Farm Horizons, February 2014

Simplify, commit, and be prepared

By Myron Oftedahl
Farm Business Management Instructor, South Central College

Tax season is here, and I am guessing that many of you are dreading the day that you sit down with your tax preparer. This may be because of the uncertainty of what the tax bill will be, or it might be because you have spent the last week trying to sort through all of the paperwork before your appointment, and in the process, upset your entire family because you are out-of-sorts.

So, here is your New Year’s resolution – simplify and be prepared. Now, you are asking, how can I simplify and be prepared for taxes?

Let’s look at some things that you can do.

• Buy yourself a set of file folders or a 13-month expandable folder. I like the expandable folder, because I can sort all of the receipts and expenses by month. I work with a couple of farms that use one expandable folder for income and another for expenses. I also work with some farms that sort everything by the business, so one file folder contains everything from that business for the year. The advantage of either system is that it narrows your search if you need to look up an invoice or receipt; you don’t have to look through the entire drawer, box, or whatever you are using.

• Commit to using an hour each week to take care of your accounting. It shouldn’t take a full hour, in most cases, so now you have time to sit and enjoy a cup of coffee or whatever you choose to do with a few extra minutes.

• Invest in a computer and a piece of accounting software. I like PC Mars, because of its simplicity and the opportunity to expand functions if needed. This also gives you the capability of printing your checks directly from the computer, so that you only deal with the information once. You no longer need to write the check, and then enter the information into your record keeping. Now you can enter the information, print the check, and your record keeping is done. The other advantage of a computerized system is that all you need to do at year-end is go to your computer and print out the year, and you are ready to go to your tax preparer. No more long days of sitting at the adding machine.

There are other accounting programs that work well also, but PC Mars was written specifically for farming.

Many tax preparers will recommend Quickbooks, because that is what a lot of small businesses use. Quickbooks is a very powerful program that was written to work in virtually any business, but because of that power and versatility, it can be intimidating sometimes. Look at the possibilities and then decide which works best for you. If you are on an Apple product, your choices for accounting software are more limited.

The most important part of this whole discussion is to commit to doing your bookkeeping every week, not just at the end of the year. Decide what time of the week works for you, write it on the calendar like any other appointment, and stick to it. If Monday morning at 8 a.m. works for you, then great. If Thursday night is what works, that is OK. What works for you? Make it a habit.

By doing these things, you can simplify your life, relieve some stress, and enjoy your family. So, invest and commit to a more organized approach to your farm bookkeeping.

If you have further questions, contact me or any Farm Business management instructor and they can advise you on what to do.

Your motto for the year should be, “Simplify, commit, and be prepared.”

Farm Horizons: Main Menu | 2014 Stories

Herald Journal
Stories | Columns | Obituaries | Classifieds | HJ Home