There is no “best” record keeping system for all situations, but, at minimum, a farm records system should: Selecting a record-keeping system should depend on the expected use of the records. Therefore, all references to records in the remainder of this publication refer specifically to financial records. Keeping and analyzing accurate production records are important and essential aspects of farm management however, this publication will only address financial records. When such information is accurately maintained and categorized, it can be used to produce useful decision-making information. They consist of crop yields, plant populations, calves born, pounds of milk produced, weaning weights, death loss, etc.īoth production and financial records are important to the efficient management of today’s farm business. Production records are items that relate to quantities of inputs and levels of production by enterprise and/or by resource type. Product sales, operating expenses, equipment purchases, accounts payable, accounts receivable, inventories, depreciation records, loan balances and price information are all examples of financial records. Financial records justify or prove farm income or expense transactions. Financial records relate primarily to money or the financial interactions of the farm. On the farm, there are two distinct types of records-financial and production. Therefore, establishing and using an effective farm record-keeping system for an ongoing farm operation aids in farm planning, informed decision-making and analysis of both production and financial records. Obviously, record analysis cannot take place without first keeping records. The evaluation process allows a farm manager to make informed decisions based on actual (or projected) farm performance. Record analysis refers to evaluating farm records. Record-keeping can be accomplished through a variety of methods, from a basic hand record-keeping method to an elaborate computerized system. Record-keeping refers to keeping, filing, categorizing and maintaining farm financial and production information. Terms in bold print are defined further in the appendix section of this publication. The farm owner or manager needs to decide on the system which best fits his/her farm situation. Not all record-keeping systems allow records to be kept for all the reasons stated above. In this publication, both hand and computerized record-keeping methods are introduced. Increasingly, farm owners are being asked to keep records about chemical use, livestock waste applications and irrigation water use on their farms. Also, “planning” for conservation compliance and other aspects of soil and water management essentially become historical records over time. For example, the government farm program requires certain production and acreage records be reported and maintained by the farm owner. Some lending agencies and governmental bodies require financial and/or production records be maintained over a number of years. Decision-Aids:įarm managers use records to construct balance sheets, cash flow and income statements, and other financial aids for making more informed decisions in such areas as machinery purchases, adding or deleting enterprises, size expansion, etc. The IRS can ask for proof of income, expense and inventory items reported on tax returns. Please check this link first if you are interested in organic or specialty dairy production Why keep records? The efficient management of a farm operation requires sound record-keeping and record analysis. Farm business decisions that are not based on accurate farm records may lead to less profit. While tax records are necessary, additional information may be needed for informed management decisions. The Internal Revenue Service (IRS) requires farmers to report cash sales, expenses, depreciation and information on government program participation.įarm records are often maintained only for IRS filing purposes. Increasingly, regulations point toward the keeping of chemical application records and soil and water conservation plans for environmental concerns. They may also require production records and an estimate of expected sales and expenses for the next year. Some lending institutions require detailed business and personal information on everything a farmer owns, as well as the status of unpaid loans. Effective management of a farming operation today requires that records be kept so managers can make informed decisions affecting the profitability of their farms. For years farmers have been reporting financial information on a variety of forms for various reasons.
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