When kids are about preschool age one thing we like to teach them is their full name. First name, middle name, last name.
Poor Dan got a bit confused and for a short and delightful period thought his full name was not just
Daniel John Quade, but Daniel John Quade and Sons.
As adults we can get caught up in the idea that the farm is part of us, and we are part of it, and our farm business is also one and the same as our identity. If it’s going well we are, if it’s not, we are not.
The business entity concept in accounting teaches us that we are separate from our business. Whilst business structures are many and varied, all are based on the premise that the business is not the person who owns it or runs it.
Things get a bit messy in family owned farming businesses. We are often all in financially, live on farm and have an intergenerational connection to the land we work on. However thinking of ourselves as separate to the farming business is of benefit when there are big decisions to be made, when new people enter and when we move on ourselves.
What are a few little things that you can do to establish the business entity as separate to your own identity?
A business name – even if you are trading as partnership or a sole trader, a unique and separate business name asserts the businesses as separate to the individuals who own or run it. They can be easily registered with ASIC . Watch out for renewal notices from private providers. They look surprisingly official but are at a higher cost.
Separate bank accounts – don’t run the farm and the family finances through the same bank account even if it is only you responsible for the expenditure. You will have a much neater set of books if things are kept separate. Like to just pay everything out of the farm and have the accountant sort it out? Consider a credit card for those purely personal items that gets paid by the main farm bank account each month.
An email address for the farming business- Things get messy really quickly when you are trying to run a life, a farm, a community group and the educational admin of the next generation through one email address. Start up one for the farm admin and one for the farm accounts. Leave the personal stuff somewhere else.
A logo – Why not!
A time or a place to talk about farm stuff- Farm chat can easily take over. Having a few rules about the time and space you talk about farm business things is important. Perhaps start with not talking about it after tea. If only one of you gets turned on by talking about new machinery, perhaps stop talking about farm stuff in the bedroom too.
These little separations may not seem like much, however they are a way of separating our time, our money and even our identity from the sometimes volatile nature of farming in Australia. When the time for intergenerational transition comes around it may make things a little smoother.
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