Ask a tax lawyer “The attitude of a new farmer”

When you think of money related to agriculture, you first think about raising capital, but what you tend to ignore is accounting. What about agricultural accounting, such as taxes and social insurance, as well as subsidies and debt handling?

We interviewed Junko Yoshikawa, who holds a tax accounting degree and PhD in small and medium enterprises, and also an agricultural management advisor on agricultural accounting, an area in which new farmers are more inclined to participate. family. He told me about the questions he worries about, such as the pros and cons of combination and tax savings.

83.5% use subsidies and incentives! How to raise money for people who want to start farming The average amount of their fund is 5.69 million yen! What is the initial cost of farming? What’s your purpose? From how you choose your farming area to your commitment, what are the practical conditions for those who want to start farming and what concerns do they face?

Agricultural taxes, insurance and subsidies

I often get asked about tax and social insurance, but the basic idea of ​​agriculture is similar to other fields. If you’re an individual business owner, you’ll need income tax, resident tax, national health insurance, national pension, and consumption tax if your business grows.

Starting a new farm means a drastic change in the content of the business. Besides, it is difficult to learn new accounting. In addition, even if you study hard on your own, there are few books specializing in agricultural accounting.

You can think of a new farming as the case of starting a business after quitting sala. If you want to look up the book, you should refer to those books. If you need an agriculture-specific response that doesn’t apply to de-sara, I think simply acquiring knowledge while doing it is enough. First of all, when it comes to unpaid start-up model, you should take care of tax, insurance, pension yourself and consult with an agricultural management advisor or accountant / tax advisor who is strong in Agricultural field when needed.

This is like starting a business in general, but the amount of resident tax and national health insurance changes with income for the previous year. Therefore, it is best to incorporate these items into your management plan first. In the first year of cultivation, it is not uncommon for the income to be zero until the harvest of the crop, but with residence tax and national health insurance.

Of course, I’d like to ask you, but you’ll basically connect with the JA (Agricultural Cooperatives), financial institutions that provide capital, and local governments. Loan terms and claim requirements will change, and each window will consult with you about which grant or fund is right for you. Our tax accountant can accompany you when you come to the financial institution.

This is a really common question, so I’ll answer that subsidies are subject to corporate tax and income tax is income, but not borrowed money. Also, the loan repayment is not an expense.

Is there a merit of the combination?

As in other industries, the loan limit increases as a result of establishment and the external creditworthiness increases as a company. Specifically, if consolidated, you will be obliged to pay the social insurance. At that time, the contribution rate of the National Health Insurance is determined by the fixed salary instead of the income of the previous year, so the contribution burden may be reduced depending on each person.

In terms of taxes, for example, there is a system that allows you to move the deficit to the following year or later and to offset the deficit when it becomes in surplus the following year or later. (As of July 2017).

In the case of a private business, there is no concept of paying your own salaries or superannuation and your stock is subject to full income tax. On the other hand, in the case of the business management, even if you pay it yourself, it will be a one-time business expense in the form of a salary or retirement allowance, so you will save taxes. Even corporate management wage earners are not subject to income tax on salaries and retirement benefits, but are entitled to tax savings because income tax is levied on the balance after deducting a certain amount. .

The value of a unique combination to agriculture lies in existing farmers who already have arable land and that new farmers will take up farmland and start farming on large-scale agricultural land. It is known that the acquisition of land on land is different from buying and selling real estate in general, such as needing permission from the Agriculture Commission under the Land Law, but if the land is attached to an individual, the procedure is complicated at the time. point of inheritance or inheritance. It tends to.

For example, even if you buy agricultural land separately, inheritance can divide the land into smaller pieces, reducing the convenience of farmland. If the management is considered to be stable, if the land is turned into “business property”, even the owner is not allowed to transfer the ownership.

If you want to start farming by inheriting farmland from your parents, who did farming as a private business, or if you want to buy farmland yourself and undertake large-scale farming yourself, you It is also possible to turn it into a company. I think you can treat it like that.

Publicly offered subsidies are unrelated to corporations and individuals as long as they meet the requirements.

For those who are new to farming, I think that the employees are usually people, families, small and medium enterprises. In that case, based on the business plan, people often design the tax rate of the company and the person starting a business is the lowest. This is the expertise of tax attorneys, so I think you should consult with us.

What are the tax savings measures you are interested in …?

Although it is extremely difficult to make sudden profits from new farming, having the “Reserve System Enhanced Agricultural Management Infrastructure (* 1)” is a useful system for those who receive sponsor.

An allowance can be recognized as a necessary expense (loss in the case of a corporation) under the name of “contingency”. Income tax and corporate tax will be reduced because the income (cost of sales) of the year the sponsorship is received will decrease.

In addition, during the year of fixed assets such as farmland and machinery purchased with accumulated reserves, the provision for recovery may be recognized as necessary expense (loss), hence corporate income tax. also applies. Tax will be reduced. This is a very effective method from a cash flow perspective because you do not have to pay additional income and corporate taxes during the year when you purchase large amounts of fixed assets such as farmland.

It can be used by both individuals and companies, but pre-application is required and a blue declaration is required for both the individual and the corporation. In addition, there are conditions for purchasing fixed assets, so if you are unsure, you may want to consult a tax attorney.

Even if you start a business in agriculture, it is easy to think of capital investments like large machinery and complex accounting processes. In addition, the tendency to devote special attention to agriculture can increase the rate of agricultural accounting. But the basics are the same as starting a business in other fields. Capturing the right cash flow is indispensable to continue doing business. Why not take a closer look at agriculture and money, sometimes with the help of experts.

83.5% use subsidies and incentives! How to raise money for people who want to start farming The average amount of their fund is 5.69 million yen! What is the initial cost of farming? What’s your purpose? From how you choose your farming area to your commitment, what are the practical conditions for those who want to start farming and what concerns do they face?

Tax accountant / small and medium business doctor. Agricultural management advisor. Born in Numazu City, Shizuoka Prefecture.
Study at Shizuoka University and study in China for a year (Yakeyo City, Hunan Province). After graduation, after working as an English conversation lecturer and tax accounting office, opened Junko Yoshikawa tax accounting office in October 2014. Then, in September 2016, he was registered as a doctor for small and medium business. Registered as an agricultural management consultant in January 2017.

Refer to (* 1) Procedures related to Reserve for strengthening of agricultural management infrastructure of the Ministry of Agriculture, Forestry and Fisheries