Agriculture can be a hugely complicated business. Even a very small operation can involve considerable uncertainty, stemming from regulation, money, and external, concrete factors like animal-borne disease, and the weather.
If your farm is to thrive, it’s essential that you’re able to understand and juggle these concerns, and others. This tends to involve recruiting an accountant with specialised knowledge of the sector.
The complex financial landscape of agricultural enterprises
Agriculture, as a sector, is highly seasonal, and subject to highly variable income streams. One harvest might be impressive; the next might be close to anaemic. There’s also a uniquely skewed balance between assets and income, with farms often operating on wafer-thin margins, despite holding millions of pounds in equipment, buildings, and fertiliser.
A traditional accounting model will often fail to capture these factors. In many cases, they might be actively obscured.
Navigating agricultural tax and relief schemes
Tax on farmers has become a major issue in recent times. Fortunately, there are several levers that a knowledgeable accountant can pull in order to relieve the pressure. These might include specific things like machinery allowances and agricultural property relief, which can be leveraged to turn a sizeable tax bill into a relatively modest one.
Unpacking this usually involves bringing in outsiders, with specific knowledge of taxation as it applies in the world of farming. SME accountants who specialise in the agricultural sector can devise an approach that reflects your specific asset structure, as well as the economic environment in which you’re operating.
Succession planning and long-term business continuity
Farms are often small family businesses. If you fall into this category, then you might already be looking at ways to transfer ownership of the farm to your next of kin, while mitigating the notorious changes around the way that inheritance tax applies to farmers. For your business to thrive for generations to come, you’ll need to think not just about how your business works today, but how it will cope with the environmental and regulatory challenges on the horizon.
Diversification and emerging rural revenue streams
If your operation is to be resilient in the face of volatile income and an uncertain future, then you might consider branching out into things like renewable energy, holiday lets, and farm shops. Get these things right, and you’ll no longer have all of your eggs in a single basket.
Regulatory reporting, sustainability and compliance requirements
Increasingly, rural businesses are expected to comply with a range of environmental regulations, and to report meticulously. It’s a good idea to keep thorough records of all your activities, especially if you intend to apply for grants, or Environmental Land Management schemes like the Sustainable Farming Initiative.
