Set your farm up for record-keeping success

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Hello, northeast Ohio! Tax season is upon us, and kitchen tables have started the accumulation of receipts, invoices and other financial records.

It doesn’t matter what size or type of farm you have, the amount of money that goes through a farm each year is staggering and trying to keep track of where all of this money is coming from and going to can be a real challenge. Luckily, there are many tools and strategies out there that can help make your life easier when it comes to tax season.

The ”farm folder” — an unorganized mess of receipts busting out of its container — seems to be a standard in most farm operations. While it may not actually be a folder, but your truck’s glove compartment, a pile on a desk or an old Amazon box, this is the dedicated location where receipts are tossed throughout the year until February rolls around. While this is an easy, cheap and convenient strategy, it also has the potential to become a headache at the end of the year. Unorganized folders increase the likelihood that something will get missed or overlooked. Finding a way to file receipts efficiently and on a regular timeline can help ensure that no expenses are forgotten. Not to mention, trying to interpret faded store receipts or scribbled notes several months later is a special type of torture.

Maximize the folder system

Every farm has a folder because it works, but there are ways to maximize its use. As one suggestion, you could try using more than one folder. A three-ring binder with a folder corresponding to each farm expense line from the IRS Schedule F might make sense for some, even if your operation doesn’t need a dedicated folder for each expense line.

If you only have a few fertilizer receipts, combine those in a folder with another expense. With this strategy, you can eliminate the sorting of receipts at the end of the year. And an organized folder will be appreciated by any tax professional.

Try digital

If paper seems to cause you problems, digital tools may be a better option for your farm. There are numerous software companies that offer financial record keeping tools, including Quicken and Quickbooks.

With a few exceptions, most of these tools were not necessarily designed for farmers, so some additional set-up may be required in order to make the tool work for you. A key convenience is that many of these tools now offer apps that can be used on your phone, so you can record transactions the moment they occur. You may find it easier to take a picture of a receipt with your phone before filing it, rather than trying to track down bits of paper later.

Beyond tracking receipts, software options can also create invoices for custom field work, make payments, track inventory (hay, grain, etc.), and help with payroll for employees. Some even have options to automate these processes, which ensures timely payment to employees and suppliers even when you forget.

Before making the leap into using software you should thoroughly investigate each option to make sure it will meet your needs. These tools are not free, and most use a monthly subscription service. You can expect to pay between $50 and $200 per month for these tools to meet the needs of most farms.

As a college student, one of my instructors said something that still sticks with me: “If you don’t put yourself in a position to succeed, you’re destined to fail.”

In 2024, we had plans to keep ourselves more organized with better record keeping. We did a great job up until May and then failed once the season started getting busy.

For 2025, I am once again trying to find better ways to approach record keeping for our farm, and I hope you do, too.

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