Farming Bank Account for Young Farmer

Ton12

Hi,

Thinking of setting up a farm account for myself, plan to throw a few pound into it every week for a few months, then add to my existing stock. Would this be a beneficial move or be to much hassle setting up?

Thanks Ton12

ganmo

If you don't already have a separate farm account from your personal one defiantly do it.
But I'm not sure what ya mean by throwing a few pound into it

kk.man

ganmo wrote: »

If you don't already have a separate farm account from your personal one defiantly do it.
But I'm not sure what ya mean by throwing a few pound into it

I agree that's creating a false image of your farm earnings.
Save money in your savings account and add it as you need to to your farm account but inform your accountant of all this 'introduced capital'.

Ton12

I’m only seriously getting into farming this year, I had planned use it for the buying of stock, meal, gets etc but had planned to fund it from wages at the start, as I wait on my current cattle being ready for finishing later in the year, hadn’t really planned on using it to march/April, when i plan to buy fresh calves in. I see where Yous are coming from with a savings account. Thought long term this would be more beneficial.

Thanks for your advice

Bass Reeves

Ton12 wrote: »

I’m only seriously getting into farming this year, I had planned use it for the buying of stock, meal, gets etc but had planned to fund it from wages at the start, as I wait on my current cattle being ready for finishing later in the year, hadn’t really planned on using it to march/April, when i plan to buy fresh calves in. I see where Yous are coming from with a savings account. Thought long term this would be more beneficial.

Thanks for your advice

What you are talking about is in reality a farm account. You just have to make sure you can account for all deposit/lodgements and debits/cheques/credit transfers.

Money out usually is not an issue as between bebit cards and cheques you have a history. Just make sure that for credit transfers that you put a identity name that makes sense rather than trying to sort out an account number. The reall issue can be lodgements. If putting wages in avoid cash, credit transfer from your own account and add an account identity name again. As well you have to remember that farm/sole trader losses are allowable against PAYE income for 2-3 years. So have everything in order for your accountant.

nhg

Just set up a separate Farm Current A/C (try to get free banking if you can), set up online banking and then transfer online any money from your personal a/c that you plan on using to pay for your farming enterprise and pay for anything farm related from your farm a/c only using a debit card or cheque book (where necessary).
When lodging any cheques use the lodgement machine in the bank with your card or on the lodgement book reference the cheque to make it clear what the lodgement is (Dawn Meats 6 No - you can quickly see that was the cheque for 6 no cattle sold or something similar). It makes life much easier to run a separate bank a/c especially when preparing your accounts for revenue.
Don't forget to transfer the money back to your personal a/c when/if finances allow...

Remember that the likes of diesel/motor expenses & phone costs, broadband etc can be farm related with a proportion of them treated as personal use....

massey265

When you can take money out from your farm profits over to your personal acc what rate off tax will be on this money, it's not something the finances ever allowed me so I don't have any experience off this.

Ton12

Does it take long setting one up or is it a matter of going to your bank and doing it then and there?

massey265

Ton12 wrote:

Does it take long setting one up or is it a matter of going to your bank and doing it then and there?

Yeah you'll just have to make appointment wit the business accounts department in bank and it's more or less like opening any other account.

kevthegaff

Is it much work switching all accounts to a different bank, I'm getting sick of waiting on the phone with boi

whelan2

kevthegaff wrote: »

Is it much work switching all accounts to a different bank, I'm getting sick of waiting on the phone with boi

Dont the new bank do most of the donkey work?

White Clover

kevthegaff wrote: »

Is it much work switching all accounts to a different bank, I'm getting sick of waiting on the phone with boi

Do you have a direct line for the person you deal with in your local branch? I'm only small fry and I have a direct landline number and mobile number for "my man" in the bank.

FeelTheBern

nhg wrote: »

Just set up a separate Farm Current A/C (try to get free banking if you can), set up online banking and then transfer online any money from your personal a/c that you plan on using to pay for your farming enterprise and pay for anything farm related from your farm a/c only using a debit card or cheque book (where necessary).
When lodging any cheques use the lodgement machine in the bank with your card or on the lodgement book reference the cheque to make it clear what the lodgement is (Dawn Meats 6 No - you can quickly see that was the cheque for 6 no cattle sold or something similar). It makes life much easier to run a separate bank a/c especially when preparing your accounts for revenue.
Don't forget to transfer the money back to your personal a/c when/if finances allow...

Remember that the likes of diesel/motor expenses & phone costs, broadband etc can be farm related with a proportion of them treated as personal use....

I'm having a slightly sad chuckle to myself here at the thought of my ever managing to transfer money from the farm account to my personal account as opposed to vice versa!!!

