Life changes require checkups. We do them for our health, children and future. The addition of a new child, home purchase, business start-up or receipt of an inheritance (if you are fortunate enough) forces one to reevaluate goals. You might ask yourself, "Why should I undergo an annual financial checkup?"
 
 Investing in an ethanol plant has changed your life, and tax planning is an important piece of the puzzle. 
 
 "Being an investor in an ethanol plant means more than just putting in your initial investment," says Donna Funk, certified public accountant and manager of the Biofuels Group at Kennedy and Coe LLC. 

 
 "As the plant generates profits and distributions are made, you have to know how to plan for taxes, not only for the current year but also when you sell your investment," Funk says. "The taxation structure of the operating entity can significantly impact your tax situation. You very easily could incur significant gains that are not afforded capital gain treatment. Therefore, cash management and financial planning should be at the top of your fiscal well-being and annual checkup."
 
 Blake Allen, certified financial planner and senior associate with Kennedy and Coe, advises clients to review the big picture, much like a doctor reads vital signs and lab tests.
 
 "The argument for putting off a yearly 'fiscal physical' can sound remarkably like the one you tell yourself when you neglect your physical self," Blake says. "You feel fine. You don't have any aches or pains, but what lies just beneath the surface?"
 
 Biofuel investors can benefit greatly from the expertise of financial advisers familiar with the nuances of this business. Given your equity investment in a project, you are already assuming certain risks. Managing for retirement, insurance and estate planning should be part of your regimen, as should planning for death or disability. Having unbiased input into your present situation is powerful and educational, not only in the ethanol context but in your total well-being.
 
 Brad Rayl, treasurer and board member of Kansas Ethanol LLC, says management of personal finances requires flexibility and should be a priority. "For example, Kansas Ethanol is taxed as a partnership, so income is reported on a K-1 and taxes are paid by each investor," Rayl says. "If the plant makes a profit but no dividends are declared, I still owe the taxes on my share."
 
 A financial checkup should include determining your goals, conducting an in-depth analysis of your financial situation, presenting the evaluation in a clear format, executing the plan, and continuously monitoring and improving it.
 
 Do yourself a favor by having a holistic evaluation of your holdings to uncover hidden risks you may not have realized. The benefit is a roadmap for success and piece of mind.
 
 Can you answer these questions about your financial future?

 
 › What are my financial and retirement goals?
 › Are my resources sufficient, and in the right allocation, to fund these goals?
 › Are my investments performing as well as they should, and are they representative of the marketplace?
 › Do my investments expose me to more risk than I'm comfortable with or need to take?
 › Does my insurance program protect my loved ones, and meet my business and estate needs?
 › Does my current plan fund the education needs of my children and/or grandchildren?
 › What is my estate tax situation, and how can I minimize its impact?
 › Do I have a succession plan in place so that I can retire without worrying about the future of my business?
 › Are all of the elements of my financial plan working together to meet all my financial goals?
 
 Jesse McCurry is a business development consultant with Kennedy and Coe LLC, a Kansas-based certified accountant and consulting firm. The firm is a member of the Renewable Fuels Association, the Ethanol Promotion and Information Council, and the American Coalition for Ethanol. Reach McCurry at <a href="mailto:jmccurry@kcoe.com">jmccurry@kcoe.com</a> or (316) 691-3758.

Personal Financial Planning for Ethanol Plant Investors

Upcoming Events

2024 International Fuel Ethanol Workshop & Expo

Biodiesel Summit: Sustainable Aviation Fuel & Renewable Diesel

Carbon Capture & Storage Summit

North American SAF Conference & Expo

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Upcoming Events

2024 International Fuel Ethanol Workshop & Expo

Biodiesel Summit: Sustainable Aviation Fuel & Renewable Diesel

Carbon Capture & Storage Summit

North American SAF Conference & Expo

2025 International Biomass Conference & Expo

Personal Financial Planning for Ethanol Plant Investors