Information for beginning farmers.
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Record Keeping is Good Business
At a minimum your farm will need a record keeping system for tax and legal compliance and it is highly recommended that you also keep yield and other farm production records that might be useful to making decisions on the farm. For example, many growers keep weather logs so that they can evaluate their practices and yields and then make better growing practice and crop variety decisions for the coming year. Many tools are available from www.smallfarms.cornell.edu/pages/resources/businessmanage/tools.cfm.
Profitability tutorial on the Northeast Beginning Farmer website:
https://nebeginningfarmers.org/farmers/achieving-profitability/profitability-tutorial/
Online Course on Recordkeeping
In October 2010, the Northeast Beginning Farmer Project at the Cornell Small Farms Program began offering an online course on Farm Financial Recordkeeping, taught by two Cornell Cooperative Extension educators, Bonnie Collins and Steve Hadcock. For information about the course, please visit nebeginningfarmers.org/online-courses/.
Paper Records
Small farms and many businesses just starting out find the shoebox method of accounting to be a good fit. Keep all sales receipts in one folder, expense receipts in another, maintain a capital asset depreciation log, and you may have additional folders for farm yield or other data important to the year. The advantage of this system is that it is simple and easy to do. The disadvantage is that the data is not well organized so when you need farm information you often have to sort through piles of paper and do all computations by hand.
Cornell Farm Account Book
Cornell and many accounting services have pre-formatted account books with categories common to agriculture and additional areas for yield and capital asset data. These are typically of nominal cost ($10-$20).
The advantage of the farm account book is that it is easy to understand and the information is well laid out in case you need to access it later. The disadvantage is that the information may not be laid out how you as a manager would like it, and it is still a hand-entry accounting system so entering farm information may take several hours per week. To order the Cornell Farm Account Book ($20) or the Cornell Classic Farm Account Book ($15) from CUP Services, a division of Cornell University Press, write P.O. Box 6525 Ithaca NY 14850, call 800-666-2211, or e-mail orderbook@cupserv.org.
Excel Spreadsheets
If you can use a basic spreadsheet in Excel or a similar program, this is a good compromise between
paper systems and more sophisticated recordkeeping programs. Many new farmers start out with a
simple spreadsheet like this one from Cornell (https://nebeginningfarmers.org/wpadmin/
media.php?attachment_id=4663&action=edit) (.XLS), which is intended for high tunnel crop
producers but can be adapted for any operation. If you don’t need to generate invoices and have a
relatively simple, small operation, a spreadsheet like this may serve your needs well for many years.
Quick Books
The most common software program for financial management is Quick Books; however, there are
more expensive industry-specific programs specifically designed for dairy farms or wineries, for
example. (Try searching online for “winery financial management software.”) If you are intimidated by
QuickBooks, try their SimpleStart program from Intuit (search for this online). It’s free and is a good
way to ease into using QuickBooks. If you are ready to upgrade at any point, you’ll be able to transfer
your records seamlessly into the full QuickBooks program. Check out your local credit unions, banks,
and Cooperative Extension to find out if they offer any QuickBooks trainings.
Farm Records Service
Some farmers choose to mail all invoices to an accounting service where the accountant will enter the information into a computer records system, provide you with detailed monthly business statements, and perform all tax functions.
The advantage of this system is that it provides a person who does not have the time, understanding of accounting, or computer skills the highest level of records information. The disadvantage is that this system has the highest cost and the monthly business statements take a few weeks to process and get back whereas the person utilizing an on-farm computer records system will have those statements in real time.
This fact sheet is part of the Guide to Farming in NY by Monika Roth et al, published by the Cornell Small Farms Program and Cornell Cooperative Extension. Fact sheets are updated once annually, so information may have changed since last revision. If you are reading a printed version of a fact sheet, compare revision date with online fact sheet publish dates to make sure you have the latest version.