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Basic Farm Accounting and Record Keeping Templates
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This project was funded by USDA's Outreach and Assistance to Socially Disadvantaged Farmers and Ranchers (OASDFR) program (Project # 2009-00705), part of the National Institute of Food and Agriculture.
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Table of Contents
**IF YOU ARE OR PLAN TO BE CERTIFIED ORGANIC**
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1
Chart of Accounts
You will also need to keep records of the following things:
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Projected Farm Budget
1) Purchase of non-treated, organic seeds or transplants. If you purchased conventional seed (still needs to
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be non-treated) you will need to show documentation that you tried finding it organically first. Contact your
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3
Cash Flow Budget
organic certification agency for more information.
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Income & Expense Statement
2) Harvest yields. The inspector will need to do an audit from seed to sale, and will need to see how much of
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a particular crop you harvested.
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Balance Sheet
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3) Soil amendments or inputs. You will need to show a log of all the things you have added to the soil over
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6
Income Records
the course of the season
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Expense Records
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How to use these forms:
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1The Chart of Accounts is the starting point for setting up your books. It's an index of all of your accounts, organized by a "Type" (Assets, Liabilities, Equity, Income & Expenses). These "types" determine how the account will behave. The numbers are a coding system professionals use to organize accounts into these specific groups, which helps as a business gets more complex. See the Lesson 3 presentation that accompanies these materials for further explanation on the types of accounts. You can edit and expand these categories based on your own operation, and assign code numbers according to your own organizational method. In setting up your chart of accounts, remember that you are organizing your financial information so that you can get what you want back out of it. At the end of the year, what level of detail are you going to want to know about your sources of income and how you are spending your money?
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2Projected Farm Budget: If you are not yet farming, you will want to create a projected farm budget before your first season starts. Since you don't have any numbers yet to work from, you will need to estimate your income and expenses based on the markets you expect to enter, and your best guess as to how much you will spend on what. This can be difficult and frustrating, but it doesn't have to be perfect! Talk to other farmers to get a sense of costs, and remember that this information is just an estimation to help you see whether your buisness plan is going to work or not. Keep the formulas in the total columns, and also across the bottom in the Monthly Net Profit/Loss rows, and fill out the rest with your numbers. You can also add accounts to both the income and expense categories that are more appropriate for your own farming business
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3Cash Flow Budget: For those already farming, use a cash flow budget to help you see what happened to your money last year, or in years past. You should be recording your income and expenses in the cash flow budget each month of the current year to understand what is happening in your bank account. The advantage of a cash flow budget is that it tracks how cash flows in and out of your accounts. You can use it predict months with high expenses and low income, and take action to ensure you have enough cash to cover your expenses.
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4Use the Income & Expense Statement to see the profit of your farm over a particular period of time. It could be over the month, each quarter or over the year. This example is for the entire year. The totals here are linked to the totals from the Cash Flow Budget, which you can see if you click on the cell. This allows you to enter your data in the Cash Flow Budget and have the I&E statement calculate your profit and loss automatically. You don't have to enter the numbers again on this form. Keep the formulas intact, but add account categories that are more appropriate for your business.
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5The Balance Sheet gives you the value, or net worth of your business at a particular day of the year. Most farmers only do one at the end of the year. There are two linked cells in this spreadsheet - the total in your cash account from the Cash Flow Budget at the end of the year, and the Total Net Profit After Taxes in the I&E Statement. Depending on what day you do the balance sheet, you may need to adjust the cash account to reflect the accurate amount in your bank account. Assets show how much you own, Liabilities shows how much you owe, and Equity shows the difference, which is the net worth of the business. Equity is also the amount of capital investments all partners contributed to the farm, and where you would put the profits of the farm if you wanted to reinvest them into the business.
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6 & 7Income & Expense Records: These last two sheets are record keeping templates for Income and Expenses. You can adapt each of these as needed. NOTE: If you are planning to have wholesale accounts, we recommend keeping a separate record of who owes you money (Accounts Receiveable). This can be done simply with a Produce Out Log in the cooler. We recorded the date, the product, amount, where it was going and how much we charged. Then we marked it paid when we received a check, but until then, it was left open so we knew it was an open invoice.
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Author:
Marisa Alcorta, NCAT Agriculture Specialist
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Farm Partner, The Cloverleaf at Bridgeway Farms 2012
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Thank you to the partners of The Cloverleaf at Bridgeway Farms for sharing your financial information for this project
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© 2012
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