"So You're in the Cattle Business:...

[IluvABbeef]

...Do you Know Where You're Going?"

http://www.aces.edu/pubs/docs/A/ANR-1130/

I found this article VERY helpful for those who are starting up, or are in the planning/thinking process.

 

[Sir Loin]

Yady yady yady bla bla bla
Same old story.
Just another pencil pushing professor trying to apply known business practices to a business he knows nothing about.

There is only one question you need to answer, and you don’t need to write it down, to set your goal.
And that is: Are you in it for the money, the fun or a tax write off or other?

If you are in for the money then all you need to do is to learn how to put both your real-estate and cattle to their highest and best use and you will make money. Because that is how everyone else who is making money with cattle is doing it.
If your goal is to make money, don’t ever forget it!

If you are in it for the fun or a tax write off or other, don’t be surprised when it cost you money.

Now set your goal.
SL

 

[MikeC]

Just another pencil pushing professor trying to apply known business practices to a business he knows nothing about.

I'll argue that one with you. I know Dr. Prevatt pretty well and he's a pretty sharp cookie.

He knows the economics of the cattle business inside and out.

You should attend one of his lectures some time. If you are anything like me, there is always something to be learned.

 

[Workinonit Farm]

Yady yady yady bla bla bla
Same old story.
Just another pencil pushing professor trying to apply known business practices to a business he knows nothing about.

There is only one question you need to answer, and you don’t need to write it down, to set your goal.
And that is: Are you in it for the money, the fun or a tax write off or other?

There is a whole lot more to it than that.

Katherine

 

[Sir Loin]

Katherine
Re:

There is a whole lot more to it than that.

No. not really. Either you’re in for the money, and therefore you are a business and should be incorporated, or you are in it for some other personal reason other then making money.

If you are in it as a business your only goal is, and should be, to make money, because that is all a business is supposed to do. Make money!
By law all businesses are obligated to attempt to make a profit, except non-profit corps.
So the only goal of any business is to make a profit, all other reason for going into the cattle business are personal goals.
SL

 

[Beefy]

i wonder if anyone has ever tried to make money and have fun too?

 

[mnmtranching]

All I know is..... It's a lot different when your out there.

That is.... From the inside looking out... than actually being out there and doing it.

 

[msscamp]

Katherine
Re:

There is a whole lot more to it than that.

Either you’re in for the money, and therefore you are a business and should be incorporated, or you are in it for some other personal reason other then making money.


SL

If I incorporate, I get to pay taxes twice - once for my corporation and again for the salary I draw from that corporation. I don't think so.

 

[East Caney]

Now we're getting somewhere....

When is it beneficial to separate your cattle business from your personal financial situation...and when is it best to leave them together?

And I'm asking this because I honestly don't know the answer... How would one pay taxes twice. Seems like a business would not be taxed on income paid out.

 

[msscamp]

Now we're getting somewhere....

When is it beneficial to separate your cattle business from your personal financial situation...and when is it best to leave them together?

And I'm asking this because I honestly don't know the answer... How would one pay taxes twice. Seems like a business would not be taxed on income paid out.

The corporation is taxed on income but, because the corporation then pays the officers a salary, I'm basically paying taxes twice on the same income - once as a corporation and again as a salaried officer. I'm oversimplifying and there are benefits to incorporating but, depending on the size of your operation, one can usually reap those benefits by going with an LLC, S-corp, or another method rather than a straight corporation. This is where a good CPA is worth his/her weight in gold - and then some.

 

[BTRANCH]

you would want to incorporate to separate your personal assets from possible creditor or liability issues.

Also, corporations pay taxes at a different rate than individuals do. Find a good CPA and do some tax planning.

You might also want to find an estate planner. There are ways to put your land and other assets into trusts that will protect from creditors and pass to heirs tax free.

 

[msscamp]

you would want to incorporate to separate your personal assets from possible creditor or liability issues.

Also, corporations pay taxes at a different rate than individuals do. Find a good CPA and do some tax planning.

