Farm and Finance

By Brian Ravencraft

When managing a farm or agribusiness, keeping accurate and organized records is essential—not just for legal compliance but also for maintaining smooth business operations. I often get asked, “How long should I really retain all of these records?” For this month’s article, let’s look at the basics:

IRS guidelines for tax records

The IRS recommends retaining all tax records for at least three years after filing your return. However, in some situations, you might need to keep them for a more extended period. Business owners may want to keep those records within reach for a longer period if bad debts were reported, or other out-of-the-ordinary circumstances were in play. Remember, keeping tax records from past years handy will be crucial should you be audited.

Payroll record rules for employee data

The Fair Labor Standards Act (FLSA) requires keeping payroll records for at least three years, while supporting documents like timesheets should be held for two years.… Continue reading

By Vinayak Shedekar, The Ohio State University

As I write this article on the last day of March 2025, about 3 to 4 inches of precipitation is expected across the state of Ohio by April 7. The 30-year normal monthly precipitation for April is about 4 inches. This means, you may have received an entire month’s worth of rain in just one week! The National Weather Service (NWS) recently issued the 2025 U.S. Spring Outlook, covering precipitation, temperature, flooding, and droughts. You can find more details on the Climate Prediction Center website.  For conditions specific to Ohio, a monthly climate summary is published online by the state climate office of Ohio.

Coming out of the recent drought conditions from 2024, the above-average April precipitation may have helped replenish the soil moisture in northwest and southeast Ohio. Most soils in Northwest Ohio are now oversaturated, leading to significant amounts of subsurface drainage discharge.… Continue reading

By Brian Ravencraft

Farmers are always looking for deductions they can take to minimize their current year tax impact. As most farmers understand, the purchase of farmland is nondeductible, and thus finding deductions at the time of purchase can be beneficial to cash flow the purchase.

While buying land does not provide a tax write off, the underlying residual nutrients can provide costs that can be deducted. IRS Code Section 180, Expenditures by farmers for fertilizer, etc., does provide landowners with such potential deductions.

When farmland is purchased, the tax code allows the purchaser to deduct the value of the excess fertility in the field. Just like other improvements, such as fences or drainage tiles, excess fertility is considered to be a depreciable/amortizable asset and can be taken as a tax deduction.

To qualify for this unique tax benefit the following criteria must be met.

1. The land purchaser must establish Beneficial Ownership

This means the purchaser cannot have farmed the acquired land during the prior crop season, and if the land is inherited, the heir cannot have farmed the land during the prior crop season.… Continue reading

By Emily Zuver, Senior Assistant Accountant, Holbrook & Manter

Farming is more than just hard work — it’s about making smart decisions to ensure profitability and sustainability. One tool that has proven invaluable for farm owners and agricultural professionals alike is benchmarking. By comparing your farm’s performance with industry standards or similar operations, you can identify strengths, weaknesses, and opportunities for improvement.

Whether you’re managing a small family farm or a large-scale agribusiness, benchmarking can help you make data-driven decisions that lead to greater efficiency and higher yields.

What is benchmarking?

Benchmarking is the process of measuring your farm’s operations, productivity, or financials against established standards or industry averages. It helps you answer important questions like:

• How does my crop yield compare to similar farms in the region?
• Am I spending more than others on inputs like water, fertilizer, or labor?
• Are my profit margins aligned with industry best practices?
• Am I properly compensating employees?

By Brian Ravencraft

Whether it be grain or livestock farming, farmers are continually developing new processes and solutions to increase yields and drive success. However, many farmers/agricultural organizations aren’t aware that their operation may qualify them for research and development (R&D) incentive programs. Most farmers believe large industries like pharmaceuticals, manufacturers or technology are the only types of entities eligible for R&D credits.

Although available to other traditional industries for many years, R&D tax credits were expanded to farmers just within the past few years. Recognizing that the nation’s farmland was remaining stable as the American population grew rapidly, Congress, with bipartisan support, expanded the R&D tax credit to farmers to incentivize them to find innovative ways of producing more food on the same amount of land.

