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re: Starting a buisness (farming) and curious where to start
Posted on 2/18/17 at 7:14 am to Ace Midnight
Posted on 2/18/17 at 7:14 am to Ace Midnight
Ok so my OP was poorly written. What I have no clue about is how to turn what I've been "official" as a business with the state, get tax ID, etc
Posted on 2/18/17 at 7:52 am to VABuckeye
quote:
It has to be a line of credit. They wouldn't be in business if they had to get a loan for a million every year.
Most farmers operate that way. They may take a loan for a million dollars every year but then pay it back when they sell their crop. It's special loans designed for them through the government. Rice isn't very profitable right now but with that comes crawfish which is
OP if it's just a hobby that you'd like to put on your tax return add it to a sch c
Posted on 2/18/17 at 8:53 am to yellowfin
quote:
OP if it's just a hobby that you'd like to put on your tax return add it to a sch c
Reading between the lines and trying to figure out what the OPs goals are, this is probably the best answer
Posted on 2/18/17 at 9:13 am to GREENHEAD22
quote:
So see a tax attorney or CPA who specializes in AG businesses and taxes, they are out there just have to find them. Talk to farmers and ranchers to run down some names.
Best advice so far. There are attorneys and CPAs who do a lot of work for farmers and are familiar with the fairly specialized issues they face.
Ask other farmers for recommendations for an attorney who handles agricultural law matters.
Posted on 2/18/17 at 10:35 am to StringedInstruments
Farming has been financed that way since forever. A lot of businesses with high up front costs operate that way...like car dealerships.
There are still a lot of small farms in this country. But for staple crops like wheat, economies of scale make size a necessity.
There are still a lot of small farms in this country. But for staple crops like wheat, economies of scale make size a necessity.
Posted on 2/18/17 at 10:57 am to FelicianaTigerfan
An LLC is supposed to limit your liablity in the event of a lawsuit. An LLC doesn't qualify you for any additional tax deductions. If you are selling any kind of product or have employees/contractors on your property, it would be worth the nominal fee of forming an LLC. LLC's don't replace the need for commercial liability insurance.
Posted on 2/18/17 at 11:45 am to FelicianaTigerfan
A good many husband/wife owned farms are set up as general partnerships.
Like others have said, you need to find out who the local accountants and lawyers who are most familiar with agriculture. You said you already have financing in place, but it wouldn't hurt to pick an ag lenders brain either. You just have to piece enough info together from different sources and go from there.
Good luck to you and keep us updated.
Like others have said, you need to find out who the local accountants and lawyers who are most familiar with agriculture. You said you already have financing in place, but it wouldn't hurt to pick an ag lenders brain either. You just have to piece enough info together from different sources and go from there.
Good luck to you and keep us updated.
Posted on 2/18/17 at 11:56 am to Decisions
quote:
It doesn't take long to run through a million in farming. Our seed and fertilizer expenses alone this year were about half a million, and we're not close to the biggest operation in our area.
This. And yes, it's a line of credit.
Posted on 2/18/17 at 11:58 am to StringedInstruments
quote:
How much money can you make from selling what you grow?
Depends on the price of the crop. We're rice, crawfish and some years soybean farming family. We've never lost money but we have many years have had all bills paid and had money to put in our retirement account. Some years are better than others BUT you don't spend that "extra" money -- you keep it to start the next years crop so that you don't have to borrow as much which equals less interest on the loan.
I'm super thankful that my husband is a great farmer and a great business man.
eta: we have a little more than 2000 acres of land; we own a little but the rest is either family land or land that we rent. This year he'll be planting about 1200 acres of rice and is undecided on soybeans at this point. He often gets calls from a landowner asking him to pick up their land. If it's a good situation location and water source wise he'll consider it. It can be a good life -- but it can also be a difficulty one just like any job. It has its good and bad days.
This post was edited on 2/18/17 at 12:02 pm
Posted on 2/18/17 at 12:21 pm to FelicianaTigerfan
Cattle prices are down from a few years ago. If you're gonna buy some now is the time
Posted on 2/18/17 at 1:02 pm to texag7
Yup, I'm hoping they stay down for another couple for when I am trying to get in.
