Filing Federal Income Taxes is an annual responsibility for most of us. Tax rules are extremely complicated as all accounting rules. Remember the math is easy but the rules are not. Ignorance is not an excuse. Good luck friends!
30 March, 2023 14:36
Two more weeks to get your federal income taxes done for another year!
Texas Drought
Tough times for cattlemen in Texas right now. We have been though droughts before, and we will get through this one. What worries me more right now is inflation. Americans need to ramp up production. Selling new products is how to beat inflation. Depletion of current and long-term assets is not the answer. It will be a happy day when US Companies produce their own parts and quit relying on third market suppliers and all of the supply chain issues. The US is too dependent on products produced in other countries due to the advantages those countries have like cheap labor and less regulations. That is fine except for the fact that the US no longer produces enough of what we need. We are now dependent on others and living off debt. This pattern will not end well for the US. Some production is coming back to the US, and I say, “Keep it up!” Don’t print more money, earn it. The best way to earn money is by producing a product that is in demand.
Brett Bickham
How Much Does an Accountant Cost?
Is your accountant costing you money? Your accountant should not cost you anything. An accountant’s responsibility, in addition to keeping you in compliance with federal and state financial laws and regulations, is to make you money. Most accountants have a degree in Business. Accountants understand how business works. It is your accountant’s job to understand your business.
Accounting is not considered a people business; however, I disagree. Accounting is about business and business is about people. We all know a business is only as good as it’s people. Just like any team, some teams are better than others. Your accountant should be part of your team. Even though your accountant may not know the names of all your employees, he should strive to be part of your team.
As your business grows it will be necessary to hire an accounting firm. Way before that happens you should already have your own accountant. Accountants that work for you are called internal accountants. Accountants that you hire to prepare annual financial statements and taxes are called public accountants. Your internal accountant can do everything an outside accounting firm can do. The difference is credibility. Third party audits are more credible than internal audits. Outside accounting firms are respected in the industry. Outside accounting firms offer the knowledge of many accountants. A large team is more effective than an army of one.
That being said, Rome was not built in a day. Start your business and begin generating revenue. Consult with an accountant when you have recurring revenue. As soon as possible bring on an internal accountant. Let your business degreed accountant assist you in growing your business. The business degree offers you valuable advice in accounting, marketing, finance, law, government, and most importantly, how to get along with others. Business is business attitude without tact and tolerance is not good for your business. People are not machines. Real people have real issues. Respect your employees, customers, vendors, and neighbors.
Accountants have a fiduciary duty of trust and privacy to their clients. Don’t be afraid to share private information with your accountant. All accountants are responsible to follow ethical duties. Even though greed has caused some accountants to go rogue, not all accountants have the Arthur Andersen/Enron mentality. A trustworthy accountant will not hide information from you. Accountants understand, “Trust but verify”.
In summary, in business you spend money to make money. Farmers don’t buy fertilizer because of the free meal the fertilizer company gives them. Farmers know fertilizer makes them money. Your accountant will also make you money, just in an indirect way.
Cost Tracking
How many of you take advantage of “Work In Progress”? This is an excellent way to keep tabs on your budgets and more importantly, your Balance Sheet.
Accounting for Business v. Personal
Expenses are a fact of life. Because we all have expenses, we all need income. Hopefully our income is more than our expenses. In accounting, both income and expenses are considered temporary accounts. The reason being, both income and expenses are constantly fluid. They change daily. They come and go. There are five major accounts in accounting: Assets; Liabilities; Equity; Revenue; and Expenses. As mentioned above, revenue (income) and expenses are temporary accounts. Assets, Liabilities, and Equity are permanent accounts.
Continue reading “Accounting for Business v. Personal”Accounting
Accounting is not about the math, it’s about the rules!
Inventory, Supplies, & COGS
I am a member of the ranching community, so this article’s purpose is to empower ranchers on the business side of ranching. Financial institutions require ranchers to submit financial statements. There are two main important financial statements, the balance sheet and the income statement.
Inventory, supplies, and Cost of Goods Sold (COGS) are terms used in accounting. Most everyone is familiar with the terms inventory and supplies. COGS is somewhat vague. All three of those terms refer to items used and paid for, in your business. When you purchase a bale of hay, or a load of hay, which of these three terms should be used. The correct answer is, with inventory and supplies, it depends. COGS is always used with inventory.
Continue reading “Inventory, Supplies, & COGS”Actual Expenses vs Imaginary Expenses
In calculus class you learned that imaginary numbers are real. They are used to find the square root of negative numbers. Of course, those same mathematicians say it is infinity to any specific point on a line. Well in the accounting world, imaginary numbers are used on the income statement to account for depreciation expense. Those same imaginary numbers are then used on the balance sheet as accumulated depreciation.
Scenario one: A business owner borrows his working capital from financial institutions. Scenario two: A business owner self-finances. Before I go any farther, let me remind you, life is not fair. Everyone has their own special advantages. Your competitor will use his advantages to his benefit, you have to do the same. Some people’s advantage is simply, they are willing to work harder. Money is a big advantage in the business world. People that are able to self-finance have an advantage over those who have to borrow.
In scenario one, Larry Leverage, financed all of his hay equipment from John Deere Credit. His annually note is $60,000. In scenario two, Richie Wells, purchased all of his hay equipment outright. Both men started their perspective hay businesses with all new equipment worth $400,000.
Larry leases a ranch with 100 acres of prime hay fields. Richie owns 300 acres of prime hay fields.
Continue reading “Actual Expenses vs Imaginary Expenses”True Cost of Baling Hay
Ranchers know baling hay is expensive, however some ranchers still sell their hay for remarkably low prices. Throughout this article, I will refer to hay balers/sellers as ranchers. To produce a bale of hay, there are variable cost and fixed cost. Hay that is sold cheap only takes the variable cost in consideration. Let me back up some. Fuel, net, wire, labor, fertilizer, and herbicide are variable costs. As we all know, not all hay is fertilized and sprayed, thus some cheap hay does not have that added variable costs.
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