Some considerations if your farm had a good year
For the fortunate who had a prosperous year, here are ideas and resources for investing and sharing the wealth.
Farmers in a region across mid-Michigan escaped the 2012 drought and yield loss. Timely rains came in the nick of time. With good yields and prices, these farmers are faced with the decision of what to do with the additional income. This might be a tougher job than expected, especially knowing there are others with great needs locally, nationally, and even globally.
In years with good farm incomes it is wise for farmers to analyze their operations and make investments that will create better efficiencies, increase yield potential or reduce risks to generate income in the future. There are also strategies to guide year-end purchases and investments to manage taxes. A year-end tax management guide is available through Michigan State University Extension and the Telfarm Center, or stop by your local MSU Extension office for a copy.
The opportunity exists for some producers that have been given once in a lifetime crop yields and prices to make exciting new investments, pay down debt and also consider needs beyond the farm. Below are not recommendations, but are just a few ideas to ponder and options to consider.
- Talk to your tax consultant and accountant. Know how your transactions will affect your bottom line and the positive impact it can accomplish.
- Treat your employees well. They are a part of your team and contribute to your success.
- Make sure landlords are satisfied. Their land is a valuable resource for your operation.
- Save some funds for retirement, emergencies or lean years.
- Focus your spending locally. Give business to others in your area and help make your rural community stronger.
- Give to your community. Find out if there are special needs. Many counties have a Community Foundation, United Way, food pantries and shelters, Red Cross, Salvation Army, faith-based efforts and countless others. Look around and ask where needs exists. Your tax consultant can provide you with information on the types of charitable gifts that can benefit others and provide your farm with some tax relief.
- Look to the needs in other areas. Many groups and organizations are providing important relief for the victims of storms, famine and other major crisis.
Every farm situation is different. Financial decisions need to be made based on your own goals, desires and future direction of your operation. MSU Extension has a team of educators located regionally across the state that can provide additional information and ideas about year-end income management and tax planning. Contact your local MSU Extension office to learn who are the educators that serve you, or use the Find an Expert tool.