Equine Business Conference helps horse owners succeed
March 5, 2012
For many horse owners, knowing how to run their business is key to their success. The Equine Business Conference, held on Feb. 25, helped producers in four states learn the basics of the horse business.
In Nebraska, the conference was held in Lincoln, Neb. The conference was hosted by the University of Nebraska, Michigan State University, Iowa State University and the University of Minnesota. The event had a total of 120 attendees.
“It’s important to provide good and new information to our horse community,” said Kathy Anderson, Extension Horse Specialist with the University of Nebraska.
She continued, “Very few organized learning resources exist for equine business owners and employees that are accessible and relevant to their specific needs. Therefore, an opportunity exists within the North Central Regions for the development of a variety of business resources relating specifically to equine business management. The majority of equine businesses are located in rural locations.”
The set-up of the conference was very different from many conferences, as the conference was held in four locations simultaneously. Each location had a live speaker, and the other three speakers were broadcast online. In all locations, attendees were able to interact with presenters by asking questions.
“It is valuable to have the ability to interact with presenters from across the region, and the ability to bring in speakers from the other states we would not have been able to do other wise,” said Anderson.
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The first speaker was Michelle Greenlee, Farm Financial Consultant for Nebraska Farm Business. She spoke to the 20 live participants in Nebraska about business structure, and how the different structures can benefit a horse owner.
The business structures she discussed were a sole proprietorship, a partnership, a limited liability company or limited liability partnership and a corporation.
“A sole proprietorship is the main structure of a business, and the most common type of business structure. It’s easy to form, easy to quit and has the easiest record keeping system,” said Greenlee.
She continued, “It’s a single member entity. If you are in a situation where you are sharing resources with someone, it might not be the best because you are having to split up everything at the end of the year.
However, there are some downfalls to the structure as well. “There is no liability protection, so if something happens your other assets are also at risk. Also, you must pay self employment tax on all your income,” said Greenlee.
The next type of structure she discussed was a partnership. “Historically, a partnership is the most common entity for two people. It makes is easier to be able to split things. It’s also easy to form, and pretty easy to quit. It’s a simple way to split your income and expenses,” she said.
She added, “The book-keeping is a little more involved. There is also no liability protection, so if something happens, all of the assets of the partners and the business are at risk. You also have self employment tax. The biggest drawback is you can’t provide tax free benefits to the partners, such as health insurance.”
The next type of structure is a LLC or LLP, which is common for many agricultural producers due to the large number of assets involved. “The IRS considers it a disregarded entity, which means the IRS does not recognize it as an entity for taxing purposes. If it is single person LLC, you file like you regularly would. You can also file like a partnership or a corporation,” she said.
She continued, “It provides some liability protection to the partners, it’s easy to form and you get almost all the benefits of a partnership.”
Corporations are the last type of business structure. “A S-Corporation is a separate entity, and is a separate company. It is not an extension of you anymore, and that is hard for a lot of people to deal with,” Anderson said.
“You only pay self employment tax on the money you pay out to yourself, so there can be a lot of tax savings there. However, getting into it takes time.” She said.
A C-Corporation, like a S-corporation, gives those involved a corporate veil in terms of liability. “The biggest advantage is you can provide benefits to those involved,” said Anderson. “However, if you make over $50,000 a year, the taxes go up in a hurry.”
The second speaker was Peggy Miller, Associate Professor of Animal Science at Iowa State University. She spoke to the attendees about social media, and how using social media can help producers to promote their business.
She spoke to the attendees about using social media such as Facebook, Twitter, blogs and webpages to promote a business.
“When it comes to Facebook, it’s no longer about if you should be utilizing Facebook, but how,” said Miller.
Miller gave some advice when using social media sites, however. “You want a separate account for your business. You don’t want people seeing your personal profile, so be aware of your privacy settings,” she said.
The other main point that Miller talked about was branding. “You need to develop a brand for your business. Have barn colors and a logo that people can recognize, and use it on everything,” she said.
She also talked about advertising, and the importance of getting a business name out in the public. She said, “Every time you get your name in front of someone, your business expands.”
The third speaker was Julie Fershtman, Attorney at Foster Swift Collins and Smith, P.C. She spoke on the issue of legal liability and contracts, a very important topic for horse owners. Fershtman is from Farmington Hills, Mich.
“National wide, 46 states have equine liability laws. Every single one of the laws differs in many different ways,” Fershtman said.
“Nebraska law was amended 10 years ago. Equine professional must post warning signs and the language must be put on the sign. However, you have a sign posting requirement that requires that lettering be in black, and the “Warning” must be in three inch letters, and the rest of the posting in 1 inch letters. This is only for equine professionals,” said Fershtman.
The biggest issue in the law that those in the equine industry face is in negligence. “A claim under negligence boils down to this. A claim against you under negligence is a claim that says you didn’t act reasonably, or act as a reasonable person should. Negligence is a standard loaded with trouble because it is often up for discussion and dispute as to what a reasonable person does and doesn’t do. Negligence is a very difficult standard to deal with,” said Fershtman.
When speaking about contracts, she reminded people to be clear in what they have in their contracts. “Make it clear what people are signing. You don’t want them to think they are being tricked,” she said.
The final speaker was Wade Ellerbroek, Licensed Real Estate Broker and Appraiser and Elerbroek and Associates. He is from Sibley, Iowa. He spoke on the using equine insurance to protect horses, an owner of an equine business, and the business itself.
Overall, the conference allowed equine producers from several states to learn about business and interact with producers.
“The proposed business resources will have a positive impact on the economic growth within the rural communities in the targeted states through business innovation and improved business management strategies. This multi-layered approach towards enhancing rural equine businesses will provide a program model for other rural communities across the United States to enhance the profitability and sustainability of equine businesses in rural America,” said Anderson.
Warning: Under Nebraska Law, an equine professional is not liable for an injury to or the death of a participant in equine activities resulting from the inherent risks of equine activities, pursuant to sections 25-21,249 to 25-21,253.
Guidelines: The warning notice signs shall be placed in a clearly visible location on or near stables, corrals, or arenas where the equine professional conducts equine activities if such stables, corrals, or arenas are owned, leased, rented, managed, or controlled by the equine professional. The placement of warning notice signs shall be such that they may be readily seen by participants in equine activities. The warning notice signs shall have black letters with each letter of the word “warning” a minimum of three inches in height and the rest of the letters a minimum of one inch in height.
(2) Every written contract entered into by an equine professional for providing professional services, instruction, or rental of equipment or tack or an equine to a participant, whether or not the contract involves equine activities on or off the location or site of the equine professional’s business, shall contain in clearly readable print the warning notice specified in subsection (1) of this section.