You might also want to find an estate planner. There are ways to put your land and other assets into trusts that will protect from creditors and pass to heirs tax free.

You're absolutely right, with the possible exception of the tax free thing - I suspect Uncle Sam will get his taxes, one way or the other. ;-)

 

[novatech]

Yady yady yady bla bla bla
Same old story.
Just another pencil pushing professor trying to apply known business practices to a business he knows nothing about.

There is only one question you need to answer, and you don’t need to write it down, to set your goal.
And that is: Are you in it for the money, the fun or a tax write off or other?

If you are in for the money then all you need to do is to learn how to put both your real-estate and cattle to their highest and best use and you will make money. Because that is how everyone else who is making money with cattle is doing it.
If your goal is to make money, don’t ever forget it!

If you are in it for the fun or a tax write off or other, don’t be surprised when it cost you money.

Now set your goal.
SL

And without a map , how do you know how to get there?
A sharp pencel is the main tool of every good bussiness man. A plan to get you to your goal keeps you on course.

 

[Victoria]

The biggest reason people incorporate is not because they are sure they will make a profit but just in case they go bankrupt. The second reason is it is easier to pass on to the next generation. If you get out a pencil and do the math however, it is better tax wise for most cattle operations to stay as a personal business.

 

[aplusmnt]

i wonder if anyone has ever tried to make money and have fun too?

Photographers for Playboy probably come pretty close ;-)

 

[VanC]

i wonder if anyone has ever tried to make money and have fun too?

Photographers for Playboy probably come pretty close ;-)

I always thought the same about being a pro athlete. I know it's not as easy as it looks, but getting paid to play a game you love sounds good to me.

 

[Brandonm2]

Katherine
Re:

There is a whole lot more to it than that.

Either you’re in for the money, and therefore you are a business and should be incorporated, or you are in it for some other personal reason other then making money.


SL

If I incorporate, I get to pay taxes twice - once for my corporation and again for the salary I draw from that corporation. I don't think so.

Exactly right. You would pay Income Tax and Social Security Taxes on the salary. The Corporation would pay their half of your Social Security taxes. Then the Corp would have to pay it's own income taxes. The real killer for small businesses (farm or not) owners is when they need some more cash. The typical sole proprietor just writes the check. When you make it a corp, that means a cash withdrawal becomes a taxable event. Income taxes, social security taxes, medicare taxes, state taxes, etc.

You also have to be careful about trusts. I have friends who's family business is a large insulation factory. They put the plant and most of the assetts into control of an independently managed trust. Well the financial managers and attorneys who ran the trust, eventually got the idea that the factory COULD be run more efficiently than it was. They descided that THEIR management team could do a better job than my friends could (even though the whole business was founded and run by three generations of their family). The managers retired the President (after 4 decades) and fired the three sons. I see the old man (who now runs a food bank) around town all the time; but his boys (my age and older) and the Grand Children are scattered all over the Southeast now. The managers of the trust fund (of course) still get paid for managing it. The family who are the beneficiaries of the trust get paid too, though they have no control of any of the assets or of how much their disbursement check is.

You put a ranch into a trust, and it is ENTIRELY possible that the trust managers could make decisions that the family MIGHT disagree with. They could switch you from Herefords to ANgus or switch you from Angus to Bison or film the next Gay Cowbody epoch there or turn the whole place into the world's largest trailer park.

 

[Susie David]

We formed a LLC and have no tax trouble....no double taxiation and have at least a little bit of corporate protection even though it's not a corporation.
Just my two bits worth...DMc

 

[Ryder]

i wonder if anyone has ever tried to make money and have fun too?

Photographers for Playboy probably come pretty close ;-)

I'm not so sure.
Look but can't touch has to be very frustrating.

 

[aplusmnt]

i wonder if anyone has ever tried to make money and have fun too?

Photographers for Playboy probably come pretty close ;-)

I'm not so sure.
Look but can't touch has to be very frustrating.

Good Point! :lol: