Smart Financial Strategies for Farmers: Incorporation, Budgeting & Real Estate Insights

The Spring 2020 issue of Intelligent Farmer delivers actionable guidance on incorporating farm businesses, mastering financial planning, and navigating real estate markets. Here’s a snapshot of key insights:

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Incorporating Your Farm Business: A Step-by-Step Guide

• Choose the Right Year-End: Select a fiscal year (e.g., October) to align with seasonal cash flows and optimize tax planning.
• Incorporation Date: Time your incorporation to minimize tax liabilities, especially around significant income events.
• Company Structure: Opt for a named company over a numbered one for marketing and administrative ease.
• Share Classes: Use special and common shares to separate equity, control, and dividends for flexible tax planning.
• Asset Transfer: Carefully transfer assets (excluding accounts receivable) and ensure proper government filings.

Financial Resilience: Budgeting & Saving

• Avoid Debt Traps: Compare outright purchases vs. monthly payments to prevent long-term financial drains.
• Prioritize Savings: Build an emergency fund first, then save for retirement, education, or business growth.
• Compound Wealth: Leverage compound interest by investing early and avoiding high-interest debt.

2020 Real Estate Outlook

• Hog Market: Improved trade relations with China and African Swine Fever impacts promise strong demand.
• Dairy Farms: Shortage of ongoing operations makes 2020 a seller’s market, with USMCA compensation funds influencing production.
• Chicken Farms: Moderate growth in consumption supports demand for quota and functional barns.
• Land Prices: Stable with modest increases, though cash crop farms may take longer to sell based on location.

Tax-Smart Vehicle Classification

• Class 10 vs. Class 10.1: Properly classify vehicles to maximize depreciation write-offs (up to $30,000 for Class 10.1) and avoid standby charges.
• Logbook Essentials: Document business usage to support classifications and minimize tax risks.

Don’t miss the full issue.

RBC Dominion Securities Inc. | Lorkovic DeKoning Wealth Management | www.lorkovicwealth.com