Top Tips for Keeping Records

Farm records provide data that will help you monitor the business over time. Your records tell your farm story and help your accountant complete your tax return, make financial decisions with you and plan for your business’ future.

Records are any informational documents that will help you understand where you’re spending your money by tracking items that are directly involved with your business.

To follow are a few of our top farm record keeping tips.

Top Tips

Know what a farm-related expense is and is not.

• All items that directly pertain to the production and management of the farm are farm-related.

• Items such as electric, telephone and internet bills can be shared expenses between the farm operation and personal use. Good judgement should be used to determine the portion of these expenses that should be considered a personal allocation.

• Items that are truly personal in nature (legal expenses for a will, improvements to your personal property, etc.) are not farm-related expenses.

Track as much information about your purchases as possible.

• Save all invoices and receipts, especially for larger purchases. This gives your accountant the information needed, including purchase price and date.

• All repairs over $1,000 should be tracked with receipts/invoices. Keep these to show your accountant.

• Use your bank statements to reconcile your checkbook.

• Itemize expenses on credit card statements to make sure you don’t miss things you forgot about buying.

Keep detailed records on livestock inventory.

• Know which animals were raised on the farm and which ones were purchased and when.

• Track the age and date when animals leave the farm.

• This information is useful because purchased animals can be depreciated over time. If a purchased animal dies during that time, it can be taken as a loss.

Understand the rules of 1099 reporting.

• Services offered by any vendors (landlords for rent, custom hire, etc.) over $600 should receive a 1099 form at year end to meet proper federal and state reporting guidelines.

• Corporations you do business with do not require a 1099 form, unless they are a veterinarian or attorney.

• Vendors should complete a W-9 form for your records to ensure you have proper documentation on file of their EIN/SSN/TIN.