Posted on 2/18/17 at 1:58 pm to texag7
quote:
Cattle prices are down from a few years ago. If you're gonna buy some now is the time
Now, or in the next couple of years is the time to get into row crops also if it's the right situation. There's a lot of positives right now despite lower grain prices. Cotton is up, for one. That's the biggest thing for us. I'd rather be on a cotton/corn rotation than a corn/soybean rotation... Land isn't really getting cheaper, but seed/fertilizer/chemicals are backing off. We own our equipment, but for someone starting out, Deere and Case IH have attractive lease deals if that's the route they'd want to go. Lots of new technology coming along.
Posted on 2/18/17 at 2:22 pm to prostyleoffensetime
Id love to get into farming but you would have to be crazy to get in from scratch nowadays. If you already own the land then yea but without owning the land or equipment its a huge gamble at best.
Holding out hope for a rich farmers/ranchers daughter to come along.
Holding out hope for a rich farmers/ranchers daughter to come along.
This post was edited on 2/18/17 at 2:26 pm
Posted on 2/18/17 at 2:57 pm to GREENHEAD22
We have the land and its way less stressful to let someone else do it and collect the check
Posted on 2/18/17 at 3:18 pm to yellowfin
Have any hot sisters or female cousins?
Posted on 2/20/17 at 7:26 am to prostyleoffensetime
quote:
We own our equipment, but for someone starting out, Deere and Case IH have attractive lease deals if that's the route they'd want to go.
While I can see the attraction of leasing, I'd always recommend buying cheap, used equipment and building equity instead.
Land availability is the real limiting factor for getting in. At least, good land is. There's just not a lot of it. Plenty of high-priced garbage dirt that will break you, though.
Posted on 2/20/17 at 7:49 am to FelicianaTigerfan
Farming is a tough business to be in, if you do it it should be because you love it not because you expect it to generate large profits.
Livestock, particularly feeder cattle, is probably a breakeven business at best most years because a large portion of the nation's herd is from mom and pop 50 cow herds where they have no idea of their cost of production and are just doing it for the lifestyle.
Orchards are tough but there is more profit opportunity there than in livestock imo, but it's all from higher risk/reward. I know the peach industry is about wiped out in Louisiana because the EPA banned methyl bromide use.
I think the main opportunity in ag right now for small producers is in organic/niche markets, piggybacking on the local food movement.
Livestock, particularly feeder cattle, is probably a breakeven business at best most years because a large portion of the nation's herd is from mom and pop 50 cow herds where they have no idea of their cost of production and are just doing it for the lifestyle.
Orchards are tough but there is more profit opportunity there than in livestock imo, but it's all from higher risk/reward. I know the peach industry is about wiped out in Louisiana because the EPA banned methyl bromide use.
I think the main opportunity in ag right now for small producers is in organic/niche markets, piggybacking on the local food movement.
Posted on 2/20/17 at 10:13 am to GeneralLee
Read an article recently on organic / niche markets and apparently water buffalo's are pretty good. The real water buffalo mozzarella is ridiculously expensive.
Posted on 2/20/17 at 10:24 am to Decisions
quote:
While I can see the attraction of leasing, I'd always recommend buying cheap, used equipment and building equity instead
Yeah I agree. I didn't word that wonderfully... I wouldn't suggest leasing all of your equipment at all. I'd buy the tractors. They're cheap as hell right now at auctions. Harvest equipment would be the most attractive as far leasing goes because the dealerships (or at least ours) will work with you if, for example, you move from a predominately grain situation to throwing some cotton in the mix and you need to go from 2 combines to a combine and a picker... It can just help keep you flexible on your crop mix. And keeps you in some newer harvest equipment to mitigate risks on your high wear pieces of equipment.
It's obviously not that cut and dry. It's case by case. Just seems like used harvest equipment never brings what it should when it's time to upgrade.
quote:
Land availability is the real limiting factor for getting in. At least, good land is. There's just not a lot of it. Plenty of high-priced garbage dirt that will break you, though.
Yeah, no kidding. Your best bet is getting in as a manager with the right people that will throw you a bone after you've proven your worth. And there's not a lot of people out there like that.
Posted on 2/20/17 at 3:44 pm to prostyleoffensetime
We've bought tractors ... leased combines which included any repairs at THEIR expense and it ended up being worth it. Think he bought a combine last year that is larger than previously and they can better keep up with harvest. Still have the combine from when we started in 1997 as a second/backup when needed.
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