DaDerv

Having a seperate account is one of the most important things you can do in farming. Any business is guaranteed to fail if you cant manage your finances. The hardest workers or best stock men in the world are only setting themselves up for disaster if they aren't controlling their budgets.

Go into Bank of Ireland or whoever you deal with and ask to set up a Business Account. They have specific people who will help you from there or as someone said "my man" and you can contact them as you wish. My "man" is a woman, and is very helpful.

Having a business account and using online banking whenever possible is best also. Add all your regular expenses such as your contractor and hardware and feeds to the online banking. This is a simple process and usually these people have no problem as they're used to doing it and will give you their bank details, BIC and IBAN. From here you can lodge money with no charges. Having a card is very handy also if you're buying for example, parts, items online which are farm related, tags, AgriDirect whatever it may be. Cheques are expensive but necessary as there will be some people who do odd jobs.

At the end of the day a farm is a business, no matter how much land you have or how much stock. Make sure you are keeping track of your income and expenditure. Very few farmers are making a massive profit but equally I'd be very slow to suggest funding your farm from your other work. If that's the case you're doing something wrong and your farm is losing money. You'd be better off keeping your other income seperate and saving from there if you wish and use the farm to repay a loan with lower interest and maintain itself from there until it becomes profitable.

What's the difference/advantage between setting it up as a business account as opposed to just setting up a seperate normal current account dedicated to the farm?

It would of course appear to me to be the right way to do it but I'd be interested in knowing what the difference would be compared to using a dedicated personal account.

Bass Reeves

Paul Dirty Zen wrote: »

What's the difference/advantage between setting it up as a business account as opposed to just setting up a seperate normal current account dedicated to the farm?

It would of course appear to me to be the right way to do it but I'd be interested in knowing what the difference would be compared to using a dedicated personal account.

No difference only down the line if you want to get an overdraft they will insist that it is classed as a business account. Used a separate personnel account for years but had to get it reclassified as a business account when I required an overdraft. There was some other issues as well but I cannot remember. Any account will do as long as you know its limits.

ganmo

Bass Reeves wrote: »

No difference only down the line if you want to get an overdraft they will insist that it is classed as a business account. Used a separate personnel account for years but had to get it reclassified as a business account when I required an overdraft. There was some other issues as well but I cannot remember. Any account will do as long as you know its limits.

probably bank charges related

thereality

Paul Dirty Zen wrote: »

What's the difference/advantage between setting it up as a business account as opposed to just setting up a seperate normal current account dedicated to the farm?

A business bank account tends to have horrific online banking and the bank likes to ride you with fees on a business account.I would set up a personal bank account and roll it over into a business one after a while

Bass Reeves

thereality wrote: »

A business bank account tends to have horrific online banking and the bank likes to ride you with fees on a business account.I would set up a personal bank account and roll it over into a business one after a while

I know that was why they did it but there was another catch along with the overdraft. There are certain thing to watch out with a business account, do not withdraw cash from it, avoid using the card for small purchasses etc and they are manageable. I have a 10K overdraft on it. In reality I could manage without it but would constantly need to be putting cash in and out of the account.

DaDerv

thereality wrote:

A business bank account tends to have horrific online banking and the bank likes to ride you with fees on a business account.I would set up a personal bank account and roll it over into a business one after a while

My business account and current account with BOI are the exact same in terms of online services. Just different log in details. Find it very good. Be lost without it. Even transferring money between my own accounts.

If you overdraw on a current account you can be subject to massively high interest rates. If you're short for money with the business account they offer lower interest loans. Less than the Credit Union when I went to look for a loan.

whelan2

thereality wrote: »

A business bank account tends to have horrific online banking and the bank likes to ride you with fees on a business account.I would set up a personal bank account and roll it over into a business one after a while

€5 monthly fee for Ulster bank bankline. I think bankline is great

kk.man

I am presuming the OP is starting out and has low stock numbers. I did the same years ago putting money into farm account but never dream of it now. If I need extra I get a stocking loan from BOI. They know farmers better and have a good network of branches. I repay this earlier than the due date thus saves on interest. He could also look out for low interest loan that was available last year.
My place is run like a company now. I never dip into it for my personal stuff at all. It all goes back into the business.
I have the luxury of a good job so I don't need anything from the business.

nhg

massey265 wrote: »

When you can take money out from your farm profits over to your personal acc what rate off tax will be on this money, it's not something the finances ever allowed me so I don't have any experience off this.

You will already have paid the tax on this money as your farming profit. It's up to you which bank a/c you put the money into once the income was accounted for with revenue.


