Cheatgrass, Tax Season, and What's actually helpful and questions I have

[Maple Row]

Hi y'all,
Quick question as I keep learning more about how things actually work out on a ranch. With tax season lining up with cheatgrass season I believe the plant is called, what kind of communication works best for you with your accountant or bookkeeper during that time of season?
Do you prefer quick (5-10 minute) weekly check-ins, two short calls a month, or one longer (30-45 minutes) monthly call with the rest handled by text or email?
I’m curious what’s felt most helpful for you in the past and what’s been frustrating when working with tax folks who didn’t quite get ranch life yet. Appreciate any insight.

 

[Puzzled]

I have always been fortunate to work with an account that was knowledgeable with the timber industry, ranch income and and other miscellaneous income. What I like is to drop my paperwork off, if they have any question they call. Other than that I find a message on the phone about a week later saying "your return in ready."
But I don't drop off shoe boxes of receipts and invoices. Mine is dropped off categorized, totals, dates etc. which makes their job easier.

 

[Faster horses]

Our accountant grew up on a ranch, is ranching now with his dad and he knows a lot about ranching accounting.
I just send him bank statements and credit card statements a couple of times a year. He gets an extension (because
our deal is small compared to most that he files taxes for) and if he has questions, he calls and we try to tell him the answer.
I could do it all myself as I have Quickbooks, put it on a flash drive and send him the flash drive. That would probably save us some $$ but old habits are hard to break. I might try it though.

 

[webfoot]

I take things in person to her semi organized. She will ask a few question and calls back when it is done. There are ranches that I know of who use their services. They were recommended to me by a big ranch when we moved here. The majority of the businesses in this count are ranches.

 

[Nicky]

I have always been fortunate to work with an account that was knowledgeable with the timber industry, ranch income and and other miscellaneous income. What I like is to drop my paperwork off, if they have any question they call. Other than that I find a message on the phone about a week later saying "your return in ready."
But I don't drop off shoe boxes of receipts and invoices. Mine is dropped off categorized, totals, dates etc. which makes their job easier.

That's what we do too.

 

[Older Whiskey]

I think you are way over thinking yearly ranch income taxation.

Are you talking about being a ranch accountant or a tax preparer? Not all tax preparers are accountants. Not all accountants prepare taxes.

Most ranches don't have accountants that track and organize their business monthly, but have a tax preparer that has them fill out an organizer for the year and then the preparer puts in a computer program that sends it to the Feds and State if their state has income tax. They visit their accountant or tax preparer yearly.

Although I no longer ranch, I still use my tax preparer that is also a certified accountant. She has only a few ranches and farms that use her accounting service monthly. Most large farms around here, have their own accountants. The majority of her clients are ranchers or connected with agriculture in one way or another.

Maybe consider what my tax preparer does. Have your client come in the first year with all their books, etc. Then after you get their taxes prepared and filed, have a computer profile for them with questions necessary so you can mail them a yearly organizer. Instead of the organizer being filed with pages of questions that don't apply to them, keep it simple as possible and easy for them to fill out.

An example would be a ranch that doesn't have equipment that is depreciating, wouldn't need questions about equipment. Take a ranch that has a new $250K piece of equipment. You will have to study the tax codes to find out what is the best way to depreciate it. A custom haying outfit will have equipment depreciating at a higher rate than rancher Joe Smoe that only puts a few hours a year on his equipment.

I would suggest studying all the tax rules that apply to construction, farming, ranching, and such. Understanding them is more important for you, than working ranch knowledge.

If a rancher works at another job, then advising them to separate expenses incurred while working on their job, from ranch expenses, is a good idea. For instance, milage on their pickup. Going to work isn't deductible, but going to the feed store on their day off, is deductible. Things such as when they go to town for groceries, to also stop by the ranch supply and buy something, so their mileage becomes deductible, can be a money saver for them. Always save receipts.

Check if your area has an annual chili feed or other ranch events. If so, attend those events. Go to your local county fair. Support your local 4 H. The best way to learn is to get involved.

 

[Faster horses]

Same here, OW. Ours is a CPA and we are lucky to have him. We have been with him for 17 years now. (WOW, where has the time gone?)
I can remember the days when I didn't keep a checkbook register, didn't keep receipts but WOW, that changed a long time ago.
I also remember when we charged everything we bought over the year at no interest. After we shipped in the fall we would visit every merchant and pay off our bill and start over. I also remember the first time we got a bill from the CO-OP with interest added if it wasn't paid by the tenth of the month! Everyone was aghast at them doing that.
Times certainly change.

