Farm Accounting

   / Farm Accounting
  • Thread Starter
#12  
kensfarm
Just got off the phone with the IRS, ordered that publication
and a couple others that looked like it might help. Could have downloaded the "BOOK" but I don't like reading instructions on a TV/computer screen - I like reading the old fashion way. Thanks for the link

Ron
 
   / Farm Accounting #13  
Your welcome!

" I like reading the old fashion way. " Me Too!!! /forums/images/graemlins/grin.gif

I'm picturing.. sound asleep snorring on the lazy boy.. w/ glasses on.. tax publication sliding off your lap! /forums/images/graemlins/grin.gif
 
   / Farm Accounting #14  
Ron:

It depends on what you mean by "accounting". If you just want to account for your income and expenses any accounting program will work fine. Even Quicken for just receipts and disbursements.

Unless you really understand accounting, which you won't completely in a short course, I highly recommend you concentrate on receipts and disbursements and your bank balance. This means you don't try to track fixed assets and such in the balance sheet accounts, but rather run every thing (including purchases of assets and cost of building barns) through expense accounts, and let your accountant deal with the depreciation and such. Believe me, he can do it faster than he can straighten out your mess.

For your chart of accounts, just use schedule F categories, and add any other kinds of expenses not listed.

I am assuming you are a cash basis farmer.

If you raise livestock, and want the accounting software to keep up with that in detail, you might want to consider a dedicated farm package. Most small farmers will find such a vertical package too difficult.

For livestock you need to keep up with which were bought to feed out and sell, which ones were bought for breeding, and which ones were raised. You keep an inventory of the ones you buy and feed out and reduce your gain on sale by the amount you paid, and deduct the feed and other expenses as you go. The ones you buy for breeding are like equipment - you depreciate those. The ones you raise don't have a tax basis (cost) because you deduct all the related expenses as you pay them (if cash basis). There is no need to separate expenses for one class of animal versus another, unless you have an internal reason (management) for doing so. It would probably be too difficult to track. Give your accountant how many head of each class you sold during the year and for how much, and how many head of inventory or breeding stock you had on hand at yearend. When you sell raised animals the entire amount is income.

Section 179 applies to livestock as well as equipment. Does not apply to real estate. The current year section 179 deduction is limited to net income from trades or businesses. Salary income is considered trade or business income, so you could conceivably have a farm loss and still have a 179 deduction, if you have a salary or another busines that is profitable.

I am not a Quickbooks fan, but am certified for it and it is sufficient for most small farmers. Peachtree is better (in most cases), but usually not necessary for a small one-computer operation. Quicken is not accounting software - it is checkbook software. It is probably sufficient although quirky for the accountant to deal with.
Whichever software product you use just don't try to set up and operate a full general ledger unless you know what you're doing. Keep your bank account reconciled and properly identify your bank account transactions, then send the backup to the accountant. He will thank you for not biting off more than you can chew.
 
   / Farm Accounting #15  
AlanL:

Good explanation. Also, RonNY needs to understand that accounting for tax purposes, and, accounting for profitability are not necessarily related, i.e. what is going on for tax purposes and what is going on for profitability within various operations often differ. By far the best explanation (easy to understand for the beginner that gets the principles across) I ever found was in a book Farm Management publ by McMillan in 1921 by F.F.Warren ed by L.H.Bailey. It was part of the rural text book series published in that era. The principles haven't changed.

<font color="blue">Peachtree is better . . . </font>

Indeed. This program is derived from the old TCS program written in the late 70s-early 80s - one of the first accounting programs for micro computers. It was sold under various names including Rocky Mountain until it became Peachtree. Once they switched to 32 bit code in the early-mid 90s it became able to handle almost any size business even though still coded in basic (the older 16 bit only allowed access to 100 open invoices for clearing for example). Unfortunately, some outfit named Best software bought them out not too long ago and has crippled some parts of the program in recent years. However, even so, you are correct, it is by far more of a serious accounting package than the other "popular" programs mentioned in this thread and still easy enough to use.

JEH
 
   / Farm Accounting
  • Thread Starter
#16  
AlanL , JEH
I have given up on doing accounting and taxes myself - at least for this year, have an appointment with a local accountant who handles 3 of the 5 horse operations in this area. will discuss setting up software for my operation. Maybe in the future I can handle it but not now. I should have started much earlier thinking about this (Like Sept) but with tax season already here don't have enough time to learn.
Speaking of "PEACHTREE" in my Sunday paper "Staples" is running a sale on Peachtree Accounting 2005 software:
$189.99 - $25 instant rebate - $165 mail in rebate = FREE
maybe I'll save money if the accountant will work with Peachtree.
Thanks to all for your replies
Ron
 
   / Farm Accounting #17  
Most accountants will work with Peachtree. Sounds like a deal, as long as you don't need the added features of "Peachtree Complete Accounting" or "Premium Edition". You probably don't, for a farm.

PT has its quirks too, but I have been installing and supporting it since version 1.0. There was an old DOS version of Peachtree before that, but it has no similarity or relationship to that old dog at all. The existing Windows program was from an outfit called "Accounting by Design", but JEH says it came from another outfit before that , so I assume thats correct.

Your accountant should set it up for you, effective 1/1/05, and give you a primer. Peachtree seems to be a little intimidating right out of the box, hence QB outsells it a mile. However, just a little help from someone who is familiar with it will unlock the key to a very easy to use program.

One of my favorite features of PT is the ability to go back to a prior month and check the bank reconciliation a client did. This really helps with troubleshooting in which month a problem occurred. With QB, the bank reconcilation is good the day you do it. Once you finalize it, its gone forever.....

Peachtree also is less likely to sweep mistakes under the rug. I have had clients come in with their QB data and boast that everything came out perfect, the bank reconciled, and that I should have no problem (which means don't charge much). Then I find $20,000 or so in an account called "opening balance equity". This is the account that QB dumps errors into, while it congratulates you for successfully completing your reconciliation.
 
   / Farm Accounting
  • Thread Starter
#18  
Alan L
He will work with Peachtree

Once again, Thanks to all for your replies

Ron
 

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