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4/8/2024, By Julie Van Hise
Up until now, I have written blogs about the fun aspect of the ranch, including the acquisition of livestock, or at least the hands-on physical labor of which the ranch demands. However, there is a lot of time also spent on the other side of ranching - the administrative side. And while the administrative side of the ranch is not entirely that exciting, and at many times can be as exciting as watching mud dry, it is extremely important. The administrative side of ranching, or farming, assists in determining the future operations of the ranch - whether your ranch, or farm, is a business or not, knowing where money is going and the return on that investment, is important!
Hi! I'm Julie Van Hise. My husband, Chris, and I are 1st generation ranchers and owners of 4 Bear Ranch - a ranch that not only provides for our family but provides for the local community as well. In 2017, we bought our home unknowing of what it would transform into in 6 1/2 short years. From mountain wilderness to mountain ranch wilderness - we have lovingly worked hard in building our dream! Now that we have a fairly solid base in terms of livestock and understanding ranch operations, to include the administrative side, we are using the information gathered to determine what the ranch needs to look like to become profitable in our endeavors. Yes, we are just now figuring it all out - to include the tax piece. Why? Because honestly, there isn't a whole lot out there on agriculture as a business! This blog isn't going to provide you the answers to all your questions but will hopefully motivate you to learn or keep on learning!
Yes, there is a lot published on the basics of business. Yes, we all know, in order to make a profit, your income must be higher than your expenses. Yes, we know taxes must be filed. Yes, we have been working on all of these things since we registered 4 Bear Ranch as a business with the State of Montana in May of 2021. There are books with details on baking businesses, craft businesses, and really, small businesses in general. There are blogs and articles and websites galore. However, look up farming, ranching, agriculture as a business and it seems to be directed towards people in which you must pay a service, or books that simply direct you to the use of QuickBooks. Don't get me wrong, QuickBooks and other tracking software is handy; however, when you already know you are going to be at a loss for the year, you try to find ways to accomplish the task without additional expense. And, while software is handy - I like to learn what the software is doing behind the scenes in calculating the data that is needed for taxes and operations in general.
Today, well, in February when I started writing this blog, I finally found the IRS Farm Guide, Publication 225, written in common, everyday understandable English for 2023. Maybe I've been looking in the wrong spot, or maybe it is just that the IRS site can be challenging. In either case, for the past 2 years, I kept getting placed into the IRS language form instructions, which is often not common English. Yes, I could've contacted a tax expert, but does the tax expert really know? Some do, and as it turns out, some don't. I might not capture all exemptions, but if I miss something, that is my responsibility. I would rather accept the fault as my own versus battling through an issue with an agency in which I paid, who knows how much, to do my accounting and/or taxes.
Over the years, I have researched more on ranching and farming business operations and management, I have discovered the answers to my questions and much more. Most commonly, I found answers to questions I thought I had the answers for from reading numerous posts, blogs, and articles from what I believed was reputable sources. What I discovered were those answers I found or were given, were partially correct, or just down-right wrong. So, yes, I prefer to do my own taxes, using tax software, and the actual IRS and State instructions.
My advice to the many that are searching for the 'how to': don't give up! Keep searching! The information and instruction is out there! For real! Use actual state and government websites, such as IRS.gov, when completing your taxes. Use your tax software, I like Turbo Tax (I have used it for years, and no, I don't get anything from the company for putting the software name here), for example, as a guideline, because it won't directly bring you to every unique situation that might apply to your situation, but brings you to the general area in which that unique sitation may be found. Turbo Tax, does allow you to complete all the unique situations that might apply to you, or provides directions and/or links on where to complete the paperwork unique to your situation, and mirrors the IRS.gov website - the source for all things taxes.
Another business related situation - actually forming a business. When determining what is required to operate as a business in your city and state, use the City and State websites - not the generic websites that are there for every state - usually it's just a culmination of information that may or may not be updated. Don't rely on hearsay from one person to the next, find what you need in writing - official writing. For example, in Montana, it is amazing how many individuals operate businesses without being registered with the state as a business - simply because they were told they did not need to be an official business - and in reality, they do. It isn't expensive to register with the State, and it's certainly not difficult. Most don't even realize it's a requirement - remember, though, ignorance is not an excuse, and will not keep you from fines/out of jail in most, if not all cases. Another example. Many individuals don't pay livestock per capita fees. What's a livestock per capita fee? Well, an individual, regardless of being a business or not, that own livestock on their property (chickens, horses, cows, etc.), are required to pay fees annually. What? Yes. It isn't a matter of agreeing or disagreeing to the purpose of the fee, it is what the law is. Either you are in compliance, or not. So, do yourself a favor, and research, research, and keep researching. The world wide web is a wonderful thing, if used properly. And do yourself the favor, teach yourself. Don't give up and just rely on others - you might judt find yourself in a situation you rather not be in, and you will only become upset and angry.
Owning a business is a lot of work - it's no secret. Owning a ranch/farming business is even more work. There are a lot of moving pieces involved, from licensing, taxes, insurance, livestock, permits, what is and is not allowed to be sold, butchered, and/or processed in terms of meat and food, and so much more. Business owners must be knowledgeable about not only their physical business operations, but also the administrative side of the business, because ignorance is not an excuse, whether you are doing it yourself, or you have employees/contractors doing it for you. Owning a business is a lot of hard work, but it is also a dream coming true, a blessing. This is all you need to remember to keep on learning, keep on doing it right, and to keep on pushing through the often times, not so much fun side of business, the administrative piece.