When I transfer funds across to the farm a/c (capital introduced) or pay for something for the farm out of our personal money I still account for this in the farm accounts (always get a receipt) through a cash account (money which the farm owes our personal a/c) - hopefully this year the farm will be able to start repaying some of the money it owes our personal a/c.

Sorry but I can't see the sense in borrowing from a bank and paying them interest when the money is there sitting in a savings/personal current a/c making no interest...

An overdraft doesn't make sense with its high interest rates when you can use the likes of AIB's Farm Credit Line (3.825 % currently) for the likes of working capital (provided you can clear this a/c for 1 full calendar month each year). Once you have been approved for X amount you can just transfer the funds across to your business a/c as you need them & again transfer funds back over from your farm a/c when you don't need it so that you only pay interest on what you need...

AIB's Farm business a/c comes with 1st yr free banking & runs seamlessly on our online banking - left BOI years ago as I found AIB much more customer friendly...

Mooooo

kevthegaff wrote: »

Is it much work switching all accounts to a different bank, I'm getting sick of waiting on the phone with boi

Is it a branch or business manager or whatever they call em nowadays,? Deal with business manager here, have had 4 or 5 different ones in the last 6 years. Current one is good previous one wasn't but he was only with the bank a year and gone again.other ones were good in fairness.

Bass Reeves

nhg wrote: »

An overdraft doesn't make sense with its high interest rates when you can use the likes of AIB's Farm Credit Line (3.825 % currently) for the likes of working capital (provided you can clear this a/c for 1 full calendar month each year). Once you have been approved for X amount you can just transfer the funds across to your business a/c as you need them & again transfer funds back over from your farm a/c when you don't need it so that you only pay interest on what you need...

It all depends on how you use the overdraft. If you constantly have the over draft maxed out like some people with a credit card then you are not using an overdraft for its intended purposes. I have a 10K overdraft. While the interest rate on it is fairly high(9ish%) the account is in credit for 50% of the year at least and only for 100days is it above 5K so on average I borrow about 5K for 100 days. You also have to remember that If I did not have it I would need 10K extar in the account which is in a savings account and while at present it is not interest rates are minimal over the last 10 yaer they averaged over 2% so you could deduct 200 euro from the interest bill on a yearly average

It great saying use AIB credit line but that money is there available. But there is something about when you are overdrawn that it keep your focus on financial discipline. Huge overdrafts are stupid just like not being able to clear merchant/co-op credit 3-6 times a year. But any business need credit flexability.

whelan2

I dont have a phone number for my account manager. I email him or his secretary. Normally get a reply within an hour.

thereality

whelan2 wrote: »

€5 monthly fee for Ulster bank bankline. I think bankline is great

I personally would not bank with anyone other than AIB or BOI. You don't know when KBC or Ulster could decide to leave Ireland tomorrow and who they will destroy in their path. When foreign banks during the recession wanted to reduce their loan book, instead of engaging with customers, they called in as many loans as possible and sold on residual debts to vulture funds.

I know a landlord who missed two payments on their mortgages and the bank had within about 4 months sold their property for a fraction of its worth. They did not know the property was sold until they seen it online a year later.

Irish banks are quite reasonable when **** hits the fan. Foreign banks on the other hand will try to screw you as much as possible.

cashcow

thereality wrote: »

I personally would not bank with anyone other than AIB or BOI. You don't know when KBC or Ulster could decide to leave Ireland tomorrow and who they will destroy in their path. When foreign banks during the recession wanted to reduce their loan book, instead of engaging with customers, they called in as many loans as possible and sold on residual debts to vulture funds.

I know a landlord who missed two payments on their mortgages and the bank had within about 4 months sold their property for a fraction of its worth. They did not know the property was sold until they seen it online a year later.

Irish banks are quite reasonable when **** hits the fan. Foreign banks on the other hand will try to screw you as much as possible.

This is all nonsense. Your property will not be sold if you miss 2 repayments. You could probably miss 2/3 before the bank would even write to you that your in arrears never mind the lengthy legal process following that. It doesn't just happen overnight.
Getting back to the OP what you need to look at when opening a business account is ease of access and charges,how close is the nearest branch for lodging cheques/signing forms,what's their internet banking like for doing stuff online.With fees,what interest rates are working capital facilities and term loans at.

kevthegaff

Problem with overdraft is say if it is 10k, it will be added to your overall borrowings so may affect your repayment capacity

cashcow

kevthegaff wrote: »

Problem with overdraft is say if it is 10k, it will be added to your overall borrowings so may affect your repayment capacity

An overdraft won't impact on repayment capacity,neither will a credit line as they don't have scheduled repayments but what might impact an application is how you use them.

whelan2

kevthegaff wrote: »

