– Christine Gelley, Agriculture and Natural Resources Educator, Noble County OSU Extension
The Commercial Farm Account Book is available thru most Extension offices.
Tax season is here! This season can be stressful for farm managers that are unsatisfied with their recordkeeping systems and patterns. Important information to track for farm taxes can be extensive and diverse. Even farmers with keen attention to detail may struggle to feel confident that their records are complete and organized come tax time.
While there is no one right way to organize your records for tax prep, here are some ideas that may help simplify the bulk of paperwork you process:
- Utilize secure cloud services via computer & smartphone- Many smartphones have tools now where you can use your phone camera to take photos of documents (receipts, invoices, bills, etc.) and turn the photos into pdfs that you can name, save, and sort. You could take the photo immediately when you get a document, name it, save it, back up the files in multiple places, make it accessible from any device you want, and toss the bulk of the paper pieces. If you find a good system that makes sense to you, it can be much easier to sort and pull documents as needed.
- Personal testimony- My current phone has the option to “scan” documents with the camera, but I also have an app that works with my home printer that does this too. Printers are on the market for less than $100 that print, copy, and scan in collaboration with smartphones. In my opinion, it has been worth every penny to help with record keeping and cut down on clutter.
- Create dedicated accounts/cards/checks- Many farm operations have separate accounts to track income and expenses for avenues of their business and home. Although creating separation of accounts sounds daunting, it can actually save you time and effort in the long run. If you have the ability to work with your bank to set up accounts for certain distinctions/purposes, that can also help with recordkeeping. Often you can work to have them linked together if you need to do funds transfers, but keep income and expenses separate by account. Then you can pull account statements to do tallies any time. Ex: Account for home, account for farm, account for retail sales. Card for home, card for farm, card for retail sales. You could even break expenses down further, ex- one card that is only for farm fuel, or farm supplies, or bills. Again, this helps cut down on clutter and make sorting easier. You can even designate digital payments to go to these different accounts (ex: Venmo, Facebook Pay, Square, PayPal, whatever you like to use).
- Use a Farm Account Book– OSU Extension offers 2 types of physical farm account books that you can pick up at most Extension offices. It resembles an FFA SAE or 4-H project book designed for whole farm use. The Ohio Commercial Farm Account Book is also available as an Excel program that you can download for free! Reach out to gelley.2@osu.edu if you would like the link to the download. For the farm account books to be effective, it is important to reconcile your accounts & fill out the record book at least monthly. This can help you track where you are, where you want to go, and anything that may be falling through the cracks during the year.
- 3-ring binders are still valuable! If you prefer to keep paper records and physically handle them, a 3-ring binder, expandable folders, and trusty old filing cabinets are still effective tools. Use one to track cattle records (genetics, breeding, birth, death, vaccination, medications). Use another to track inputs on the land (fertilizer, herbicide). Use a third to track bills for services (farm utilities, farm equipment deliveries, gravel, etc.) OSU Extension has data tracking sheets for many of these entries including all the details you need to track and keep on file. If you are looking for a data tracking sheet, don’t hesitate to reach out.
- Software for your computer is available specifically for farm use. You can choose to use software that is completely on your computer and saved locally or programs that operate online utilizing cloud storage. Read all terms and conditions with cloud storage options. Some will offer certain services for free, but make you pay for additional services. Some will save your data in perpetuity, while some will only save it for a short time. Like all systems, you should use them frequently to help cut down on the stress that comes at tax time. Oklahoma State Extension has developed a Quicken Agricultural Users Manual for farm businesses using Quicken to complete their farm accounting. Some App based programs are to diverse to list, but if you would like assistance deciding on if an app will work for you, feel free to reach out!
EDITOR’s NOTE: If interested in learning more about recording keeping with Quicken, see the upcoming trainings Farm Accounting Workshops with Quicken.