Accountant for Farmers
Farming is different from any other kind of business no matter whether it is small or large. It may be a farm that runs livestock or one that produces crops. If you’re running one, it is expected that you manage your accounts quite differently from non-farming businesses as well. Farm accounting is more complex in terms of assets, costs, revenue and liabilities. At Sky Accountants Ballarat & Bookkeepers Ballarat, our goal is to empower you to become a better, more finance-focused and well-rounded entrepreneur. Contact us at firstname.lastname@example.org or 1300 328 855
Farming is a regulated and subsidised industry with unique profit and loss statements. Accounting for all of these can be tricky but doable if you get into a routine of planning and managing your farm’s finances. Here are some farm accounting tips to guide you:
Agricultural land won’t depreciate and might even increase in value if managed properly. However, if your land is mismanaged, it can take a very long time to get it back into productivity, especially if it has been drained of nutrients or has become highly acidic due to over-farming. You should maintain your land with a good fertiliser – an unavoidable expense if your fields are to be kept productive.
Accountant for Farmers
You should also account for irrigation, which is a major expense in our dry continent and ensure that your soil drains well so that your crops won’t rot. Various plants need different pH levels and some crops may need more acidic soils. Money would need to be spent to ensure the soil’s pH levels are correct. Other ongoing costs would include weed removal and pest control. All these expenses need to be accounted for.
Meanwhile, most governments provide subsidy schemes to farmers to support them during lean years but subsidies are different in each state and often change. You should keep track of your subsidies and account for them so you can plan your farming strategy better and make the most out of them.
You can also adjust your farm accounting calendar to fit in with the government’s strict timetables. It’s ideal to go with the government’s significant dates and livestock ages when you’re doing the accounts to avoid complex calculations in the future.
Accountant for Farmers
Economies change and so does the farming type that’s carried out on the land. There might be a shift from pasture to crop production; or the government may pay farmers to return farmed land by letting indigenous species grow wild; or locking up carbon in new tree growth. Some forests may also be cleared for meat production. You should record any change of land use in your accounts and make sure that the land value is changed if necessary. You should account for any sale of stock or any cost of buying stock if you move to livestock farming. Recording any changes as they happen will make it easier to keep your accounts updated.
It is also important to know your stock, how many animals you have of what type, age and breed. The numbers won’t remain static but every head has a value which should be recorded.
Cost of new equipment may sometimes be offset against tax and its value will depreciate as it wears out, becomes older or obsolete by advancing technology. It’s important to know the rules of depreciation because it will affect your tax bill. You should account for tractors, harvesting equipment, farm machinery and trucks which are built to last but undergo heavy use. Note that computers are now essential in managing a farm efficiently and they depreciate much faster than hand and machine tools and repair equipment that have a long depreciation tail.
Accountant for Farmers
It is also important to record losses in accounts because of weather and unseasonal storms as these may reduce your overall tax bill. Equally important is keeping track of your profitability. Farm profitability can be hard to measure but there are different ways to do so, such as through the Economic Farm Surplus scheme that gives an overall performance rating, a monthly profit guide which shows the farm’s current performance but without the capability of predicting future profits or cashflow, and revenue or profit per unit area measure which shows the amount of revenue or profit generated for each unit area of farm land but does not take into account underlying costs. Remember that a good farm accounting software can track farm profitability and make forecasts based on past trends.
Most businesses now have internet connection and it’s often enough for the basics. You can use the cloud to check stock prices and trends, access kill sheets, track suggested retail prices, check long and short range weather forecasts and other resources, accounting tools and bank accounts. You can have direct feeds for farm suppliers, partners and banks from one platform.
If you’re running a farm, a good farm accountant can do the work for you and allow you to run your business the way you want to. Good farm accountants may save you money and reduce your tax bill. Keep important financial information and work together with your accountant in the cloud so you can run your farming business more efficiently.
As you look for different ways to grow and improve your business, seeking professional advice could prove to be an important and helpful decision.
You can click here to speak to a business, accounting and bookkeeping firm. We will give you a call to know more about your needs. We will explain to you how we can improve your business.
We would love to help you formulate investment strategies and streamline your processes to take your business to the next level. Our goal is to help you grow your business, find ways to invest more and increase your productivity.
Here are two other ways we help business owners grow their business:
- Take our free online assessment and see how much your business is currently worth (free 30page detailed report included)
- If you are looking to change Accountants or need advice on how to grow your business, organise a 1on1 session with a Sky Business Expert here
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Sky Accountants Ballarat & Bookkeepers Ballarat
Phone: 1300 328 855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
Postal Address: PO Box 2234, Bakery Hill, Victoria 3354
Sky Accountants Sunbury & Bookkeepers Sunbury (Melbourne)
Sky Accountants Gisborne & Bookkeepers Gisborne (Melbourne)
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Sunbury Office Address: Suite 13, 33-35 Macedon Street, Sunbury, Victoria 3429, Australia
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Postal Address: PO Box 270 Gisborne Victoria 3437