Horses are never a lukewarm interest. The passion of any horse lover is one that runs deep within the fiber of their being. It’s the kind of ardor that can lie dormant for many years, often pacified with brief excursions in the saddle or a photo shoot with your favorite steed, but sooner or later it comes out full-force. This can sometimes manifest in the form of creating a horse-related business of some sort or another. After all, if you can combine your life’s work with something that brings revenue, that’s the best case scenario, right?
Buckle Up for the Ride
So, you’re thinking of finally chasing that dream and starting your own horse business? It won’t all come together without a little upfront investment. And we’re not just talking about mucking stalls, cleaning tack, and lugging around feed either… Don’t worry, though, you get to do all of that, too.
In the meantime, there are a lot of other details that go into starting any business of this nature, or any small business really. The origin of each individual venture will be chock full of its own challenges and obstacles. As an upfront encouragement, while these difficulties can be a pain at times, don’t give in to that temptation to throw your hands up in despair. Just go back to riding on the weekends.
Through patience, diligence, and a thorough knowledge of what’s required, all of the nitty-gritty obstacles can be checked off one by one until the dream of owning your own horse-centric business finally becomes a reality. From being ready when tax season rolls around to likely events where you need extra help. Let’s break things down and go over some of the scenarios you might run into when starting your business.
The first thing to ask yourself is, whether you want to form your business as a separate entity. While you can technically be a sole proprietor of your business (if you’re the only owner) that can leave your personal possessions at risk if something were to go south along the way.
Often it’s a wise move to consider creating an LLC or S Corp. Either option can both provide some legal protection, as well as allow you to write off business costs as you go.
Another factor that is important for any small business, but especially one as physical as owning horses, is safety. Keep your horses’ safety in mind as you go about setting up your dream ranch. However, remember that your workers are also going to need some protection. Workers’ compensation is an important insurance tool, as it can help cover things like wages and medical expenses if a worker is injured “in the course and scope” of doing their job.
Along with workers’ compensation insurance, there are a few other insurances that every small business needs. While your overall insurance needs will depend on what kind of business you have, some may include general liability insurance, business interruption insurance, and employment practices liability insurance. These will help protect you from any incident of damage or injury from sending your business into bankruptcy.
The Tax Factor
Taxes can be one of the most daunting elements of running your own business. While you may still be dealing with animals, it’s not going to be quite the same as simply adding up your typical pet-related tax deductions. In this case, you’re making money on the deal, so the equation changes a bit. From keeping track of expenses to filling out countless forms and legal jargon, it can initially be a bit overwhelming. Nevertheless, it’ll come in handy when it comes to making sure you’ve got all of your ducks in a row each time tax season rolls around.
But the good news is that recent changes in tax laws have generally made things better for small business owners. While it’s impossible (and largely fruitless, thanks to the laws’ constant shifts and changes) to get into the minutia of tax laws in an article of this length, it’s highly recommended that you find an accountant who you can genuinely trust. This gives you peace of mind knowing that a professional is helping you keep up to date with any changes.
Employees in Small Business
While it’s always fun to chase your dreams, sometimes starting a business can be a lot of work. But before you just pop a sign up informing everyone that “we’re hiring!” you’re going to want to consider a few complications that employees bring into the picture.
The question of employee benefits is an old one, stretching far back into the 19th century. Culturally shocking events like the Industrial Revolution ushered in the issue of how to create job security and stable wages. Since then, the concept has continued to shape itself, often through radical developments via the Federal government. Legislation such as COBRA, meant to help bridge gaps in healthcare during times of financial difficulty, or the introduction of the minimum wage are good examples of this.
While some of these changes apply to all businesses, though, others like FMLA (the Family and Medical Leave Act) only affect companies with 50 workers or more. Additionally, the various statuses of your employees or contract workers make a huge difference in what they are eligible for.
Often hiring part-time employees can significantly reduce the number of benefits that you must provide for them. While it’s often wise to offer as many benefits as you comfortably can if you want to attract and retain happy and skilled employees, the harsh reality of a start-up business is that sometimes you have to look at the books and make some tough financial decisions.
If you want to offer things like healthcare and 401k matching to any employees, you’ll need to consider those costs (or perks, as they’re considered from the employee’s perspective) when you consider taking on a new employee.
Probably the most famous employee protection of them all is the minimum wage law. This guarantees that no employee will be paid under a certain dollar amount. As of now (Feb. 2019), the Federal minimum wage stands at $7.25 per hour. Currently, there are state governments have their own minimum wage that is slightly higher than the Federal, but many still choose to stay at $7.25.
However, there have been many recent efforts to increase this, some of them rather dramatically. In 2013 President Obama called for an increase of the minimum wage of nearly two dollars, while a few years later the “Fight for $15” movement brought the hopeful number up to $15, an over 200 percent increase.
While it’s easy for larger corporations to have a bit of wiggle room, small business owners must consider the cost of hiring workers and how that might be affected by raises in the Federal minimum wage. It’s something that you’ll want to keep in mind both initially and over time, as something like the “Fight for $15” movement. If applied to smaller businesses, you could see your employee expenditures double overnight.
As a side note, many policies that are as sweeping as a large hike to the minimum wage are regularly meant to be only applicable to larger companies. It’s often not worth spending time and worry on potential law changes such as these until the issue truly becomes a reality for small businesses.
One factor that affects both full-time and part-time employees alike is overtime work. Now, just to clarify, this doesn’t mean that if you’ve got someone working 20 hours a week and you need them for 23 hours on a particular seven-day stretch that suddenly you need to start paying them overtime. According to the FLSA, all employees must be paid overtime pay if they work more than 40 hours in a single work week. Full-time or not, an employee must work past that 40-hour mark for the pay to go to overtime.
At that point, pay must increase to at least 150% of the normal rate. In other words, an employee that is paid $10.00 per hour is going to be making $15.00 per hour for any extra time they put in.
The State Factor and the Professionals
Finally, you’re going to want to keep your state and local government in mind as you sort through things and get ready to launch your brand new equine venture. While many of the elements we’ve discussed are purely Federal in nature, there are often legal situations and other requirements that boil down to state and local laws. Minimum wage, as mentioned before, can often be different in your state or local area. If there is a discrepancy, the highest one must be adhered to. Thus, it behooves any savvy business owner to make sure that you’re addressing both the macro and micro government requirements as you go along.
As we already mentioned above, it can also be extremely helpful to try to find an accountant you can trust as you launch your startup. They can help answer questions and make sure you understand each situation that might arise. For example, depending on your situation, at times farm workers are often exempt from things like overtime or minimum wage. There are many other possible exemptions and exceptions that a smaller ranch can fall under depending on the size of their operation or the state they live in.
It’s All About Getting Started
It’s important to remember that many of the factors discussed above are issues that are resolved at the beginning of your journey. Many of them become easier to deal with over time or, once set up, just require maintenance, such as keeping up on minimum wage laws or making sure you understand the current tax requirements for the year.
While it can be a bit overwhelming at first, the grunt work that goes into setting up a business is often well worth the effort if your dream career as a rancher lies on the other side.
About the Author
Devin writes from somewhere along the West Coast. He is infected with wanderlust but always tries to bring his dog, Scrummy, along for the ride. You can follow him on Twitter.