Following the success of a similar event held last fall, the Alaska Longline Fishermen’s Association (ALFA) hosted a “Spring Fishermen’s Expo” in early March to provide educational workshops and technical assistance to local fishermen.
During the Expo, fishermen had the opportunity to attend bathymetric mapping workshops at both beginner and advanced levels, receive technical support on their vessels, and attend a “financing your fishing business” session targeted towards young and beginning fishermen. The two day event wrapped up presentations from the Alaska Department of Fish and Game and NOAA on sablefish stocks.
During the “Financing Your Fishing Business” workshop, Nicchia Leamer, a local lender from Wells Fargo, and Susea Albea, an accountant from Spirit Bear Bookkeeping, gave presentation on qualifying for loans, bookkeeping for a fishing business, and good financial practices for fishermen.
Here are five major takeaways from the financial workshop:
1) Save your receipts.
The most important step to good bookkeeping for a business is to save all paper receipts. Why is this better than relying on your online credit card statements when tax time comes? Being able to provide information about your itemized purchases is very important in accurately reporting your taxes, and protects you in the event of an audit. Itemized receipts allow you to prove that the $500 you spent at the hardware store was actually for fishing gear, not on paint for your home. And, as Albea put it, “It’s the difference between driving the bus and being towed behind the bus.” Good bookkeeping can also improve your relationship with lenders.
2) You will save money on your taxes if you have professional help, and it will protect you if you are audited.
Our tax system is incredibly complex, with many new regulations and changes being made each year. Very few people, other than tax professionals, have the time or energy to follow these changes. A professional will know exactly which ways you can best save money while doing taxes for your business. Simply put: if you hate bookkeeping, pay someone to help you and go out fishing instead!
3) Know where you stand.
Having a good understanding of your financial situation and the larger financial climate is important for anyone who is considering borrowing money. Know your credit, understand your earnings, be reasonable about collateral, and save your money!
4) Know the difference between good and bad debt.
Good debt pays off. It is the purchase of an investment or asset that will grow, defers other expenses, provides job opportunities, or is well below market value for some reason. Bad debt doesn’t. It is a purchase that doesn’t pay off, mis-financed debt, or high interest rate debt. Knowing when to borrow and why is very important for running a sustainable business.
5) Know what lenders are looking for--and remember, relationships count!
Lenders are looking at the five “C’s” of credit: character, capacity, collateral, capital, and conditions. This means that range of things, including your credit history, current financial situation, and other holdings are important- it is important to develop them all and have a realistic understanding of where you stand before you go in to meet your lender. And remember, having a good relationship with a lender is important both now and later on when you decide to borrow again.