Setting up a Farm as a limited company

Wildsurfer

Solar panels or extra slurry storage and write off all capital allowances this year

yewdairy

https://www.boards.ie/discussion/comment/123499701#Comment_123499701

Long term get a better accountant who will give you proper advice and tax planning and won't have you trying to reduce a big tax bill.

There are lots of suggestions but spending money on things you might not really need isn't a great place to be.

When a farm is consistently profitable, you run out of road with sole trading.

MIKEKC

https://www.boards.ie/discussion/comment/123500130#Comment_123500130

BBuying forward catches up with you eventually unless your profit drops significantly. You have to keep buying more every year

mahoney_j

https://www.boards.ie/discussion/comment/123500459#Comment_123500459

100% ….anyone humming and hawing re company etc read that post a few times …

Bass Reeves

I like to know what lads intend to do with the cash that will be in the company. Are they willing to spend 20k/ acre plus on land. How many children have they is everything in the company going to one of them and the farm as well.. If you are in your early 30's it's 20+ years before you have access to 750k retirement allowance even at 40 its 15. Are you intending putting spouse as a director/owner as well. Will the.money be sitting there earning 1% or less in the bank and DIRT paid on that.

It's all very well entering a company to avoid tax but what are you going to do with the cash

cjpm

@Bass Reeves

I’d say cocaine and hookers Bass. And then squander the rest!

MIKEKC

https://www.boards.ie/discussion/comment/123501742#Comment_123501742

IInside or outside a company you will have to decide what to do with the cash. You will just retain more of it in a company. Even if you are prepared to spend e20,000 an acre very little land comes up for sale. I would think that most people let the cash build up until retirement or pass it on to the next generation. The feeling of security most be very important also

yewdairy

https://www.boards.ie/discussion/comment/123501873#Comment_123501873

The security of having a cash buffer in the business is a huge positive. Have a young family here and when we set up company we did a lot of development, great piece of mind knowing there was a good buffer in place to cover repayments and my own wages if some disaster hit the farm.

Have talked to our own accountant at length about succession and what steps are if no one wants to take on the farm. Very happy that we are still in a much better off than being a sole trader

Bass Reeves

https://www.boards.ie/discussion/comment/123501810#Comment_123501810

If you can get invoices for hookers and coke within a company you can probably do the sane outside. Maybe nuts maintenance. It cannot be capitalised as it would an ongoing expense. However if its personal spending you are paying another 15% on top of drawdown tax to fund it

SodiumCooled

https://www.boards.ie/discussion/comment/123501959#Comment_123501959

I don’t see how being in a company helps with a cash buffer. You are paying 15% tax for the company and then if you want the cash you have to pay the same income tax you would have had to anyway as a sole trader but as a sole trader the cash could be invested in other things more easily if desired with much better return than sitting in the company.

I can see why a company structure is needed for a large business I don’t really see it for a farm.

yewdairy

https://www.boards.ie/discussion/comment/123502041#Comment_123502041

The company can carry surplus cash from one year to the next without a huge tax liability, the cash is in the company, but companies can also invest any additional cash above the cash buffer if they want.

2022 was a bumper year where the farm here would have had a taxable profit well over 150k. 2023 was a much lower profit year but we had no huge tax liability hanging over us. This makes life a lot easier.

Companies obviously are only worth considering for farms that are consistently delivering high profits and options like partnerships aren't suitable.

This is where you need a good accountant to advise what is best for individual farms.

unfortunately a lot of farms seem to have book keepers, where tax planning seems to be to panic buy machinery before year end

I don't think anyone suggested the average drystock farmer should be going into a company

straight

I think my own accountant is good and experienced. Paying about 20k a year on bi annual accounts and now in income averaging a few years. Getting into a bit of a corner with that due to larger profits the last few years so will have to go into a company soon it looks like. You would nearly want to have 10 more years of farming left in you to consider a company I'm told. I'm mid 40s now so it's getting tight.

mahoney_j

https://www.boards.ie/discussion/comment/123502333#Comment_123502333

same age as you and was in very similar position as you described …gone ltd over a year …no regrets

MIKEKC

https://www.boards.ie/discussion/comment/123502127#Comment_123502127

IIf you have a large farm payment it could tip the balance

mr.stonewall

https://www.boards.ie/discussion/comment/123503510#Comment_123503510

Off farm income at the higher rate and the lack of need of drawings from the farm, tipped the balance for me

QA1

company suit farmers with high tax bills and yards kind of finished who don’t live the high life who want a vehicle to put money together and spend it however you want if a couple go into company that 1.5 million plus directors loan if there is any left there is nothing wrong with having a pot of money and doing something with it