 

[jodywy]

we used an accountant, and he prepares our taxes, for probably over 30 years now. He always take a summer course for next years tax changes. When we sold the ranch , no realtor on the sale, Used my accountant and Lawyer save a couple hundred thousand just there. Did use a 1031 lawyer and a relator on buying the 2 new places. I call my accountant always before calling the lawyer.

 

[Faster horses]

we used an accountant, and he prepares our taxes, for probably over 30 years now. He always take a summer course for next years tax changes. When we sold the ranch , no realtor on the sale, Used my accountant and Lawyer save a couple hundred thousand just there. Did use a 1031 lawyer and a relator on buying the 2 new places. I call my accountant always before calling the lawyer.

We have done 2 1031's with no problem because we had quality people doing it. Sounds like yours worked well, too, Jody.

 

[Maple Row]

I think you are way over thinking yearly ranch income taxation.

Are you talking about being a ranch accountant or a tax preparer? Not all tax preparers are accountants. Not all accountants prepare taxes.

Most ranches don't have accountants that track and organize their business monthly, but have a tax preparer that has them fill out an organizer for the year and then the preparer puts in a computer program that sends it to the Feds and State if their state has income tax. They visit their accountant or tax preparer yearly.

Although I no longer ranch, I still use my tax preparer that is also a certified accountant. She has only a few ranches and farms that use her accounting service monthly. Most large farms around here, have their own accountants. The majority of her clients are ranchers or connected with agriculture in one way or another.

Maybe consider what my tax preparer does. Have your client come in the first year with all their books, etc. Then after you get their taxes prepared and filed, have a computer profile for them with questions necessary so you can mail them a yearly organizer. Instead of the organizer being filed with pages of questions that don't apply to them, keep it simple as possible and easy for them to fill out.

An example would be a ranch that doesn't have equipment that is depreciating, wouldn't need questions about equipment. Take a ranch that has a new $250K piece of equipment. You will have to study the tax codes to find out what is the best way to depreciate it. A custom haying outfit will have equipment depreciating at a higher rate than rancher Joe Smoe that only puts a few hours a year on his equipment.

I would suggest studying all the tax rules that apply to construction, farming, ranching, and such. Understanding them is more important for you, than working ranch knowledge.

If a rancher works at another job, then advising them to separate expenses incurred while working on their job, from ranch expenses, is a good idea. For instance, milage on their pickup. Going to work isn't deductible, but going to the feed store on their day off, is deductible. Things such as when they go to town for groceries, to also stop by the ranch supply and buy something, so their mileage becomes deductible, can be a money saver for them. Always save receipts.

Check if your area has an annual chili feed or other ranch events. If so, attend those events. Go to your local county fair. Support your local 4 H. The best way to learn is to get involved.

I appreciate you taking the time to lay this out, Old Whiskey.

For context, I do both tax preparation and bookkeeping, so I tend to look at things from both angles, maybe more than I need to. That said, I believe I was indeed overthinking parts of this process, and your examples helped provide a more concrete perspective.

The way you broke down how ranches actually operate year to year, and where the simplicity matters more than the theory, I have personally come up with. I'm glad for the eye-opening real-world feedback I was hoping to get.

I admit I am still reading, learning, and trying to understand where tax rules meet day-to-day ranch life, not just through here, but through the IRS as well. I agree that practical application matters more than just a perfect structure. So, I'll be making it a goal this year to be more active in local events and pay attention when opportunities to learn in person come up.

Thanks again, this was genuinely helpful.

 

[webfoot]

The one used by my wife's family on first take didn't impress me. Then I worked with a neighbor rancher. His opinion was that guy worked for the IRS and he wanted an accountant who works for the rancher not the IRS. I have to agree with him.

 

[Maple Row]

The one used by my wife's family on first take didn't impress me. Then I worked with a neighbor rancher. His opinion was that guy worked for the IRS and he wanted an accountant who works for the rancher not the IRS. I have to agree with him.

While I do follow make sure to follow the IRS rules and standards, the client comes first. My goal is to help them after all.