Keeping good farm records often lead to better business decisions. They are also essential when it’s time to file taxes, meet with a lender, or participate in any government farm program. A number of tools make record-keeping easier and more efficient.
“The key is to find the system that works best for you,” says Ben Cabaniss, commercial/ag Loan officer in the Lincolnton office of Carolina Farm Credit. “Use technology to your advantage.”
Excel spreadsheets may serve the purpose for those who wish to develop their own record-keeping system. Consider the important items to track such as income and expenses (feed, supplies, fuel, for example) on each enterprise (cattle, specific crops).
A number of tools and software programs are available for those who may not have the time or the inclination to develop their own spreadsheets. Kelvin Leibold, an Extension farm management specialist at Iowa State University, recently evaluated farm accounting software. An important feature, he writes, is the ability to download the software to your tax or tax preparer’s software so all of the data doesn’t have to be reloaded. He recommends checking with your tax preparer for compatibility. Here are highlights:
If you are not tech savvy, Cabaniss encourages you to explore courses at local community colleges, which often offer step-by-step lessons for free or for inexpensive registration fees.
Other options include the following. Many include a demo on their websites. Some may offer free trials to help you determine if it’s a program that meets your needs.
“The key is to find the right tool for you,” says Cabaniss. “Old school records are better than no records at all. While we encourage you to maintain records in a system that is backed up on a computer or the cloud, it is still possible to keep strong records in paper form, just keep them in a safe place.”
If greater borrowing potential and improved decision making aren’t reason enough for better records, Cabaniss lists another one: audit protection. “Strong records often keep you from getting audited in the first place. If you are ever audited, strong records make it easier to work through the process.”
Gary Bullen, a farm management associate with N.C. State Extension, says that “The Organic Farmers Business Handbook” by Richard Wiswall is a helpful resource. He shares that anyone who participates in the N.C. Farm School receives a copy. It includes advice on office systems and a companion CD offers valuable business tools, including easy-to-use spreadsheets.
Deborah Cavanaugh-Grant, an Extension educator with the Local Foods System and Small Farms program at the University of Illinois, echoes Bullen’s recommendation. She adds “Fearless Farm Finances” by Paul Dietmann, Craig Chase, and Jody Padgham to the list. Each author is involved in agriculture in various capacities. The book includes techniques for data collection, setting up and using a bookkeeping system, computer bookkeeping program tips, step-by-step development of financial statements, how to assess large financial investments, and more.
Enroll in Carolina Farm Credit’s “Ag Biz Planner” course and receive a copy of “Fearless Farm Finances” as part of your coursework!
Ag Biz Planner
“Ag Biz Planner” is a 10-module online course on how to run a successful farming operation. Designed for young, beginning and small farmers and their families, it includes 10 modules that provide the nuts and bolts essentials for any business when it comes to financial and business topics and marketplace knowledge. While the course doesn’t endorse any specific record-keeping tool, it does focus on good records and includes sections on constructing a balance sheet, income statement and cash flow as well as personal financial management. It’s designed for you to work at your own pace with training modules that are available on demand through any high speed internet connection, whether from your home, place of business or local Farm Credit office. Each participant will be paired with a mentor in this program that is facilitated by Farm Credit University. The program is designed to lead you through the process of building a strategic plan for your business. Learn more at “Ag Biz Planner” and stayed tuned for the upcoming enrollment period for the next course.
Cabaniss urges people to speak with their loan officer for help. While they are not CPAs, lawyers, or financial advisors, they are a good starting point. “We are familiar with a multitude of agricultural and other business operations and would be glad to help figure out a record-keeping solution that may work for you.”
To read more about Carolina Farm Credit, our members and the ag industry, check out issues of our Leader magazine—you can read them online.
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