Deal or no deal part 2: moving forward

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thatdoggJake

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recap: to purchase the herd of 60 and lease the 500 acres they are currently on.

Now that I am thinking about moving forwad to try to put a final deal together, how should I handle my money? I searched google and talked to a few local cowboys in the area, but I don't really think I am getting the best answers (aka I don't know how some people 'aren't' deep in with the IRS). My first option that I play in my mind would be to set up a seperate checking account for my cattle venture. This way I could keep all my money going out and all my money going in together. Also I figured if I had to pay for something cattle related and I forgot my checks for that account I could just pay another way and then pay myself back from that checking account (is that allowed???). My second thought would be to set up a LLC, but I have no idea if there are any advantages or disadvantages to this.

How are most doing it these days with a setup like I am looking at? I want to play by the rules and do it right.

Would I get to take a loss the first year since I purchased the cattle in the first year or is that not considered an expense you could right off? I probably need to get some help from a CPA with cattle knowledge but I figured I would pick the minds of you guys first : )

Thanks
 
Just go find a decent accountant, he/she would be the best source for answering the questions you have posted here. You might get lots of suggestions here, and all of them will be different. It could be that none of them will fit your situation though. An accountant can help you much more with this in my opinion. Congratulations!
 
grubbie":3mm1diid said:
Just go find a decent accountant, he/she would be the best source for answering the questions you have posted here. You might get lots of suggestions here, and all of them will be different. It could be that none of them will fit your situation though. An accountant can help you much more with this in my opinion. Congratulations!

Good advice - now you are about to find one of "many to come" hidden costs of doing business.

These additional expenses tend to not be included in the final calculations by the vast majority of folks on this board when they announce their profits or their "annual cost to keep a cow".

Watch your pennies

[Bez]
 
You have gotten good advice from the other 2 posters and I agree wih them
and yes I would recommend you keep a separate checking account the better records you keep the easier it is if an issue ever arises that you need to prove to the gov't that this is a business and not just a hobby

and that is the only true way to know if you are making a profit or losing you A$$
 
Running out of time.......seal the deal and write the check before the end of the year and you get to depreciate 50% (economic stimulas on qualified property) of your asset cost the first year.

You can get your feet wet and show your first huge loss this year and be in business only a week. :lol:
 
i must live in that dream world b/c i haven't fertilized with anything but cow chips & legumes for 5 or 6 years now. still keep just as many cows as before
 
tncattle467":zpe6xxyr said:
grubbie":zpe6xxyr said:
Just go find a decent accountant, he/she would be the best source for answering the questions you have posted here. You might get lots of suggestions here, and all of them will be different. It could be that none of them will fit your situation though. An accountant can help you much more with this in my opinion. Congratulations!


Best advice yet even though you are getting screwed on the deal. You will have to fertilize, you will have to feed hay, if you do not think you do you are living in a dream world. I have a separate farm account, feed, fuel, etc come out of that account. I am tax exempt on farm stuff so do not have to worry about extra taxes. Most of my money is made selling freezer beef, heifers, and bulls. Other than that everything else is a loss (cows that dont peform and have to go to the sale barn, etc.). Granted I do make a profit but it is not a huge profit margin. It is more than just "getting buy". As far as I know anytime you sell cattle at the sale barn or what not you can write it off. I do anyways.

We also ran a lot of years without N-fertilizer, fed no hay, and ran >40 cows/bull. If you want to operate like most people, you are just buying an expensive hobby. If you reject conventional thinking and do what makes biological sense, you just might stand a chance to make a little money.

I also would advise you to stay out of the 'friendship' partnership. They almost never work out. Staying away from show cattle is also a good idea if you have any interest in running a functional cattle operation.


With good grazing management, that 500 acres should run a lot more than 60-70 cows.
 
JRGidaho`":3kz6k5kg said:
tncattle467":3kz6k5kg said:
grubbie":3kz6k5kg said:
Just go find a decent accountant, he/she would be the best source for answering the questions you have posted here. You might get lots of suggestions here, and all of them will be different. It could be that none of them will fit your situation though. An accountant can help you much more with this in my opinion. Congratulations!


Best advice yet even though you are getting screwed on the deal. You will have to fertilize, you will have to feed hay, if you do not think you do you are living in a dream world. I have a separate farm account, feed, fuel, etc come out of that account. I am tax exempt on farm stuff so do not have to worry about extra taxes. Most of my money is made selling freezer beef, heifers, and bulls. Other than that everything else is a loss (cows that dont peform and have to go to the sale barn, etc.). Granted I do make a profit but it is not a huge profit margin. It is more than just "getting buy". As far as I know anytime you sell cattle at the sale barn or what not you can write it off. I do anyways.

We also ran a lot of years without N-fertilizer, fed no hay, and ran >40 cows/bull. If you want to operate like most people, you are just buying an expensive hobby. If you reject conventional thinking and do what makes biological sense, you just might stand a chance to make a little money.

