Bookkeeping for Horse Businesses: Trot Ahead of Your Business with Smart Accounting Strategies

The responsibilities that equestrian real estate owners and managers shoulder can seem overwhelming‌. They need to operate their horse farms, perform maintenance, purchase feed, and handle many other tasks in between. Moreover, they’re tasked with ensuring that their financial books are up to date for both business and tax purposes.

If you’re managing a horse property, you may be partly or fully responsible for the business’s accounting as well. If so, you may already know that handling a horse farm’s books requires a unique, nuanced approach. This approach should consider the specific costs and equipment needs associated with running horse farms.

In this article, we’ll share some leading accounting strategies for equine businesses. We’ll provide advice on proper accounting to help your business reach its long-term goals quickly.

The 7 Best Accounting Strategies for Equine Businesses

Use these smart accounting strategies to optimize your business’s finances, while creating a sustainable financial model for your long-term operations.

1. Handle Business and Personal Finances Separately

Many horse farm owners make the mistake of combining their personal and business finances into a single account. It’s generally advisable to keep your personal and business accounts separate, depending on the legal classification of your operation.

Having a separate account for your equine business makes it easier to keep track of your business finances. It also allows you to do so without having to comb through every transaction you make to find relevant documents. Opening a separate, dedicated bank account for your business simplifies the process of submitting tax documentation. And it helps to keep you organized and aware of the state of your financial health.

2. Keep Meticulous Records

Keeping your business documents neat and organized is one of the best accounting strategies you can adopt. Staying organized saves you time, and prevents you from having to search for the documents you need. Plus, it helps you to stay on top of your invoicing process, outstanding payments, and other time-sensitive tasks.

If you have a dedicated accountant, you can lower your expenses by keeping your paperwork collated. This way, you won’t need to pay your financial professional to spend hours tracking down invoices and receipts.

3. Use Small Business Accounting Software

Automated accounting software uses the power of AI to automate a range of accounting-related processes. Using an automated system can save you significant sums of time and money and boost productivity. And it will streamline repetitive tasks that would otherwise take you or your accountant hours to complete.

Another benefit is that it minimizes the margin of human error involved in traditional accounting and keeps all your documentation organized. These documents are stored in the cloud for easy access during tax season.

4. Adhere to Tax Laws and Deadlines

Keep your equine business compliant with local laws and regulations by adhering to tax laws and deadlines at all times. When a tax deadline is looming, set a reminder on your PC or phone, or mark it on your calendar. The best reminders are the ones that you will see most often!

The better prepared you are during tax season, the more time you will have to submit accurate documentation. More time means that you reduce your risk of making any mistakes too. This approach ensures that your records are always up to date, reducing the stress typically associated with filling out tax returns.

5. Store Your Business Receipts

Keep all receipts from business purchases in a safe place so that you can claim back tax and expenses where possible. How much you can claim will depend on the nature of your equine business. It will also depend on if you know how to calculate profit margin and offset expenses correctly. However, a registered accountant will be able to help you identify exactly what you can legally claim.

Potentially claimable expenses include horse feed and medical care essentials, and advertising expenses. This approach could save you plenty of money in the long run. Maintain records of all of your business expenses and file them appropriately. It’s also possible to store them using automated accounting software to ensure easy access whenever you need it.

6. Create a Clear and Realistic Budget

Every business needs a budget to aid in its financial management. Your budget gives you a clearer picture of how much profit you need to make to keep your horse farm viable. Plus, it outlines the actions you need to take during specific time periods to achieve your monetary goals.

Not only should you have a budget in place. But you also need to adhere to it closely for the best results. After a few months, you can review it and find recurring expenses to reduce as well. This will streamline your cash flow and clarify your revenue and money management goals. It will also outline your costs. When you use a budget, you’ll know exactly how much you spend and how that expenditure compares to your projected earnings.

7. Maintain a Cash Reserve

Achieving optimal cash flow requires a multi-pronged approach. You should be working towards enhancing your equine business’s cash flow by reducing expenses and increasing profits where possible. However, it’s advisable to set aside cash reserves so that you have cash available to handle unexpected expenses.

Your cash reserve should be set aside specifically for emergencies and can be stored in a dedicated business savings account. Ensure that you deposit regularly into this account and maintain a healthy cash balance in it at all times.

The golden rule is to have between 3 and 6 months’ worth of operational expenses set aside as a reserve. Doing this will reduce financial stress by ensuring that you can always streamline your cash flow during critical times.

Saddle Your Equine Business Up For Success

Horse farm managers can optimize their finances and remain compliant with just a few key strategies designed for their business.

Handle your business’s finances separately from your personal finances, maintain organized records, and stick to tax deadlines. Have a realistic budget in place, and keep a reserve of cash on hand to handle emergencies. Once you start using these strategies, you’ll be well-equipped to drive your equine venture forwards in a sustainable way.