The Importance of Separating Agricultural and Personal Expenses
Farmers are at the heart of our communities. Supplying crops and livestock to help feed local residents and providing jobs to keep the local economy strong. Many working farms have been in families for generations and have withstood various challenges through the years.
One of the biggest mistakes farmers can make with their finances is mixing personal and business. While it seems like the easiest solution is to combine everything, it will make things harder in the long run, especially at tax time.
Here are a few reasons to keep your business and personal accounts separate:
- It makes managing finances easier. Keeping your agriculture expenses separate means that you can handle things like payroll, taxes and budgeting on their own, making it much simpler to keep track of everything. You’ll save time combing through personal purchases, but also have a better snapshot of how your farm is doing financially.
- It saves headaches at tax time. Let’s face it, tax time is already stressful enough. Having your business and personal expenses separate will help keep your business expenditures on their own. Additionally, should you ever be audited, it allows you to pull clean records.
- It helps with budgeting. Keeping your finances separate can help keep you from spending personal money on business expenses.
While this may seem daunting, Pennian has a dedicated agricultural expert to help guide you through this process. They can also help you assess your financial needs, such as account types and various agricultural loans.
*This article is not tax advice. Please contact a tax expert to assess your unique situation.