MSU Extension educators assist commercial agricultural producers in maximizing cash flow
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EmailGood records and accurate financial accounting provide the information to reduce income tax liability and increase cash flow.
Michigan State University (MSU) Extension farm management educators stress to commercial producers the importance of good financial records. These records are necessary for accurate financial accounting, correct and complete income tax filing, farm business analysis, estate and business succession planning and long term business planning. Using these records and a program created by the MSU Income Tax School, farm management educators assisted commercial agricultural producers in projecting their taxable income. Most of these producers subscribe to the Telfarm system of business accounting. The income tax projection considers business and personal income and calculates business and personal deductions including depreciation of capital equipment. In most cases, several scenarios are projected in order to optimize the tax liability for the financial benefit of the farm. These scenarios also provide substantial teachable moments for explaining the income tax ramifications of a potential change in accounting.
Each participant’s financial situation is unique and the workshop program utilizes each participant’s individual situation. A farm specific report is produced indicating the various scenarios and results. These results can be utilized in concert with an accountant or tax preparer in calculating income tax liability. These work sessions are offered throughout the state in November and December. Session location is dependent on the number of participants in that area. Some are offered in each county and some are offered for multi-counties.
A total of 177 farms representing 788 full time equivalent employees participated recently. The total positive measured change in the economic situation of all participating farms was $5,095,532 or $28,788 per farm. This increased business capital is utilized differently by each business depending on their long range business plan. It can be used to upgrade equipment, provide seed money for a business expansion resulting in the creation of new jobs or retaining the funds for the future.
