Horses and running businesses around them can be costly, but there are ways to manage the expenses of horse ownership without cutting corners. Whether you compete, give lessons, provide therapy, breed, or sell horses, there are strategies to make expenses work for you. Here are some tried-and-true horse money moves to help you better afford your passion.
Money Move Number One: Do Your Research
Before diving into horse ownership, research the costs involved in boarding, hay, hoof trimming, and vaccinations. Create a budget to determine if horse ownership is financially feasible for you. If not, consider alternatives like partial leasing or taking lessons before committing to ownership.
Money Move Number Two: Set Up a Business
If you spend over 700 hours annually on your horse activities and generate income, consider setting up a small business. This allows you to treat all horse-related income and expenses as business profits and losses, providing potential tax benefits.
Money Move Number Three: Invest in the Business
Invest in your horse operation by purchasing equipment, hiring trainers, attending clinics, and improving your skills. Keep detailed records of these investments to demonstrate your commitment to the success of your business.
Money Move Number Four: Keep Thorough Records
Maintain detailed records of your profits, losses, and expenses related to your horse business. Keep receipts, invoices, and a journal of your business plans and approach to ensure proper documentation in case of an audit.
Money Move Number Five: Explore Deductions
Many costs associated with running a horse business are deductible, so keep a separate checking account and work with a tax professional to maximize your deductions. Consider deductions for insurance costs and payments to children who help with horse-related tasks.
Money Move Number Six: Find a Knowledgeable Tax Professional
Work with a tax professional who understands the complexities of running a horse business and can help you navigate tax implications. Regularly communicate with your accountant to ensure you are maximizing deductions and managing your taxable income effectively.