Bookkeeping and Accounting for Ranch Hands

Taxes on ranch hand earnings and agricultural incomes are calculated based on the net income from this source. The net income is determined by calculating the gross receipt from the ranch or agricultural work and then subtracting any allowable expenses. These may include the cost of materials and supplies, labor expenses, depreciation on equipment, and any other expenses directly related to the ranch or agricultural operation.

Once the net income is determined, it is then subject to self-employment taxes (if applicable), and then added to any other sources of income on the return (if any) to determine total taxable income. It is this total taxable income that is subject to federal and state income tax rates. It is always recommended to consult with a tax professional or accountant to ensure all deductions and expenses are accurately calculated and reported.

When it comes to handling the unique expenses associated with livestock and farm equipment in bookkeeping, a few strategies are particularly effective:

• Depreciation: Farming equipment often has a long lifespan but decreases in value over time. Using depreciation, these costs can be spread out over the useful life of the equipment.
• Livestock Valuation: Livestock represent a significant investment, with their value often fluctuating based on market conditions, health, and age. Proper maintenance of inventory records and regular reappraisals are necessary for accurate bookkeeping.
• Direct Expense Method: Under this method, all costs associated with raising livestock to the point of sale are deducted in the year they occur. This includes feed, veterinary expenses, and other direct costs.
• Inventory Method: Alternatively, these costs can be capitalized (added to the basis of the asset) and recognized when the livestock are sold.

Given the complexity of farm bookkeeping, it is often advisable to engage a bookkeeper experienced in the agricultural industry.

Accounting for ranch hands who work on a seasonal or part-time basis can be a bit different compared to full-time workers. Most often, these laborers are considered as independent contractors rather than regular employees. This means that they're responsible for managing their own taxes.

However, as their employer, you still need to keep accurate records of their wages and the number of hours they worked. This information will be useful in issuing their 1099-MISC form at the end of the year, which is necessary for contract workers.

Using bookkeeping services, like Bench Accounting, can aid significantly in maintaining proper financial records. They can assist you in setting up a robust accounting system that adapts to the nature of seasonal or part-time work. In addition, Bench Accounting can help you comply with tax laws and ordinances that specifically apply to ranch hands working seasonally or part-time.

Nope! All bookkeeping is completed in-house.

Your bookkeeper will be your main point of contact, but at times you might hear from another member of your team. This is usually when your bookkeeper goes on vacation, is sick, or otherwise unavailable.

We handle the bookkeeping for you but sometimes we’ll need your input, especially at year-end. On average, expect to spend 15 minutes each month answering questions for your bookkeeper, or uploading supporting docs.