Tax preparation tips

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Editor’s note: The following article was written by Shelly Sorem and reprinted with permission from theAmerican Christmas Tree Journal, Jan. 2010 issue. Shelly Sorem is a partner with Spectrum CPA Group LLP in Corvallis, Ore.

The calendar has rolled forward and here we are again at the beginning of a new year. For many Americans, 2009 was a financially difficult year as individuals and as business owners. My suspicions are none of our readers has been immune. It is time to put 2009 behind us and focus on making 2010 more prosperous.


Before 2009 can go into the archives, your accounting and tax work needs to be completed. Compiling the farm/business information for your tax preparer should include the following:

  •  All income received, which should match the business deposits and cash not deposited
  • All expenses, which includes a breakdown of specific types of expenses.
  • Detail of all new asset acquisitions - copies of invoices with notations on whether the assets are new (original use begins with you) will reduce the number of follow up questions from the preparers.
  • Detail of all asset dispositions including junked assets - review your depreciation schedule.
  • Copies of all payroll reports filed (federal and state), quarterly and annually
  • Calf & heifer information
    • 2009 sales in dollars (collections for 2008 sales and collections for 2009 sales separated)
    • Number of raised calves for sale
    • Number of purchased calves
    • Number of calves sold
    • Farm payroll expenses including payroll taxes
    • Farm supplies
    • Farm contract labor
    • Farm machine hire
    • Number of unpaid labor hours for farm

Providing this information in a succinct manner with appropriate documentation should help your tax preparer be the more efficient and ultimately keep your costs down.


As you compile your information for your tax preparer, it is the perfect time to review your expenses and evaluate what can be handled differently in 2010 to improve the bottom line. Once your 2009 reporting is completed, your main focus should be working on that bottom line. First and foremost, the focus should be on what expenses can be eliminated or reduced. What kind of return are you getting for the costs you are expending? 

For example:

  • Labor: Can you tap into a more favorable rate for work on your farm? Can the work on your farm be accomplished in a more efficient manner?
  • Supplies: Can you buy in bulk or team up with neighboring farms to buy supplies in larger quantities, getting a better price? 
  • Accounts Receivable: How many days is it taking to collect the accounts receivable? Should you implement a discount policy to get the cash in sooner? Should you be making collection calls sooner than you are (the squeaky wheel gets the grease)? Do you have repeat late paying customers? 
  • Expenses: Have you recently shopped your insurance? Asked your agent to run a new quote? All businesses are being affected by the current economic conditions and there are deals to be had. Have you reviewed your insurance coverage? (Sometimes assets are sold and they don't get removed from the insurance policy.) Have you reviewed your cellular phone bills lately? Are there better plans that are more cost effective? Do you still need that land line? 

For 2010, build a budget and do your best to adhere to it. Discipline is essential to success. We are operating businesses in difficult economic times, which force us to be more diligent in our business practices. This is not to say that we shouldn't always be diligent; however, when times are good there is a tendency to be more lax than we should be. Most business owners and individuals are being forced to look at the cost/benefit relationship of current expenses and are consequently evaluating whether changes should be implemented. There is no time like the present to make this a priority for you and your business.

Source: Dairy Calf and Heifer Association

 



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