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buying farming equipment - Complete Controller

The farming industry is one of the oldest and most essential industries in the world. As the human population continues to grow at an exponential rate, the demand for farms’ production continues to grow as well. To meet the ever-increasing demand, farmers need to increase efficacy. Using cutting-edge technology to fertilize their fields to the latest farming equipment, farmers use every available resource to increase productivity and augment their bottom lines. As per bookkeeping experts with an eye on the farming industry, most successful farmers tend to invest more in the latest farming equipment. Check out America's Best Bookkeepers

 

To facilitate and nurture the farming industry, the government creates laws that allow farmers to reduce expenses in terms of tax deductions. Section 179 covers one such expense deduction which farmers can use to purchase farming equipment cost-effectively.

 

What is Section 179, and what does it entail?

Primarily, section 179 is a component of the Internal Revenue Code, which pertains to expense depreciation for farming equipment and property. Under the rule mentioned above, the farmers can deduct the cost of the equipment they have purchased and utilized within a fiscal year. The equipment does not necessarily need to be new and can include a wide range of equipment and even livestock for breeding purposes. In 2018, the limit to which farmers can deduct the cost of the farming equipment they have purchased had been increased to $1 million.

 

As per the latest updates to the rule, farmers can benefit from this deduction until the total purchase of $2.5 million. If the entire purchase exceeds $2.5 million within a fiscal year, the purchaser can deduce $1 million and then depreciate the equipment purchased more than $2.5 million. Previously, the limit for deduction was up to $500,000 on the purchase of $2 million. Check out America's Best Bookkeepers

 

Although to ensure a competitive business environment in the farming industry, an upper threshold of $3 million has been set as well. The $3.5 million caps on total expenditure ensure that large farms do not exploit the rule and put small/medium-sized farms at a disadvantage.

How to use section 179 to buy farming equipment?

Bookkeeping experts suggest a variety of ways through which farm owners can make the most of the rule. Under the new control, a hundred% depreciation is allowed and will remain in effect until 2022. Therefore, farmers have five years to benefit from this rule before the deductions are gradually phased down to 20% over the next five years until 2027. Therefore, buying and declaring farm equipment before 2022 would be the most beneficial for farm owners.

 

Using section 179 to buy farming equipment is quite simple as long as you are buying equipment within $2.5 million limits. Since the farming equipment is quite expensive, the total expenditure can often exceed the prescribed limit to avail the deduction under section 179. To circumvent this, bookkeeping experts suggest that farm owners declare or purchase their farming equipment strategically. For instance, if you plan to buy farming equipment worth $5 million, you can acquire them throughout two fiscal so that you can avail of the deduction. In some instances, farm owners tend to delay the disclosure of their purchase to avail the deduction.  Check out America's Best Bookkeepers

 

In short, buying farming equipment is just as simple as buying any other article, such as a car or truck. The only difference is that you can claim a tax write-off at the end of the fiscal year while purchasing your farm equipment. Getting the help of bookkeeping specialists can help farm owners make a better decision that would allow them to buy equipment for their farms in a more affordable way and benefit from section 179. By decreasing costs and increasing production, farmers would be able to earn higher profits and ensure that the market demand is met adequately.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

Ask any farmer, the biggest hurdle is not growing the produce but earning a living from it. Growers have to focus on operations and other factors to make a living income. One way for farmers to evaluate their processes to meet their monetary goals better is to share knowledge through farmer groups, meetings, and shop talk. But farmers may feel hesitant to share their financial information.

Between 2002 and 2004, a grower-led plan was introduced that used ratios that focused on net income for each acre of growth. The findings of the plan were summarized in a report called ‘Grower to Grower: Creating a Livelihood on a Fresh Market Farm’. This was a case study for farmers creating a fresh market farm. The focus of the study was on the financial aspects of this type of farming. These are the areas of focus for this study. Check out America's Best Bookkeepers

Farm Finances

The farmers and growers who were a part of this case study analyzed their sales, labor hours, and expenses over three years. This meant they had to have a sound financial plan and use accurate bookkeeping to gather the data for the study. These growers chose to associate the yearly net cash revenue they produced from their farms. They did not include factors, for instance, land costs, prescribed machinery usage, opportunity, and depreciation costs.

Marketing

Check out America's Best Bookkeepers For a farmer, selling produce directly to the customers is the center of their marketing plan. This is accomplished through retail outlets, farmers’ markets, restaurants, etc. On-farm sales, while less common, are another way this is accomplished.

Farming Equipment

Farming equipment is essential and has to be the best quality. This is so that the equipment lasts for a long time to come. Those farmers who have vast acres of land need to put a lot of investment into their equipment to make sure they can have high production.

Crops:

In the study, the organic farms had different crops, some more unique than others. Variation and diversification help prevent pest buildups. It also provides some protection against crop failures, if any. The challenge that the farmers faced was learning how to grow these different kinds of crops. To be successful, they had to adjust and learn everything they could about growing these lucrative crops. Check out America's Best Bookkeepers

The data contained in the study has helped growers as they set fiscal and life goals for their farms and shape their strategies to realize those goals. There is no ideal size for a fresh market vegetable farm; growers have to use their managing skills and financial assessment tools to figure out the scale and level of streamlining that makes the most sense for them. This study also worked to compile data regarding financial issues while understanding the farmer’s reluctance to share financial information.

 

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers