Preventing Accounting Errors and Loss in Your Equestrian Business

 

equestrian business accounting

Owners of an equestrian business face challenges unique to any other business. Turning a profit can be difficult and you have to diversify your offerings in order to generate enough income. The margin of error is very small and small mistakes can end up costing your business in a huge way. Your best bet is to avoid accounting errors and loss wherever possible.

Common Causes of Equestrian Business Accounting Errors

  • Losing receipts or missing invoices
    An equestrian business is often mobile. You’re taking horses to events, meeting with vendors out in the fields, and traveling to other farms. This means that you’ll frequently be handed invoices and receipts on the fly which, unfortunately, means they might not always make it back to your office for proper recording. A receipt that was stashed in your glove compartment could potentially cost you when you’re balancing your books. Try to go digital wherever possible. Snap a photo of the receipt on your phone. Even email it to yourself if it helps you keep better track.
  • Failing to record income
    If you show your horses, don’t forget to record any horse show prizes as income. Cash payments from customers need to be recorded as well.
    equestrian business accounting
  • Bartering
    Although we recommend against it, the reality is that many solo entrepreneurs do participate in bartering. If you’re trading riding lessons for grooming work, you’ll still need to report that as income. The IRS requires all bartering to be reported.
  • Omitting tax deductions
    Your time as a trained, experienced professional is valuable. Many people don’t realize that even if you donate your time for a good cause, that time is tax deductible as a charitable donation. The following are examples of time spent that can be itemized on your taxes as a tax deductible donation.Donating your horses and/or your professional training with equines for:

    • Animal/equine therapy events or individual appointments
    • Demonstrations for young and/or special needs children
    • Community events like parades, festivals, and fundraisers

Loss

In business terms, “loss” typically refers to damage or theft. In an equestrian business, you can be faced with loss in several additional ways.

  • Overbuying feed that goes bad

    It may seem like a good idea to buy feed in bulk to get a discounted rate. But if you buy too much it may rot before you ever get a chance to give it to the horses. If you store it improperly, it could become moldy, exposed to worms or insects, and you will take a loss on the investment. Keep your feed purchases to a realistic amount and don’t overbuy.

  • Horse injury, sickness, or death

    The financial health of any equestrian business relies on the health of living, breathing creatures. You aren’t trading a commodity. Regular veterinarian visits are essential. If one becomes sick, keep him separated from the other horses so it doesn’t spread. Treat injuries immediately and take the required time to rehabilitate your horses correctly. If you rush them back to racing or performing, you could exacerbate their injuries.
    equestrian business accounting

    Keeping your animals healthy begins with prevention. Care for your horses like you would your children. Feed them a healthy diet. Give them plenty of exercise and plenty of rest. Make sure they are well-groomed and their stalls are cleaned thoroughly.

  • Natural disaster

    One important way to combat loss is with insurance. Your insurance policies need to cover property and liability. Your farm needs to be insured from damage, flood, fire, and other natural disasters. Liability insurance needs to cover the risk of injury to the horses, as well as the humans riding them and working with them.

With all the pitfalls that come along with equine business accounting, having a great accounting firm by your side is crucial to success. Give Prestige Bookkeeping a call at 954-818-4922 and we will help you get a handle on your equestrian business financials so you can spend more time in the saddle.

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