For many beginning farmers and ranchers, the largest challenges relate to finances: keeping track of money coming in, going out, etc. When running a farm or ranch, it’s imperative to keep good financial records. It will help you make good business decisions, file your taxes and apply for loans. Beyond that, good recordkeeping is important for participating in government programs, writing grant applications, obtaining crop insurance and more.
A Guide to Financial Record Keeping for Farmers and Ranchers, produced by Intertribal Agricultural Council in partnership with Rural Coalition and USDA’s Risk Management Agency, provides detailed information through a curriculum on how to keep good records.
Basic rules for good recordkeeping:
- Track all funds coming in and going out
- Save all receipts, invoices and credit card statements and make copies of checks
- Avoid doing business in cash, when possible; pay all expenses with check, debit or credit cards
- Create useful filing recording system: separate expenses into categories specific and track by month, or use a ledger (money journal) to record transactions details and dates
- Tally expenses monthly and enter into accounting worksheet at least monthly
This record, taken from the above guide, is a good example and could be used as a template.
The federal government has put together a Farmer’s Tax Guide, Publication 225 with detailed information on how to fill out tax forms, including Schedule F.