Happy New Year! Now that the last Christmas cookies have been eaten and the holiday decorations have been taken down and put away, it’s time to get working on your New Year’s resolutions.
Because I’m not very good at keeping resolutions I make for myself, I thought I would write a few for you to follow in 2021. I think that falls in the category of “those who can, do, and those who can’t, teach” — or something like that.
The new year is a great time to get your act together and tackle those issues you have delayed handling because you’re too busy or there never seems to be enough time.
Here are five resolutions you will want to make and keep in 2021:
1. Communicate goals. Take a full day away from the farm in January to discuss with family members involved in the farm what your goals are in 2021. In other words, communicate!
Often, farm families are too busy to sit down and discuss their goals — especially at the farm where you can be interrupted by phone calls, visits from salespeople and emergencies that require your immediate attention. Schedule a daylong meeting off the farm in a relaxing setting such as a hotel or conference center.
Have everyone involved write down their goals for the farm. Then ask them to write down five-year and 10-year goals.
Take time to discuss the goals as a group and write down what the group’s goals are for the farm. This is how everyone can get on the same page about machinery purchases, taking time off and financial goals.
2. Figure cost of production. Speaking of financial goals, you should know your cost of production. Knowing your cost of production, good or bad, is the first step in managing costs. As we continue to experience low profit margins, knowing your cost of production may be difficult to figure out, but that doesn’t make it less important.
If you need help figuring your cost of production, contact your county Extension agriculture agent for more information.
3. Make a bookkeeping plan. Get your bookkeeping done more quickly to take advantage of year-end tax planning opportunities next December. Devise a plan now to deal with your paperwork. Have a fixed place where all the paperwork is organized. Some farmers have an office where they keep their farm paperwork separate from everything else.
Pick a day of the week — say, Wednesday — to sit down and go through paperwork, organize it and keep it from piling up.
Develop a simple filing system, whereby you place all bills together that need to be paid but in order of priority. Bills that need to be paid first should be placed on top.
There is a variety of online farm management software available that makes it easier to create and maintain all farm records. If you have your farm records up to date next December, you will be ready to take advantage of year-end tax planning opportunities.
4. Start planning for the future. Make this the year you begin planning your estate or transitioning the farm to the next generation. The primary goal in farm succession planning is the transfer of management, and eventually ownership, of the family farm to the next generation.
Usually the parents form a limited liability company, which then owns the farm personal property and often the primary building site. Sometimes they will also form an LLC to own all or part of the farm’s land base.
The parents then gift or sell a minority interest in the entity to the children actively involved in the farm. Gifts of “earned equity” are most common, as the farm needs to continue reinvesting its cash flow in the farm.
For more information about transitioning the farm, talk to a farm attorney.
5. Educate yourself. This year, make a point to learn something new. Whether you take a course or read a book, you’ll find education to be one of the easiest, most motivating New Year’s resolutions to keep.
Most local universities and technical colleges offer online and adult education classes in a variety of subjects, ranging from accounting to welding, and from computer science to art history. Consider learning a new hobby like quilting or woodworking. Sign up now and learn something new.
Here’s to a great new year for you and your family!
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