These federal and state tax credits apply not only to the farmers that find ways to innovate but also is expanded to all the companies that consult and collaborate with farmers.… Continue reading

By Brian Ravencraft

The Internal Revenue Service issued guidance in late September providing tax relief for farmers and ranchers in applicable regions forced to sell or exchange livestock because of the recent  drought conditions.

Under the IRS  guidance, farmers and ranchers may have an extended period of time to replace their livestock and defer tax on any gains from the forced sales or exchanges.

Notice 2024-70 provides a list of the applicable areas, by county or other jurisdiction, designated as eligible for federal assistance. The list includes 41 states and other regions for which drought was reported during the 12-month period ending on Aug. 31, 2024. In Ohio, 39 of the 88 counties are listed as applicable drought areas.

The tax relief generally applies to capital gains realized by eligible farmers and ranchers on sales or exchanges of livestock held for draft, dairy or breeding purposes. Sales of other livestock, such as those raised for slaughter or held for sporting purposes, or poultry, are not eligible.… Continue reading

By Brian Ravencraft

For those looking to optimize their farming businesses, understanding, and utilizing Key Performance Indicators (KPIs) is crucial. Let’s look at the essentials of KPIs and explore how to apply them effectively in your agricultural ventures.

What are KPIs and why farmers should care?

Key Performance Indicators (KPIs) are measurable values that demonstrate how effectively a business is achieving its objectives. In farming, KPIs are vital tools that help monitor the health and productivity of your operations. They can range from crop yield and soil health to financial metrics like profit margins.

Agricultural entrepreneurs and farm managers often juggle numerous responsibilities. By tracking KPIs, farmers can gain a clearer picture of their performance, helping them make informed decisions. Whether it’s optimizing resource use, boosting productivity, or increasing profitability, KPIs are essential for sustaining a competitive edge in the agricultural sector.

Implementing KPIs aligns with strategic goals, making it easier to pinpoint areas needing improvement.… Continue reading

By Emily Zuver, Senior Assistant Accountant, Holbrook & Manter

Inheriting the family farm is both exciting and daunting. For many young farmers stepping into this role, the challenge can be overwhelming. Whether you’re new to farming or have grown up surrounded by crops and livestock, these insights will guide you through the transition, ensuring the enduring success of your family’s agricultural heritage.

Understanding your land

Every successful farm starts with understanding its foundation — the land itself. Begin by familiarizing yourself with your farm’s soil composition, drainage patterns, and climate conditions. Remember that understanding your land is an ongoing process. Seasons change, weather patterns shift, and soil conditions fluctuate. Regularly monitor your farm’s environment and adapt your strategies as needed. Staying attuned to the land’s natural rhythms is key to sustainable farming success.

Building a management plan

Taking over the family farm requires a clear management plan. This plan should outline your goals, strategies, and resources needed for effective farm operations.… Continue reading

By Brian Ravencraft

Autumn is an ideal time for tax planning because it aligns with the post-harvest period when farmers typically have a clearer picture of their annual income and expenses. This clarity allows for more accurate forecasting and decision-making regarding their tax obligations. By addressing these concerns in the fall, farmers can avoid the last-minute rush come tax season.

The autumn months provide a window of opportunity to evaluate your financial standing and make necessary adjustments. It’s the perfect time to assess your cash flow, review your balance sheets, and identify any discrepancies. This proactive approach not only helps in tax preparation but also assists in setting realistic financial goals for the coming year.

Furthermore, autumn tax planning can help mitigate the impact of unexpected events. Whether it’s a sudden rise in input costs or a dip in crop yields, having a tax strategy in place can cushion the blow.… Continue reading

By Emily Zuver, Senior Assistant Accountant, Holbrook & Manter

Donating crops and other farm assets to charity can be a rewarding way to give back to your community while also reaping tax benefits. Whether you are a seasoned farmer or new to the agricultural community, understanding the nuances of charitable contributions can help you make informed decisions that benefit both you and the charitable organizations you support.

Farmers can donate various types of assets, including crops, livestock, equipment, and land.

