Farm Horizons, February 2010

How is your bookkeeping going?

By Myron Oftedahl
Farm Business Management Instructor, South Central College

As we close 2009, are you prepared to file your taxes, or are you dreading sorting through all of your paperwork? The year 2010 may be the year to turn to a computerized accounting system.

What should you consider when choosing a system?

1. Is it affordable? How expensive are the upgrades?

2. Is it easy to use?

3. How available are support services?

4. Is my computer and/or printer capable to run the new software?

5. Will the software track inventory?

6. What is my computer savvy?

The most important thing to remember is, no matter which system you choose, you need to develop the discipline to do your accounting frequently. I stress that you should set aside one hour each week to do your accounting. After a while it will become a habit that you do your accounting every Tuesday morning or Thursday night, or whatever works for you.

There are some definite advantages to a computerized accounting system. Most of them will allow you to enter the information and print a check directly from the software.

During the year, and at the end of the year it is very easy to get a totals report. So, if you wanted to know how much you spent on diesel fuel, you can just turn to your computer and print a report. How long would it take you to figure out how much fuel you used last spring? How long does it take you to add up all of the columns in order to be ready for taxes?

Are you comfortable using a computer? I would suggest that you start with a basic, simple program that is affordable. As you become more technologically literate, you can add to that basic program or move up to a more advanced program. Either way, ask some questions so that you understand what you are getting into.

Is the software affordable? Prices will range from $300 to $2,500 or more. The software on the less expensive side will allow you to separate expenses and income so that they match to the Schedule F at the end of the year, and should have enough capability to separate expenses by enterprises. In other words, can you separate seed expense for soybeans from corn?

Software on the high-end of the range has the capability of connecting with your GPS unit to help keep field records, etc. It will also be much more detail-oriented.

Any software should offer some technical support, so that if you have a question about how to enter a specific transaction, you have a person that you can call.

If you have a computer that is five years old or older, be sure to ask if the software will run and if it will work with your printer. Some of the older printers will not work with the newer software.

Will the software track inventories? It is always good to keep track of how many bushels you sold, or how many hogs you sold. We need to track the dollars for taxes, but if you track inventories also, you can calculate some production costs and efficiencies.

One other thing that I would stress, if you decide to move your accounting system to your computer, is to invest in a flash drive and do the backup every time that you enter more information. You don’t gain anything if your computer crashes in November and you neglected to back up your information. Now, you have to re-enter everything, and that takes you back to the box or drawer full of paperwork and it is the end of the year. So, do your backups religiously.

If you want a recommendation on software, feel free to contact me. Happy computing.

By mail: Myron Oftedahl, FBM Instructor, 704 10th Street East, Glencoe, MN 55336.

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