Introduction So far in this blog series we’ve discussed setting your business up for payroll, calculating a paycheck, the difference between pre- and post-tax deductions, and how to calculate withholdings. In this blog post, we will discuss the frequency of payroll tax deposits, calculating payroll tax deposits, and payroll tax reporting. When to Deposit Payroll Taxes The frequency of depositing payroll taxes is dependent on what kind of labor you have and the amount of your annual tax liability. Table 1 summarizes how often tax deposits have to be made. Annual agriculture deposits are made with Form 943 (discussed [...]

Introduction So far in our payroll series, we have discussed how to prepare your business for payroll, how to calculate a paycheck, what the differences between pre- and post-tax deductions are and unemployment taxes. In this blog post, we are going to discuss how to calculate withholdings from an employee’s paycheck. There are three main taxes to withhold: FICA, Federal and State. FICA Tax FICA (Federal Insurance Contributions Act) Tax is comprised of two parts: Social Security and Medicare. The total FICA tax is 15.3% (12.4% to Social Security and 2.9% to Medicare).  All taxpayers must pay the tax [...]

In an earlier blog post, we discussed how to set your business up for payroll. Once your business is setup for payroll, the next step is to figure and write the employee’s paycheck. This blog post will cover pay period options and how to calculate paychecks. Pay Periods and Gross Wages The business will have to decide the frequency of which employees will be paid; Table 1 outlines some of the options, definitions, and number of pay periods per year. Table 1: Summary of Pay Periods Once the business has determined the pay period, they need to determine how [...]

As farm families across the Midwest get busier each year, the need for part-time, hired help becomes prevalent.  However, it’s not as easy as simply writing them a check every week.  We need to ensure the proper steps are completed before beginning to pay an employee as well as continued compliance and reporting once the employee relationship is established. This article discusses the necessary steps to set your business up for payroll. Employee or Contract Labor? The first step is to determine if you are hiring an employee or if you are hiring contract labor. There are three general [...]

Farming in the modern era is a skill that must balance biology and agronomy with cost and markets. Thus, it’s important to understand what the top influencing factors are for raising high-yielding soybeans. Once you know the factors, you can balance them with the current market. Like any budget, it’s important to separate cost into fixed and variable. Fixed costs: Seed, crop insurance, herbicides, fertilizers, land payments Variable costs: Storage, trucking, labor, fuel, parts Fixed to Variable: Seed Replant: Understand service policy and try to get 100% replant to move this into the fixed cost category. Overseeding: It’s important [...]

It is important to understand the different 1099 forms as they are a necessary component of tax planning and preparation.

Each year taxpayers have the opportunity to work with their tax preparer to craft a year-end tax plan that provides a desired tax liability. Taxpayers may use current tax legislation to lower or raise taxable income by claiming more or less taxable income during the current tax year. While working through tax planning decisions, taxpayers may wonder “What should my adjusted gross income be?” This article discusses adjusted gross income and identifiable signals which answer that question. What is Adjusted Gross Income? Individual income tax returns have changed a bit over the past several years; not only in how [...]

Depreciation is a term you’ve probably heard your accountant use fairly often; understanding its full meaning and financial implications is important to make strategic management decisions. The concept of depreciation is not as daunting as one would think. This article will provide details to give you more confidence when discussing and selecting depreciation for your operation. An Example – Tractor Purchase When you purchase a tractor (or other depreciable property), it starts to lose value as it ages. When the tractor is sold, it likely brings less in return than the original purchase price. Depreciation is a way to [...]

And just like that, we have found ourselves at the end of another year. 2020 has brought its own set of challenges and opportunities to farm families across the nation, so let’s look at five things to have ready before going to your accountant's office for your year-end visit: 1. A tax plan – This is not something you can prepare the night before your meeting. This is something that needs to be completed well before the end of the year. I always suggest meeting with your tax preparer in November or early December (or at least a month [...]

Now that harvest is over, all of the bushels will soon be accurately counted and from the profit capital investment can be purchased. Regardless of your farm’s size or how much money is in your checking account, you are the CEO and president of your company and your farm. It is 100% up to you to make sound agronomic decisions, but to also make good, sound financial decisions. Several years ago I was talking with a family member who farms, and they were telling me how they just got done with harvest and were thinking about buying a new, [...]