Investing in capital replacement or new investments is appealing, but building working capital and paying off dead-weight debt may be the more prudent financial decision.
Farmers are notorious for preferring to farm while leaving business dealings to trust, fate or chance. Afterall, there are only so many hours in a day, and when farm families work near each other all day, it is tempting to believe that assumptions or verbal communication may replace written text. Farmers must remember, however, that every business entity carries legal and tax implications, and the written operating agreement may save a lot of headaches and heartaches when legal and tax issues arise.
Regular family money meetings can help divide the stress of the financial burden into more manageable challenges.
Regardless of the time of year, it is important for farm operators to spend some time in their office completing their least favorite activity – paperwork. Most farmers enjoy getting their hands dirty, from digging in the soil, repairing machinery, or working with livestock. They will reluctantly compile the necessary information for income tax preparation, credit borrowing, and crop reporting.
With economists at the U.S. Department of Agriculture predicting farm debt will reach a record high this year, Wisconsin agricultural leaders are warning farmers against the dangers of unregulated lenders.