Problem with overdraft is say if it is 10k, it will be added to your overall borrowings so may affect your repayment capacity

Had an overdraft of 55k a few years ago, interest was mental, account manager kept increasing overdraft limit by 5k rather than giving me a loan to sort my accounts out. Changed account manager, got a loan to pay off o/d . Now have an o/d facility of 10k which is rarely used

sea12

whelan2 wrote: »

Had an overdraft of 55k a few years ago, interest was mental, account manager kept increasing overdraft limit by 5k rather than giving me a loan to sort my accounts out. Changed account manager, got a loan to pay off o/d . Now have an o/d facility of 10k which is rarely used

To be honest I don't agree with this thing of blaming the bank manager for giving people too much money. It's up to an individual to take personal responsibility for how much they borrow and what interest rate etc.

whelan2

sea12 wrote: »

To be honest I don't agree with this thing of blaming the bank manager for giving people too much money. It's up to an individual to take personal responsibility for how much they borrow and what interest rate etc.

If your account manager wont answer your calls and just increases your overdraft without your consent, there's not a lot you can do. Very stressful on the customer. Interest rate was crazy too.

sea12

whelan2 wrote: »

If your account manager wont answer your calls and just increases your overdraft without your consent, there's not a lot you can do. Very stressful on the customer. Interest rate was crazy too.

But just to argue the point. Just because the facility is there doesn't mean it has to be used. just my view. Nothing personal.

whelan2

sea12 wrote: »

But just to argue the point. Just because the facility is there doesn't mean it has to be used. just my view. Nothing personal.

Account manager should have answered my requests for a loan to get rid of the overdraft rather than doing what he did. I was the one paying the interest. With an overdraft of that amount Iwas never going to be out of it even when sfp and milk cheque came in on same day. He was too busy with builders and developers to deal with me. So just kept upping the overdraft amount.

Bass Reeves

Was looking through the farm business account and the following is what I paid in charges and interest last year on an overdraft of 10K, banking charges, cheque book fees

Overdraft fee 50 euro
Interest on overdraft for complete year is 130.95 euro
Banking charges 128.40 euro
Cheque Book 10 euro
Gov Duty on cheques 25 euro

There was about 190 transactions on the account and I would virtually use a full cheque book every year. However I am using the bank card more and more to pay bills where possible.

Bullocks

Bass Reeves wrote: »

Was looking through the farm business account and the following is what I paid in charges and interest last year on an overdraft of 10K, banking charges, cheque book fees

Overdraft fee 50 euro
Interest on overdraft for complete year is 130.95 euro
Banking charges 128.40 euro
Cheque Book 10 euro
Gov Duty on cheques 25 euro

There was about 190 transactions on the account and I would virtually use a full cheque book every year. However I am using the bank card more and more to pay bills where possible.

I was giving out to AIB about bank charges and they said to keep 2500 euro balance and they give free banking ? Is it worth doing that think ? I would probably end up spending the 2500 rather than keeping it there anyhow so would end up being a non runner for me ?

Anyone using any good current accounts lately ? I want to set up a joint account here for myself and the wife mainly for just paying bills to have a few months bill money in advance that we both know where we are going spend/saving wise

Bass Reeves

Bullocks wrote: »

I was giving out to AIB about bank charges and they said to keep 2500 euro balance and they give free banking ? Is it worth doing that think ? I would probably end up spending the 2500 rather than keeping it there anyhow so would end up being a non runner for me ?

Anyone using any good current accounts lately ? I want to set up a joint account here for myself and the wife mainly for just paying bills to have a few months bill money in advance that we both know where we are going spend/saving wise

Trying to keep a set amount in an account is like trying to jump through hoops. To keep an account in credit you would need to keep over 3K in it all the time, one late cheque lodged, wrong timed DD etc and you lose the free charges. I could not have the OD facility without the charges.

cute geoge

Bass Reeves wrote: »

Was looking through the farm business account and the following is what I paid in charges and interest last year on an overdraft of 10K, banking charges, cheque book fees

Overdraft fee 50 euro
Interest on overdraft for complete year is 130.95 euro
Banking charges 128.40 euro
Cheque Book 10 euro
Gov Duty on cheques 25 euro

There was about 190 transactions on the account and I would virtually use a full cheque book every year. However I am using the bank card more and more to pay bills where possible.

Cheques probably made up the bulk of your bank charges .Do alot of farmers direct transfer payments instead of cheques and how does it compare in costs

kk.man

Last year I made a promise to myself to reduce cheques. All marts I deal with now I've added to my 'payee' list on the banking app. It has made a huge difference.
Only people that get cheques now are small contractors who have no card facilities etc.