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6 top tips for better Farm BookKeeping in 2020

Saturday, February 15, 2020

6 top tips for better Farm BookKeeping in 2020

Accountants come across a variety of errors every day and from your point of view, reducing the frequency of those errors will save time on your accounting and ultimately the time saved will save you money. More than that the other incentive is that having the right management information circulating in your business will help you make the right decisions year-round. So, getting your bookkeeping in check really is a win:win.

 

1. Separate Farm and Personal Accounts

If you're someone who has personal expenses that go through your farm business account, you could be making life unnecessarily difficult for yourself. Commingling business and personal funds is a bad idea. Once a week or twice a month, pay yourself a draw from the farm to the personal account.

Stay disciplined by spending out of the right account. This one step will give you instant feedback about how personal living expenses and off-farm income sources are impacting your farm operation.

 

2. Balance Early and Often

Log into your farm accounting software regularly, every few days, to make sure your bank balance matches with your books. Enter checks as you write them and receipts as you deposit them. Reconcile your checking accounts every month when the bank makes the statement available. Spend 15 minutes each week balancing, another 5 minutes a month reconciling, and save yourself hours at year-end trying to remember why you wrote that check to so and so.

 

3. Consistency is key.

When you allocate expenses or income, it’s important to make sure that you allocate them to the right place in the first instance and keep on allocating them to that place as time goes by. It’s also important that you avoid falling into the General Expenses/Miscellaneous trap. Allocating your expenses wisely and making sure you have a code for each category means that you will have the detailed information you need to make wise decisions for your business. A big pot of General or Miscellaneous expenses is confusing, unclear and to be avoided.

Using Farm Accounts Software you can set up templates for regularly occurring transactions, this will not only save time but help ensure that you are consistent with your coding.

 

4. Chart of Accounts.

You need enough income and expense accounts to make sense of your Profit & Loss statement, but not so many that every transaction has its own line item.

I've seen small business code the majority of their expenses to Miscellaneous. How is that helping you manage the business? Give yourself enough detail to be able to reflect back on the year and understand where you spent your money.

 

5. Keep your finger on the pulse.

It's important to know the state of play regarding your invoices and receipts, so this is something you should check regularly. Outstanding invoices and receipts that aren’t on your accounting radar can give you a false impression of either business success or business failure. By running an aged customer and supplier report, you’ll be able to keep your finger firmly on the pulse of things that have been outstanding too long as well as the true financial state your business is in. Credit control and spotting errors early is the basis of sound financial management and by checking out any duplicated or misallocated items immediately, you’ll stay in tight control of what’s happening.

 

6. Attention to detail.

Petty cash is badly named in some ways because the name means that the whole notion can seem ‘petty’ and unimportant. But in the same way as counting the pennies mean that the pounds look after themselves, keeping receipts for small items all add up in the end. Even though controlling your petty cash may seem like a whole lot of unnecessary hassle, it is an important part of your bookkeeping process and must be done. Choose a system that suits you and your accountant and bear in mind that the better the system suits you, the more likely you are to find it hassle-free (or at least low hassle). You can make electronic copies of your receipts and store them in alphabetical or date order, whichever you and your accountant agree to.

 

Not all Farm Accounting systems are created equal, so it's important to know all the facts before you dive in and choose one. If you're ready to grow your business and simplify your bookkeeping operations, start your free trial with Joyce Software today.
There's no technical knowledge needed to get started. We'll help you get set-up and running quickly and easily, and you'll have access to free unlimited support.

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