The important role of accounting services in agribusiness may receive less attention from business owners. It is undeniable that new and exciting farming technologies are driving transformation in the agricultural sector. Also, agribusiness is booming right now, compared to what it was before. And with all the new and evolving trends and technologies in agribusiness, many business owners feel like there are getting pulled in too many directions, always chasing the next emerging trend. Consequently, they may inadvertently neglect the basics.
We know that agriculture is a crucial sector in any economy, as it plays a pivotal role in providing food, fiber, and fuel to the population. The reality, though, is that agri-businesses face several challenges that include climate change, land degradation, pests and diseases, global market competition, and regulatory requirements. These challenges require agri-business owners to be proactive about financial management – to ensure that they can sail through the peculiar uncertainties in the agricultural industry.
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Understand Why you may Need Professional Accounting Services for your Agribusiness!
In view of the foregoing, proper management of your financial resources as an agribusiness owner cannot be overemphasized. The role of accounting services in agribusiness comes in here. Before you venture into commercial agriculture/agribusiness, you should want to take this into consideration. The truth is that, without reliable, high-performing accounting talent keeping a much-needed eye on your fiscal future, you may meet unanticipated financial roadblocks before you can leverage the latest trends.
To achieve optimal profitability in the future (medium and long term), it is pertinent for you to engage an accountant in your business. In this article, we will discuss six important aspects of the role of accounting services in agribusiness. You will understand the reasons to include the services of professional accountants in your resource planning.
Expert Financial Management
This is the first role of accounting services in agribusiness. Professional accountants are trained to handle financial matters in different industries, including agriculture. They have expertise in analyzing financial statements, preparation of financial reports, and interpreting financial data to assist in making informed decisions.
This is important for you as an agri-business owner; you need to understand the financial performance of your operations to enhance profitability. Professional accountants can help you understand your cash inflow and outflow, as well as your financial strength. They can also provide insights on how you can minimize costs, manage taxes, and maximize profits.
Effective Year-End Planning
This is another role of accounting services in agribusiness. Some agribusiness owners might be apprehensive about undertaking the fulfillment of their tax responsibility, which should be done annually and regularly. This shouldn’t be the case because tax remittance can present some benefits to the business. Taxable income can be reduced by effective planning ahead of future tax seasons.
An accountant specializing in taxation should be engaged to help you create a detailed plan and give you professional guidance on current schemes that could benefit your business – and help you be more tax efficient. They will also intimate you with a deeper understanding of variables such as tax liability expected to be incurred in the current accounting year or the years to come.
Enhanced Access to Funding
Another role of accounting services in agribusiness is that they may enhance your agribusiness’ ability to access funding. Inability to access funding is undeniably one of the leading challenges that can plague businesses. This problem can impede their viability, especially for new, and/or small, micro, and medium (SMEs) agri-business enterprises.
Depending on the location of your agribusiness, government, and non-governmental organizations’ funding programs and schemes may be available, but they are requirements to access them. Also, as shown in our previous article Powerful Tips on Business Funding for your Agri-food Start-up/Enterprise, you may want to try raising funds through venture capital, angel investors, loans, or crowdfunding.
Professional accounting services can help you access funding for your agri-business by preparing financial statements, cash flow projections, and business plans that meet the requirements of funders. Moreover, they can provide insights on the best funding options for your agri-business, depending on factors, such as the future financial outlook of your enterprise.
Another aspect of this role of accounting services in agribusiness is that they can help agri-business owners negotiate favorable terms with lenders, such as reduced interest rates and longer repayment periods. They can also provide insights into financial risks that agri-business owners may face, such as weather-related risks, market risks, and credit risks. They can help agri-business owners to develop risk management strategies to reduce or eliminate these risks.
Improved Decision Making
Another role of accounting services in agri-business is the provision of accurate and timely financial information that is critical for decision-making. They can help agri-business owners understand the financial implications of different decisions, such as expanding the business.
Moreover, professional accountants can help agri-business owners develop strategies to improve their financial performance. They can provide insights on how to reduce costs, increase revenue, and maximize profits. This can help agri-business owners have a strategic competitive advantage, which can bring about excellent returns in the industry and attain medium and long-term growth.
Estate/Retirement/Transition Planning
In terms of estate, retirement, and succession planning, agriculture businesses have unique challenges to overcome. The role of accounting services in agribusiness comes in here too. To achieve success, you may want to engage the services of an accounting professional to help with this type of planning and to care for your retirement readiness, as well as asset administration.
Compliance with Regulatory Requirements
This is probably the least likely to be considered as one role of accounting services in agribusiness. The fact is that agri-businesses are subject to various regulatory requirements, including tax laws, labor laws, and environmental regulations. Failure to comply with these regulations can result in consequences, such as fines, penalties, and legal liabilities.
Professional accountants can help agri-business owners comply with these regulations by providing professional guidance on tax planning, record-keeping, and financial reporting. For instance, they can help agri-business owners to understand their tax obligations, including how to calculate and file tax returns.
Moreover, professional accountants can help agri-business owners comply with environmental regulations, such as water usage, waste disposal, and land use. They can also advise agri-business owners on labor laws, including wage and hour laws, discrimination laws, and safety regulations.
The Bottom Line
When planning a business, it is important to include all the resources needed to run it successfully and profitably. It turns out that many who venture into agribusinesses, especially at the farming or ranching level may forget to take stock of all the resources that may be needed. Accounting services are one of the easiest-to-forget resources – but certainly not the least important.
This article has highlighted the important role of accounting services in agribusiness. In summary, you may need the services of a professional accountant for expert financial management, effective year-end planning, enhanced access to funding, improved decision-making, estate/retirement/transition planning, and compliance with regulatory requirements.
Sources
The importance of accounting services. https://www.ag1source.com
The jobs of accountants in agriculture. https://www.agrirs.co.uk
