-end tax bill benefits farmers

Today, Congress passed Protecting Americans from Tax Hikes (PATH), a bill that includes two important provisions affecting farmers. The bill will permanently cap small business deductions for capital expenses at $500,000, up from the previous limit of $25,000.

The PATH Bill also extends the existing bonus depreciation for the purchase of new capital assets for another 5 years at 50 percent for 2015-2017, 40 percent in 2018 and 30 percent in 2019. The National Corn Growers Association has advocated for these two tax provisions for years and applauds Congress for these important changes to the tax code and support for America’s farmers.

“These tax provisions allow farmers to reinvest in their operations – and that has a ripple effect across the entire agriculture industry and rural communities,” said NCGA President Chip Bowling.

Bowling urged Congress to continue pressing ahead in 2016.

“When Congress returns to Washington next January, we hope they will roll up their sleeves and tackle important issues for agriculture,” said Bowling.

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Business or hobby? It matters for farm taxes

Is your farm operation a bona fide business or more of a hobby? There is a difference in the eyes of the IRS and knowing how to classify your entity is crucial when it comes to your taxes. It affects the way taxes are filed and what can be deducted.

Determining if an activity is engaged in for profit is based on the facts and circumstances of each case. However, IRS regulations provide nine factors to consider. These factors are frequently applied in relevant case law. Although certain activities are more susceptible to the hobby loss taint, no activities are immune.

Section 183 of the tax code governs “hobby losses.” This section of the tax code was passed so Congress could close down what it perceived as inappropriate farm and horse shelters. The “Safe Harbor” law sets up a presumption that if an activity shows a profit in three out of five tax years, then the taxpayer is engaged in it to make a profit.

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A good accountant: A more important resource than you think

As everyone involved in agribusiness knows, this industry is ever-changing. Whether you are a farmer or a supplier, the cyclical ups and downs of this business are unavoidable. It’s important to know how to adapt to changes in the economy, markets, customers, competition, technology, regulations, taxes…the list goes on and on. Adapting is easier to do when you partner with the right people, a good accountant being one of them.

An accounting professional with extensive experiences in the agribusiness space will end up being a pleasant surprise and a trusted advisor to your business. That trust will grow as you watch them handle not only the tasks you would expect, such as your taxes, but also as they guide you towards making sound decisions that will help your operation reach the next level.

For example, an accountant can help you in regards to growth, expansion, and even best industry practices. One Holbrook & Manter client explains this a bit further sharing, “we might be thinking about buying another farm and trying to understand the financial ramifications so we’ll get a hold of Holbrook & Manter and have a what if discussion.

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Planning for 2014 taxes

For the past several years, many of Ohio’s farmers have had the enviable task of planning for higher incomes because of historically high crop prices. Year-end tax planning became increasingly important with the passage of the 2012 Fiscal Cliff legislation (passed on Jan. 1, 2013, but made retroactive to 2012). This legislation contained several provisions that penalized high income earners, such as a new 39.6% income tax rate, a 20% tax on capital gains for taxpayers in the 39.6% range, and a new 3.8% net investment income tax and a 0.9% Medicare tax.

Most farmers normally do not have income that exceeds the thresholds that trigger these higher taxes. However, the higher crop prices over the past several years have pushed more farmers into the category where year-end tax planning was critical. Perhaps 2014 will be different because of the plummeting crop prices, but on the flip side, farmers have lost two very important tax planning tools, at least for today.

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Good news about Ohio taxes just got better for farmers

It’s not too often you can read the words “good news” and “taxes” in the very same sentence, particularly when your business is farming. But Ohio farmers did indeed receive some good news about taxes over the past year. And now — brace yourself — because that news is getting even better.

First, let me recap some good tax news from the recent tax-filing season. When Ohio farmers settled up their 2013 taxes, they shared in the largest tax cut of any state in the nation, a welcome financial boost to our state’s $105 billion food and agriculture industry.

In 2013, personal income tax rates for all Ohioans were cut 8.5%. Even better, small businesses — including most farmers — were able to claim an additional 50% tax deduction on top of those lower rates. This exclusion was available on up to $250,000, meaning the deduction is capped at $125,000 for each farmer or business owner who reports business income on their personal income tax return.

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