Farmers Guardian
Word ‘milk’ banned for use in branding of plant-based products

Word ‘milk’ banned for use in branding of plant-based products

This Is Agriculture - Sponsored

This Is Agriculture - Sponsored



Auction Finder

Auction Finder

LAMMA 2020

LAMMA 2020

You are viewing your 1 free article

Register now to receive 2 free articles every 7 days or subscribe for unlimited access.

Subscribe | Register

Farm accounting: Everything you need to know

Farming is unlike any other type of business. There are few others that rely on living produce, from crops to livestock, to be successful.


This makes farm accounting more complex than other businesses when it comes to assets, liabilities, costs and revenue.

Share This

Farm accounting: Everything you need to know #Hints&Tips

There are various factors to consider when running a farm, including government subsidies, changes in land use and even the weather, which can have a dramatic effect on profit and loss.


Accounting for all these factors is far from straightforward.


But with thought and planning it’s possible to get into a routine of managing the finances for every aspect of a farm’s operation.


Ten points to consider when it comes to farm accounting are:



1. Your land is an asset and the cost of maintaining your land should always be accounted for.


Properly managed agricultural land shouldn’t depreciate in value, but mismanaged land can take many years of careful nurturing to return to productivity.


Remember to take into account the cost of fertiliser, irrigation, drainage, soil pH management, weed removal and pest control.



2. Stay up to date with government subsidy schemes.


Farming is a critical industry, it keep the population of a county alive.


For that reason, most governments provide subsidies to farmers to help during the lean years to ensure that the country never runs out of food.


These subsidies are different in each country and often change so make sure you keep track of subsidies and account for them, especially if they’re made as direct payments.



3. Adjust your farm accounting calendar to suit the government’s.


If lambs are born early, late or out of season, they might not fit into the government’s rigid definition of age.


This can cause issues when trying to keep a tally of the animals on your farm.


The simplest solution is to go with the government’s definition of significant dates and livestock ages when doing your accounts.


It may not be always be factually correct, but it’ll save you going through more complex calculations in the future.

Read More

Handy hints: 8 key accounting tips for farmersHandy hints: 8 key accounting tips for farmers
Handy hints: Alternate bedding sources for farm winter housingHandy hints: Alternate bedding sources for farm winter housing
Hints & tips: How to limit the spread of pink eye in housed ewesHints & tips: How to limit the spread of pink eye in housed ewes
Hints & tips: How to make your farm meetings more productiveHints & tips: How to make your farm meetings more productive
Hints & tips: The benefits of registering your farmlandHints & tips: The benefits of registering your farmland

4. Record changes in land use.


As economies change, so does the type of farming that’s carried out on the land.


For example, a shift towards a more vegetarian society can lead to pasture being given over to cereal, fruit or vegetable production.


If your use of land changes be sure to record it in your accounts, this will make it much easier to keep your business accounts up to date.



5. Know your stock.


Most farmers will know how many animals they have, of what type, breed and age, to within a small margin.


But animals breed and die, so your stock numbers will change over time and it’s important to record these changes in your accounting software.


Every head has a value, and that value should be recorded.



6. Understand depreciation.


In most countries, the cost of new equipment can be offset against tax.


Tractors, trucks, harvesting equipment and other farm machinery, while built to last, undergos heavy use and wear and tear.


Also, new technology is moving fast in this area, making older machinery less valuable.


Ensure you understand the rules for depreciation in your country, because the value of your equipment will affect your tax bill.



7. Account for loss.


Farming is dependent on the weather, and sometimes the weather wreaks havoc.


It’s important to record any losses in your accounts, because that will reduce your overall tax bill.


You won’t want to be taxed on something that’s been destroyed, or on a profit that you haven’t made.



8. Keep track of your profitability.


This can be difficult to measure on a farm and there are various ways of doing so.


The only way to truly understand farm profitability over time is to use good quality farm accounting software.


The additional benefit of doing this, is that you can use it to make forecasts and predictions based on past trends.



9. Use the internet and the cloud.


It enables farmers to check stock prices and trends, access kill sheets and weather forecast.


They can also take advantage of the latest farm accounting software, which will have direct feeds in place for banks and farm suppliers.


This makes it possible to manage all your resources, suppliers and partners from one place.



10. Consider hiring an accountant.


It is possible to manage the accounts of a small or even medium-sized farm on your own, but the time and complexity involved means it will be hard work.


A good accountant can take most of the fiddly detail work off your hands, leaving you free to run your business the way you want to.


Post a Comment
To see comments and join in the conversation please log in.

Most Recent