Going Ag in TX

WhiteRock · Jan 15, 2005

Sneaky Pete, thanks for the feedback.

I guess I was thinking, how many liability issues could I have in this business? But I think you are definitely right. Today while fencing, I decided to mow the fence line so I could work on nice ground. Somewhere along the way I saw about a 3 foot 2 X 4 sail about 35 yard and land right in the middle of the highway. Oops! I am glad no one was driving down the road. There's probably a ton I haven't thought of yet.

I think this means I have to fill out 2 tax returns. I HATE tax returns!

fishman · Jan 17, 2005

There is a lot of talk right now with the TX legislature meeting, and most of it centers around property and business taxes. It sounds like the political winds are blowing towards a business tax, but there is quite a bit of pressure to exempt sole proprietors, as they are viewed as "startup" businesses. With ag, one might be exempted from business taxes anyway, but that is something to consider. Incorporating your business might incur some additional taxes in 2006.

Also to Whiterock, I'm not sure about the point you made about having 5 years to turn a profit. I have an ag-related business and after the third year with no profit (although close) I got the "friendly" audit letter. Mine went smoothly, but I did have some additional taxes and penalties to pay. I do my own taxes (Turbotax) and although these programs are good, you sometimes miss the small print, and that's where you get in trouble. I'm seriously considering getting a professional to do my taxes this year.

Bird · Jan 17, 2005

( I'm seriously considering getting a professional to do my taxes this year. )

John, I've been sitting here trying to remember the guy's name, and can't, but just off Hwy. 6 and just north of I-35, there's a CPA that I called on the first year I was on the farm. I, too, do my own taxes with TurboTax and I just looked up the guy in the Waco yellow pages and called him and asked a couple of questions. He seemed knowledgeable and friendly, so the next year when I had some more questions, I decided I'd just pay him. What I actually did was that I did my taxes with TurboTax, then took everything (receipts, etc.) to him and left it all with him for a couple of weeks to review and/or re-do as he saw fit. Naturally, I can't say how much time he actually spent, but he said I had it done right and he didn't even charge me anything at all.

sneaky_pete · Jan 18, 2005

( I guess I was thinking, how many liability issues could I have in this business?)

I thought there were very few liabilities in my business (consulting), but didn't really want to find out the hard way that I might be wrong.

The best thing about a corporation is that a corporatrion pays all of its bills first and then is only taxed on what is profit after that, and in Texas there is no franchise (corporate) tax at all on the first $50,000 of profit. It is pretty easy to have a decent standard of living and show less than $50,000 profit every year.

sneaky_pete · Jan 18, 2005

( There is a lot of talk right now with the TX legislature meeting, and most of it centers around property and business taxes. It sounds like the political winds are blowing towards a business tax, ... Incorporating your business might incur some additional taxes in 2006.)

I hope not, but there's no telling what our legislature might come up with. I'm employed right now, and only a small amount of "mail box" income is passing through my corporation, but I'd actually like to get back on my own this year and crank it up again. Thanks for the heads up on this issue.

fishman · Jan 18, 2005

The franchise tax was specifically mentioned in recent newspaper articles as being targeted for overhaul. I don't know what they are proposing, so it might be just a lot of hot air.

I'm in the situation of being a taxpayer whose property taxes have increased dramatically in the past 4 years, but I'm also a state employee who hasn't gotten a raise in that same time period. So I don't know what to think.

sneaky_pete · Jan 18, 2005

( I'm in the situation of being a taxpayer whose property taxes have increased dramatically in the past 4 years, but I'm also a state employee who hasn't gotten a raise in that same time period.)

I admire your dedication to public service - I would not be a happy camper to go that long without a raise. The cost of living alone, never mind taxes, would necessitate your standard of living being reduced over time. How does the state manage to keep employees, without even cost of living raises?

WhiteRock · Jan 18, 2005

I spoke with my County Tax appraiser today. Sounds like I may have some good news. In my 5 year run to be eligible for an Ag exemption, looks like I may be allowed time credit of getting my place in shape for Ag. I need to show legitimate documentation for expenses and progress. Seems reasonable. I didn't expect to get that.

I am glad that I have been keeping records.

fishman · Jan 18, 2005

You are right, most state employees are not happy campers right now. I'm fortunate to work in a branch where people don't rely on $ as their sole source of incentive to keep working so morale isn't too bad. However, the crunch is really getting to us. There has only been one state-mandated raise in the seven years I've been an employee (a whole $100/month). No cost of living raises or anything. Turnover has been steadily increasing and now is around 25-30%. /forums/images/graemlins/shocked.gif Apparently, the costs of losing employees and rehiring them is exceeding the cost of just giving us a nice raise. It can be difficult to stay motivated. /forums/images/graemlins/frown.gif

The only way I've been able to deal with it is consulting on the side (with the blessing of our director). As a result I end up working lots of 60-70 hour weeks during the spring, summer and fall. I'm finally starting to turn a small profit, and that's a real good thing.

At best, I'm hoping for a $100/month raise starting with the new fiscal year next September and it's likely we won't get that. Since the legislature only meets every two years, that'll be it for a while. /forums/images/graemlins/frown.gif

fishman · Jan 18, 2005

Oh, and did I mention the really crazy thing about all of this is that my job is highly desirable in my field. Seven years of college, and seven years of temp jobs to get this far. Sometimes I wonder what I was thinking. /forums/images/graemlins/crazy.gif /forums/images/graemlins/confused.gif