I also would advise you to stay out of the 'friendship' partnership. They almost never work out. Staying away from show cattle is also a good idea if you have any interest in running a functional cattle operation.


With good grazing management, that 500 acres should run a lot more than 60-70 cows.
 
JRGidaho`":1uvdpo3m said:
tncattle467":1uvdpo3m said:
grubbie":1uvdpo3m said:
Just go find a decent accountant, he/she would be the best source for answering the questions you have posted here. You might get lots of suggestions here, and all of them will be different. It could be that none of them will fit your situation though. An accountant can help you much more with this in my opinion. Congratulations!


Best advice yet even though you are getting screwed on the deal. You will have to fertilize, you will have to feed hay, if you do not think you do you are living in a dream world. I have a separate farm account, feed, fuel, etc come out of that account. I am tax exempt on farm stuff so do not have to worry about extra taxes. Most of my money is made selling freezer beef, heifers, and bulls. Other than that everything else is a loss (cows that dont peform and have to go to the sale barn, etc.). Granted I do make a profit but it is not a huge profit margin. It is more than just "getting buy". As far as I know anytime you sell cattle at the sale barn or what not you can write it off. I do anyways.

We also ran a lot of years without N-fertilizer, fed no hay, and ran >40 cows/bull. If you want to operate like most people, you are just buying an expensive hobby. If you reject conventional thinking and do what makes biological sense, you just might stand a chance to make a little money.

I also would advise you to stay out of the 'friendship' partnership. They almost never work out. Staying away from show cattle is also a good idea if you have any interest in running a functional cattle operation.


With good grazing management, that 500 acres should run a lot more than 60-70 cows.
We use no fertilizer either, and grow our own hay. But in your area, how do you get away with not feeding hay? I don't feed every day, but sometimes the snow gets too deep for them to graze, and we also throw hay out when it is bitter cold just for some added calories. I would think you get just about the same weather as we do, but maybe you are in a little warmer climate. Also, how long is your calving season? I like to keep mine at 60 days. If I go anymore than about 25 cows per bull, it will stretch my calving season way too long, or I will have a bunch of open cows if I pull the bulls out in 60 days (which is how we do it now.)
 
grubbie":1c9miryq said:
We use no fertilizer either, and grow our own hay. But in your area, how do you get away with not feeding hay? I don't feed every day, but sometimes the snow gets too deep for them to graze, and we also throw hay out when it is bitter cold just for some added calories. I would think you get just about the same weather as we do, but maybe you are in a little warmer climate. Also, how long is your calving season? I like to keep mine at 60 days. If I go anymore than about 25 cows per bull, it will stretch my calving season way too long, or I will have a bunch of open cows if I pull the bulls out in 60 days (which is how we do it now.)


Grubbie, he posted in the other thread that he was south of Houston near the coast. If it does snow their it doesn't last very long. I'll bet this past year the cows probably could have made use of some hay or at least protein supplement. But 60-70 cows probably could make a living on 500 acres without feeding hay, for this area, utilizing stockpiled grass and winter pasture.
 
id seal that deal now before it goes away.since he will have 60 cows on 500acs.he shouldnt need but 60 bales of hay to get through the year.if he bales 250acs in june.he will have more hay than he knows what todo with.then if he bales the other half in aug he will be hay poor.the cost of shredding that place will cost him $7500 a year or more.we have 400acs an 100 total head on the place.an we feed about 1.2 bales of hay a hd a year or less.
 
grubbie,

We ran ccattle in Missouri for 20+ years before moving to Idaho six years ago. It was in MO where we learned to graze year-around and eliminated making or feeding hay in our operation. It was a lot easier to do there. We were in 45-day calving season on spring grass. If I had stayed in MO, we would have moved to fall calving. In the 23 years on that farm we used N-fertilizer on three occasions, each time on less than 25% of our total pastrue acres. We did use lime, P, K, S, and B, but I view those as long term investments since those nutrients tend to stay on your property. Our annual fertilzer cost was less than $5/acre. We also ran a custom graze operation to balance out forage supply and demand.

In Idaho we just run a seasonal deal as part of a larger ranching operation. Generally we have 300 to 500 pairs up here(6000 ft) April into January, then the cows go down to the lower ranch (5200 ft) until they start bring pairs up in April. We graze here until the grass is gone. This year, they will leave about Jan 5. If we stockpiled more grass, there is no reason we couldn't graze year-around. We don't get much snow (6-8" annual precip) and the wind doesn't blow much up here in these valleys. Down on the Snake or in SE Idaho it gets a lot snowier and colder.

There are several guys in the next valley who graze year-around. It's largely a matter of how you stock the property. They run combination cow and yearling operations.
 
Okay that makes a little more sense, thanks for the explanation, and Merry Christmas!!
 

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