Each type of donation has specific tax implications and requirements. This is very important to explore with your accountant before making any sort of donation.

One popular donation method for farmers is donating crops directly to charitable organizations. Here’s how you can do it.

Steps to donate crops

1. Harvest the crops: Ensure that the crops are harvested and meet the quality standards required by the charity.
2. Transfer ownership: Transfer ownership of the crops to the charitable organization.

By Emily Zuver, Senior Assistant Accountant, Holbrook & Manter

Now is a good time to review your budget for the first half of the year. If you do not have a budget, it is never too late to establish one. Ask your accountant to help you with this process.

Whether it is something established that you tweak each year, or it is a new element brought into your business, planning, maintaining, and monitoring gives you a window into knowing how your business stands financially. Cashflow management is so much easier with a budget in place, and it keeps you from making risky financial moves such as pulling funds from personal accounts in the name of covering important expenses.

When you do sit down to create or alter a budget with your accountant, here are some things they will likely want you to consider since your operation falls under the agribusiness umbrella.… Continue reading

By Emily Zuver, Holbrook & Manter

It is no secret that we are fans of accounting software. I could start in on the benefits that it brings to farmers and agribusiness owners, but I do have a word count limit for this article. The benefits are simply endless.

Chances are you are using some type of accounting software. Whether it be something developed just for farmers or one of the more popular platforms like Intuit QuickBooks. No matter what you have in place, the mid-year point is an ideal time to really evaluate your software to make sure it is meeting your needs.

At Holbrook & Manter, we get asked often what software we recommend. It truly depends on the business and the business owners’ needs and desires. With that being said, we tend to gravitate towards QuickBooks Online. This platform allows both the business owner and their accountant to view records and finances in real time.… Continue reading

By Brian Ravencraft

Having sound internal controls in place is necessary for any agribusiness. It can be the difference between success and struggle. Internal controls are designed to prevent fraud, streamline operations, and ensure that your business is following best practices. Every type of business needs to have controls in place, no matter the size. Let’s take a look at some of the top controls to implement.

Separation of duties

Segregating duties among your employees is crucial for preventing fraud and costly errors. By dividing responsibilities for different processes, no single employee or department has too much control. For instance, the person who reconciles your bank statements shouldn’t be the same person who approves transactions within your accounting system.

Regular reconciliations

Frequent and accurate account reconciliations help identify discrepancies that may point to mistakes, internal fraud, or external theft. This includes reconciling bank statements, credit card statements, and other financial accounts to the accounting records within your business.… Continue reading

By Emily Zuver

For farmers, who balance a myriad of unpredictable elements ranging from weather patterns to market demand, financial stability is the key to success. This is why it is so crucial for farmers to maintain a steady dialogue with their accountant throughout the year. Not just at tax time. This month, we look at some of the top reasons farmers need to always keep their accountant’s contact information handy.

Tax planning beyond tax season

The common misconception is viewing accountants solely as tax advisors. However, their proficiency lies in strategizing tax planning throughout the year. By being proactive and engaging with accountants even during off-peak seasons, farmers can manage tax liabilities, leverage incentives, and streamline tax returns effortlessly. Also, communicating with your accountant about equipment or land purchases and sales, when acquired, will help alleviate the rush at year end to obtain this pertinent information.

Budgeting for the unseen and unforeseen

Agriculture is renowned for its seasonality and inherent unpredictability.… Continue reading

By Emily Zuver 

For farmers, planting season is a time filled with anticipation, where every move is critical, and every decision must be made with careful consideration. The success of the planting season, and by extension, the harvest season, hinges on meticulous preparation. This month, I join the rotation of writing this monthly article with my colleague, Brian Ravencraft.

Let’s talk about what you can be doing now to prepare for planting season and the financial aspects of 2024. Before the seeds touch the soil, the groundwork must be perfect. Start by assessing your farm. Are there any areas that need special attention?

