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Hi all,
I am not a book owner as we started our "dream" before the book came out, but by all I have read it should be regarded as very useful. Good luck to all of you using it.
We have gone down the route of agricultural apraisals and planning consultants and have got our temporary permission and are now living in a mobile home which expires in December 2011. This means we are in year 2 of our permission. Our business which is actually rearing rare breed pigs on our 6 acres is already showing a good profit, which we intend to increase dramatically.
My question, which Im sure our consultant must have explained to us (but have now forgotten - stupid me) is this:- The profit we are making is being reinvested into the business, so the "cash" is not actually there. Even in year 3 Im sure the majority of this earned income will also be reinvested. To be able to build our house we need to have enough cash to afford the mortgage payment. This wont therefore show in our accounts until after our temporary permission ends. If we keep reinvesting our profits back into the business, how will the planners see that we can afford the mortgage payment?
Is this a stupid question and am I being a bit thick!!
Hope someone is able to put my mind at rest, thanks in anticipation
Regards
Karen
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Profit 1 year in 3
Started By
KChally
, 30 Jun 2010 21:23
Back to top
#2
Posted 01 July 2010 - 08:39
Cornish Gems
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- Book Owners
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- 1,597 posts
Lord and Lady of the Manor
- LocationCornwall (formerly Devon)
Karen,
I hope that by reinvesting profit you mean that it has been for capital items and not for the general running of the small holding.
The planners will look at your accounts showing your pretax and post tax profits, this is profits earned befor reinvestment in capital projects. Your accountant will tell you what items should be captalised, normally equipment over £200, equipment costing less than the amount he advises will be shown as costs against earning thereby reducing your profit.
Please also bear in mind that the increase in equipment and stock goes towards showing your worth, and movements in these will show flow of funds.
I hope that this is of help but it is the best I can give without details of your reinvestments so as to be able to see what you actually mean by reinvesting.
Best Regards
Phill
I hope that by reinvesting profit you mean that it has been for capital items and not for the general running of the small holding.
The planners will look at your accounts showing your pretax and post tax profits, this is profits earned befor reinvestment in capital projects. Your accountant will tell you what items should be captalised, normally equipment over £200, equipment costing less than the amount he advises will be shown as costs against earning thereby reducing your profit.
Please also bear in mind that the increase in equipment and stock goes towards showing your worth, and movements in these will show flow of funds.
I hope that this is of help but it is the best I can give without details of your reinvestments so as to be able to see what you actually mean by reinvesting.
Best Regards
Phill
