How you structure your business can have a significant impact on your lifestyle, finances and wellbeing as well as affecting the future sustainability of your farm.
Amongst farmers, the most common business structure is sole trader, representing just under 70% of this year’s responses. More than half of these farmers (52%) work full-time on their farm. The majority do not employ additional staff and only 3% avail of farm relief services. Sole traders are more worried about their farm’s future than either partnerships or limited companies with more than half (56%) either ‘concerned’ or ‘very concerned’ about the future. 57% do not prepare budgets or cashflows, citing reasons such as time constraints, lack of financial know-how and cost. However, without access to timely, accurate information it is easy to make expensive mistakes. Real time accounting and careful tax planning can be the key to improving margins as well as helping these farmers to save time and money.
Partnerships account for 17% of this year’s responses. Most partners work full time on the farm and 28% employ either full time or part time staff. Around half prepare budgets and cashflows saying that this provides clarity, helps with decision-making and gives them peace of mind. Not surprisingly, partnerships are the most likely business structure to have considered succession planning—26% have identified a successor and 42% have a clear succession plan in place.
Limited companies account for 14% of this year’s responses. These businesses employ more staff — 63% have either full-time or part-time employees— and are more confident than either partnerships or sole traders. 59% of limited companies are either ‘confident’ or ‘very confident’ about the future. The limited company structure is most common on dairy farms.
If you are thinking of restructuring your business and need help, contact your local ifac office by clicking here. We are happy to advise you and help in any way we can.
To read our full ifac Irish Farm Report 2020 click here.