Forming a company for farming ?

cj maxx

Anyone experience of farming through a company .
How does it work with bps etc
My plan would be to lease my entitlents to this company and any money from these would go to that company.
It would also lease the land I am currently leasing. .
Do I need to put the company name on the bps application ( which is already on in my name )
Sorry if this doesn't make sense

yewtree

cjmc wrote: »

Anyone experience of farming through a company .
How does it work with bps etc
My plan would be to lease my entitlents to this company and any money from these would go to that company.
It would also lease the land I am currently leasing. .
Do I need to put the company name on the bps application ( which is already on in my name )
Sorry if this doesn't make sense

From my own expierence, entitlements are transfered to company aswell as herd number. The company is the farming entity. Land leased to company.

Not a small step with involves creation of an entirely different legal entity. I would take my time, a step not to be taken lightly

MFS2

Hi there

I have seen quite a lot of farmers doing this recently but you really need to plan out the steps well in advance.

Its not just about the entitlements but you also need to consider the long term plans with the farm business and make sure that you get the tax and legals right beforehand.

Its relatively easy to transfer to the company but if you choose to unwind it later, that can create problems.

Best of luck with it

cj maxx

It's a lot more complicated legally than I thought and as said , complicated to unwind . Got talking to my advisor who gave me more info so for me now a complete non runner

lakill Farm

its as simple or as complicated as the advisors want them to be.

Limited companies suit a percentage of farmers & agri contractors but in no means does it suit everyone

patsy_mccabe

Lakill, what are the pros & cons of a farming company?

lakill Farm

patsy_mccabe wrote: »

Lakill, what are the pros & cons of a farming company?

standard limited company

Advantages of trading as a Limited Liability Company:
1. The shareholders are only liable to lose the share capital they have invested in the company.
2. Raising Capital to fund growth and development can be easier.
3. There may be many owners of the company, and it continues to exist despite the death, retirement or resignation of the Directors.
4. The Company can make pension contributions as an expense.

Disadvantages of trading in a Limited Liability Company:
1. In practice, lenders generally seek to have personal guarantees against loans given, which reduces the benefit of limited liability.
2. Setting up a company is more expensive than trading as a sole trader.
3. Legislative requirements in making annual returns to the Companies Registration Office are more onerous. Annual Accounts must be filed with the Companies Registration Office also.
4. Company Directors are subject to extensive legal responsibilities, including being made personally liable for all the debts of the Company if they are proven to have traded recklessly.


you can factor in the land leasing as an additional advantage to a farming enterprise

patsy_mccabe

Thanks. Do you pay less tax on income.

lakill Farm

patsy_mccabe wrote: »

Thanks. Do you pay less tax on income.

the company does a tax return in its own right called CT1 (Corporation tax) and rate for farming would be 12.5%

the director would do his/her own Form 11 (Income tax) return as usual but based on a P60 for the wages they took from the company

Buford T. Justice XIX

The Journal has a book that might be of interest to anyone looking into this area.

https://www.farmersjournal.ie/shop/product/farming-in-a-limited-company/4/4189

patsy_mccabe

Might be the quickest route to becoming a CEO.:rolleyes:

memorystick

I'm working full time as is my wife. Should I have my farm as a company? Buying stores and keeping until slaughter.

Mooooo

You're accountant prob the best person to talk to. If there is development to do on farm the capital allowances would be more valuable outside the company but if not and consistent profits being made maybe so. Other ways of managing it also, income averaging, pension contributions etc. Every case different so best to go thru it all with accountant

K.G.

Theres no point in setting up a company just to avoid tax.it has to be part of an overall strategy that has to be thought through to possible sucession or exit.if you need the money to live and are already at top tax rate it dosent make any sense but if its part of an overall investment strategy it can make alot of sense.

cj maxx

As a very small farmer I asked an account I knew. Its fine creating a company, but dissolving it is a different matter.

Donald Trump

Biggest advantage of a company would be if you wanted to buy land and were making a lot of profit you didn't need from the farm.

If you use the company to buy the land it isn't your land though. It's owned by the company. You own the company though.

3 the square

I was at the mart for an hour last week I see most dairy farm with a company name now days coming up on the board was half expecting to see trotters independent traders coming up 😂