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Don’t stress over year-end recordsDon’t stress over year-end records

Bottom Line: Find the right starting point to ensure accurate and complete records.

November 1, 2023

4 Min Read
stacked notebooks and papers
COUNTING DOWN: Gathering information for year-end records might seem daunting, but North Dakota Farm Management Education instructors offer tips to help.demaerre/Getty Images

by Lynsey Aberle

Year-end records for your farm or ranch can seem daunting and stressful, but they don’t have to be. Producers wear many hats within their operations and being a bookkeeper is necessary to achieve complete, accurate records for both your lender and tax accountant.

We all know there is no perfect starting point, and that everyone is going to start with what needs to be done first or what is going to be the easiest. However, if you start with getting your income and expenses up to date, along with getting your production records sorted out, it will help make things go faster and smoother in the long run.

I encourage producers enrolled in the North Dakota Farm Management Education program to use accounting software to reconcile their accounts to keep them from missing important transactions. Just because it might not apply to taxes doesn’t mean it’s not important to your financial records.

Be efficient

I work with plenty of producers who still record their finances by hand, but they often miss things that would’ve been caught through reconciling. While keeping your financial records, don’t be afraid to make notes of how many bushels or cows you sold, and what type of vehicle or equipment you purchased along with what you sold. You need to keep track of such items regardless, and it’s a lot easier to spend 30 seconds writing a memo than it is to sort through papers six or 10 months later to remember what happened.

Be sure you keep your capital purchase receipts in a folder for your tax accountant as well because they need to know what type of equipment you purchased or traded, and they need to know the actual value of that piece of equipment, not the after-trade value. Setting up a filing system of “farm income” and “farm expenses” will also be helpful, especially for when you keep handwritten records.

Production records are crucial in helping you update your balance sheet. You might already know some of the bushels you sold of your different crops, or you have some sitting in the elevator or storage, or you may have kept records of the crop coming off the field. Knowing this information will help you complete your crop insurance records and help you fill out part of your balance sheet.

The same goes for livestock records. Use a calving book to keep track of your calves born, those that died or those that were born dead. If you don’t have a spreadsheet of all your cows, keep a notebook specific to your cow herd to write down important things that happened throughout the year. That could include deaths, dates you turned bulls and cows out to pasture, how many cows were pregnancy-tested, or even what cows or bulls you sold.

What comes after recording?

Once you have all your records for income and expenses, and production figured out, it makes updating your end-of-year balance sheet and putting together a cash flow plan much easier. You will know exactly where you are sitting with cash on hand, livestock inventory, crop or feed inventory, and capital purchases needed.

You may need to look further into updating your loan balances as of year-end, but that’s a simple look on the computer or a phone call to the bank.

Cash flow plans are important for determining what you need for operating going into the new year. Lenders want information that is accurate, and if you have your income and expenses up to date, it’s easy to figure out some of the predicted expenses by looking at your history. I strongly encourage the producers that I work with to talk with their agronomist and figure out an estimated cost for seed, chemical and fertilizer because we all know that changes from year to year.

Production records are also key for filling out your cash flow plan because you need to know what your average crop yield is, how many bred cows and heifers you’ll have, and what your calf death loss percentage is so you can use that information for planning.

I know I’m preaching to the choir, but if you can keep up with your records year-round, it makes things so much easier at year-end. You can do better tax planning, be ready for your lender and not spend days in your office trying to figure out what you did months ago.

Producers are always looking for ways to better their operation — and one way is by better managing their records. Knowing your financial position helps you make better decisions when it comes to selling your grain or livestock, or whether you can afford a different combine or baler. 

Just remember, record-keeping doesn’t have to be hard. It’s learning to manage yourself in how you keep your records to make it easier in the end. In addition, lenders and tax accountants appreciate it when your information is organized and accurate.

Fideldy-Doll is the state supervisor for ag education at North Dakota Career and Technical Education in Bismarck. The North Dakota Farm Management Education Program provides lifelong learning opportunities in economic and financial management for those in farming and ranching. Visit ndfarmmanagement.com for more information.

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