For planting, farmers are busy in the shops getting all of the necessary equipment ready for planting, making final seed and input decisions and preparing for field prep. Winter is a great time to upgrade technology and address infrastructure issues like fencing, outbuildings and drainage as well. It is also a great time to plant the seeds for a fertile financial future.… Continue reading

By Brian Ravencraft

Transferring farm management and ownership from one generation to the next is no easy task. It is a process that involves careful planning, consideration and commitment from all parties involved. Emotions and finances come into play and having qualified advisors help you with your succession planning will be key. A CPA is one of those advisors. This month I am sharing some tips for succession planning success with you so you can ensure the long-term success of your farming operation.

Start early

Succession planning is not a one-time event; it is a process that can take several years to complete. That’s why it’s essential to start early. Ideally, start planning at least five years before the intended transfer date. This gives you ample time to prepare your farm, assess potential successors, and ensure a smooth transition.

Over communicate

Communication is crucial when it comes to succession planning. You need to talk openly with your family members or potential successors about your intentions, expectations, and goals.… Continue reading

By Brian Ravencraft

I am sure you have been told time and time again that all farmers and agribusiness owners should partner with a Certified Public Accountant (CPA). I know I have made that point a few times or so over the years. Making the point and explaining the point are two different things. For this month’s article, I want to touch on some of explanations around why a CPA should be a part of your farm management team. This partnership extends far beyond tax planning and filing. Let’s take a look.

Financial management

Farmers and agribusiness owners need to keep track of their income and expenses, manage their cash flow, and have a good understanding of their financial position. A CPA can help with these tasks by providing bookkeeping and accounting services, creating budgets and financial statements, and providing financial advice. With a CPA’s expertise, farmers and business owners can make informed financial decisions to help grow their business.… Continue reading

By Brian Ravencraft

The recent enactment of H.B. 33 of the 135th Ohio General Assembly has changes that may eliminate the requirement for many businesses to file the Ohio CAT tax. H.B. 33 increases the CAT exclusion to $3 million in taxable gross receipts for tax periods beginning in 2024 and $6 million for tax periods beginning in 2025. The CAT rate will remain at .26% for taxpayers with taxable gross receipts exceeding these increased exclusion amounts. Combined or consolidated elected taxpayer groups are treated as one taxpayer. The annual filing minimum tax (AMT) will be eliminated after the 2023 annual return. Only quarterly returns will be accepted beginning in the calendar year 2024.

What this means for taxpayers

Annual taxpayers must file their 2023 return by May 10, 2024. Since the annual minimum tax for 2023 was prepaid with the 2022 return, no tax will be due with the final return unless taxable gross receipts exceeded $1 million in 2023.… Continue reading

By Brian Ravencraft

Financial practices that business owners and farmers implement and then do repeatedly over time tend to be beneficial. One of those practices is known as “closing the books” or the “month-end closing” process. I am not just speaking in accountant slang; these are actual exercises that can set any business up for success and can save the owner many headaches when the end of the year arrives.

The month-end closing process is something you can set up with your accountant. This will be conducted at the end of every month and will allow you and the accountant to really take a deep dive into the finances of the business. This will be the time to reconcile any mistakes and to plan for upcoming expenses. Doing this simple exercise will also allow you to prevent lost revenue, plan for tax obligations and more.

The month-end process can look different for different businesses, but it typically includes actions such as: reviewing the balance sheet and financial statements, reviewing accounts payable and accounts receivable, examining journal entries in accounting software, evaluating income and expenses, reconciling accounts, and reviewing fixed assets.… Continue reading

By Brian Ravencraft

I am sure you have heard the saying “cash is king” when it comes to business. There is some truth to this statement for sure because when cash flow is tight, stress certainly sets in for any business owner. Ideally the cash is always flowing, but that isn’t always the case. Let’s look at some moves you can make when cash is slowly making its way in:

• When money is tight, purchasing expensive new equipment falls to the bottom of the to-do list. However, if you still need certain equipment to keep operations afloat, investigate repairing what you already have on the farm. Or you can shop for refurbished equipment. Purchasing new equipment does present tax savings in most cases, but that won’t help with the cashflow when things are tighter than normal.

• Perhaps you have equipment collecting dust on the farm. If you have machinery you no longer use, now would be the time to investigate selling it.