Dairy Chitchat 4, an udder new thread.

It's a long term decision, but the main reasons were to retain cash in the business, reduce tax liability particularly in high milk price years and make it easier to pay for land purchase

Everyone has to pick some structure to farm in there are pro/cons to each one. We are happy we are in the right structure for our farm.

I call myself a fooking ejeet most days for not getting a cushy number in the department of ag or someplace

It's a bit more complicated than that. There's a rush and encouragement for dairy farmers to go the company route even where significant cash reserves will not be created. Use of pension funding will often solve the problem until children are old enough to be paid wages.

As for building cash reserved to buy land, for farmers in reality there is no savings. The use of company structure to buy land is the reason land has gone so expensive. So once again farmers have been sold a pup. The accountants , agri consultants, auctionees, solicitors all get bigger fees, the seller get away higher price, the government get more stamp duty and probably collects extra capital gains tax, and guess what the stupid farmer pays it all.

And he thinks he is winning because its within a tax free structure for capital repayments, except technically its not you pay 12.5%.

And to finally add insult to injury you do not own the f@@king land.

Ltd companies weren't created for the benefit of dairy farmers, most profitable small and medium size businesses outside of agriculture are in Ltd structures. There are farms it won't suit but there are lots of dairy farms where it makes the most sense.

Land is expensive for loads of different reasons, farmers in company structures is not the main driving force.

Absolutely 💯 Jesus when we formed a company here many years ago friends who were sole trading were in tears with the protection it offered in business and the fact that they were locked out of it. The company structure and administrative side of things has really eased so much in the last number of years

I see you are well able to debate and explain your understanding of what you are posting.

Basically you accountant told you what to do and you went along.

So again I ask you to explain how most of a million in tax free money was created, look even a few hundred K will do.

Actually if you know a way to create a few thousand in a tax free structures explain it to me.

There is no such thing as a free Lunch.

The debate on here is not great like I have my opinion and I ram it down your throat

yes for some people company is not the right thing to do but for some farms company is the right move and that’s okay too

What is wrong with directors loan of stock machinery and maybe some good will if you have a couple hundred thousand then is it not easier to build up this couple hundred in a company and use it as you will

farming is no picnic just because the accountant says you will make all the profits for ever does not mean you will not too many farmers near me buying land anyway when it was so called cheap at10k or dear now at 15 or 20

Will you be back on youtube, or is there a world of abuse that comes with it, so not worth the hassle. Be interesting see you convert to dairy

My point was that unless you are going to have 50k++ retained profits a company is of little advantage to you.

It's relatively easy to get to 200k in directors loans, I get to over 100k that myself on 60-70 acres with a stock value of 70k and unused depreciation of 40-50k. But directors loans are not money from the magic money tree. They already exist within the system and when they are used up they are gone

Most dairy farmers with 100 cows could probably hit 250k very comfortably, but unless you are throwing substantial cash free you will not draw down directors loans any faster than using standard deprecation especially if stock values are a substantial part of the equation. However of taxation is a issue its quite possible that stock values are minimal

However you are taking reliefs that would be available when you retire. My eldest lad will probably take over some of the farm in 4-5 years time. He will buy sheds and machinery off us we can take stock values tax free and use the 750k relief to shelter the machinery and sheds. And yes you can do the same within a company, but you can do it externally as well.

As well you have employer PRSI you no longer are a soke trader you are employed by the company, yes you can rent land and building to the company. But with renting you pay a K9 prsi stamp which has no benefits. You will still have to put some income through wages ( admittedly you can keep the rate low) to qualify for OAP and other benefits

When you employ family labour as a sole trader there is significant PRSI advantages compared to a company below 5k no PRSI above 5k PRSI 4%. A company pays 8.8%.

Previous there was an additional tax advantage to being employed by a company it allowed access to the PAYE credit however the earned income credit available to sole traders balanced that out.

Would any of ye have a suggestion for a good teat spray for milking on straw?

There is a certain value in being able to leave the money there in the company to decide what to do with it at a later date. None of us has a crystal ball to predict the future clearly and while it's always possible to manage tax as a sole trader reasonably well. Having money tied up in a pension etc and not accessible can ultimately cause similar issues as having money tied up in a company when you need it for personal use.

Was talking to the accountant yesterday with FDC. He was saying what they were finding it was the lads with the Jersey cross cows had the biggest reduction. I said that wasn't the fault of the Jersey cross but more the mind set of the owner of the Jersey cross. They expect them to milk on grass and fresh air.

We were actually up 11% in supply last year.