6 accounting tips for successful farming and agriculture
Tracking all your farm transactions and simultaneously attending to your farm produce and crops by yourself can be overwhelming. You may fail to do financial audits and account for your unbalanced sheets yet still have outstanding bills to clear. With these six accounting tips, you can avoid these mistakes and succeed in your farming and agriculture.
As a business owner in the agricultural sector, it is essential to have all your books in order. However, managing everything by yourself can be complicated, tedious, and time-consuming, particularly for small farms. The Internal Revenue Service (IRS) may also impose a 2% penalty for delaying filing your payroll taxes.
Save yourself the stress by outsourcing your accounting and bookkeeping processes to a trusted accounting firm, like Roake & Cook. With their extensive experience in the industry, these experienced accounting firms will track all your business finances, help with the payroll, ensure your business is compliant with all tax obligations, and shift your current accounting software to cloud accounting.
Cutting-edge technology is at the front and center of a productive farming process. It includes smart irrigation systems, automated farm machinery, cloud-based accounting software, and machine learning software that generates top-notch planting strategies.
You can use the internet to find information on government subsidy initiatives, stock prices and trends, and more. Weather forecast apps can help you predict when to plant your crops.
Document your losses
Always keep records of all the losses incurred in your accounts, as it will lower your overall tax bill. You will not pay taxes for what became destroyed or unseen profits. Losses are inevitable in the farming and agriculture business as crops may fail to yield, and unexpected storms and droughts wreak havoc on your crops and farm produce. Remain focused if that happens as you constantly look for creative ways and alternative finances to bounce back.
Know your inventory and your assets
In farm accounting, how you treat crops and livestock differs. Crops include vegetables, fruits, grains, nuts, berries, and fibers. On the other hand, livestock includes cattle, horses, sheep, hogs, small animals, and poultry. Other production animals are poultry for eggs and meat and a cow for milk. The farm accounting experts consider crops and production animals as inventory. All other livestock and land are often considered assets.
Be keen on your profitability
You can gauge your farm’s productivity through various methods; the most common is the Economic Farm Surplus, which enables farmers to measure their performance based on asset metrics and inventory. The easy way to measure your farm’s profitability is to look at the month-to-month profit on your profit and loss statement (PNL). Other key performance indicators are cost-per-product ratio and revenue per unit area.
Keep up with government subsidies
Agriculture is the backbone for all nations seeking to remain self-sufficient in the long run, which is why most governments offer subsidies to their farmers.
With agricultural subsidies, change is the only constant thing as the government can decide to subsidize pork production for a year and milk production for the next. Tracking subsidies enables you to use your long-term strategies to maximize revenues.
Engaging in farming and agriculture is the best way to get the highest return on investment. However, it is vital to have proper accounting and bookkeeping systems to manage every farm transaction. For excellent results, hire an accounting firm to do the job for you as you adhere to all the tips above.