Accounting essentials on the farm

ARCADIA, Wis. — A good accounting system sets the foundation for a successful farm business.

Cathy Kulig, certified public accountant, shared advice during a webinar hosted by Compeer Financial.

“One of the basic ideas is that you need to be consistent in your recording,” she said. “You’ll want to compare your results from one year to the next. This will give you a benchmark.

“Record your transactions in a timely matter. If you record your transactions on a monthly basis, you can keep an eye on things.

“You can compare one month to the next, one quarter to the next. It’s not fun to record an annual amount of transactions in one sitting.”

Remember that transactions are recorded at cost, not fair market value, Kulig said.

“When utilizing and developing an accounting system, you want to keep your personal transactions separate from business transactions,” she added.

Other tips:

• Report and analyze activity over a standard period of time: month, quarter, year, seasonal.

• Know that there is cash basis and accrual basis of accounting.

• Double-entry accounting is the most accurate — two entries, one debit and one credit, for every transaction.

Keeping an accurate accounting system helps you run a profitable business, maintain good cash flow, understand your finances and determine solvency.

Having an accountant for your records is like having a veterinarian for your cows, Kulig said.

Learn more at www.compeer.com.