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5 easy tax tips

5 easy tax tips for those who half-ass it — Like me

Every year I make the promise to myself that I will tackle the farm paperwork like a boss babe AND every year I fizzle out after April when the field work picks up. Between keeping the kids hydrated and being the go-to person when parts need to be picked up I never make the time to sit down and do THE paperwork when farm life gets busier. That usually means when December rolls around I start to realize that come January I’ll have a lot of time at my desk playing catch-up. Here I am five days out from our tax meeting with GreenStone FCS (and their ahhhmazing tax accountant) with very little done and I’m not stressed out!  Over the years I have picked up a few tips that help me, the half-ass organizer, be organized.

ACCOUNTING CODES for everything.  Every income and expense has a numerical code associated with it; this allows me to itemize each entry easily in my checkbook ledger so that I can direct the total to the proper category. 

  • All of our incomes are numbered 0-99, obviously I don’t have that many but I have added new numbers over the years when I don’t know which category something can be combined with (like the MPP got it’s own number in 2018).  Example: #1 is crops and pasture payments from the FSA, #7 is milk and milk product sales, #13 is livestock sales from cull, beef, or steers, and #16 is off-farm income. 
  • All of our household expenses are numbered 100-199, items like personal credit cards, non-farm vehicle repairs and gas, groceries, cash withdraws, and babysitting. We have a personal account for these types of expenses but there are moments when the business card/checkbook is all I have in my wallet and seeing these codes all get put into a personal withdrawal category from the accountant anyway.
  • All of our farm expenses are numbered 200 and up.  Items like# 202 are machinery repair; this allows me to take all those debit transactions from the three different auto parts store into one column.  The expenses continue to include #210 which is livestock expenses and has a total from the veterinarian, the RFID tags, the medical supplies, and anything else related that I can group together.  

A BIG SHOE BOX and a small filing cabinet. First of all — B U Y the shoes, whatever shoes you’ve been contemplating you have my permission 😉 Secondly, papers stress me out; piles of paper are my kryptonite so I take the whole “out of sight” thing seriously.  My expenses that need quick reference throughout the year get put into the filing cabinet: bank statements and taxes, incomes like milk checks, statements from the sale of livestock, and non-farm income stubs, expenses like operating supplies for the milk house, fuel, feed, animal health, and equipment repairs.
Try to keep your filing cabinet to NO MORE than 10 files, I keep these as specific as possible to minimize clutter and everything else goes into a really big shoe box; all those debit transactions, or garbage pickup statements that once listed in my checkbook ledger with their accounting code RARELY require a second glance. 

QUICKEN Home and Business allows me to write out my checks and create debit card transactions and utilize my accounting codes to total my incomes and expenses with each transaction; or some other accounting software. When I head to my accountant I print a few reports from this program and include them in a BIG 3-ring binder of year end details.

KNOWING WHAT YOUR ACCOUNTANT NEEDS and don’t fuddle with the tiny details.  I know at every meeting my accountant wants to know certain changes in our business so I keep a notebook on my desk with pages for these adjustments, I keep it easy to access so that I am reminded to record these little details.

  • Did we BUY or SELL any equipment… but she doesn’t care much if the total is under $600 so in my accounting codes I have #224 as equipment purchased and# 224a as small equipment. The expenses that are over $600 would go into my filing cabinet but anything itemized as #224a would go into the shoe box.
  • Did we BUY or SELL any livestock. In my notebook I will record which animals we sold, and how much we received for them. I detail the deductions on each check so that I can add them to my expense codes for advertising and trucking.
  • Interest paid during the year on loans; this is something I usually do in the car ride to the meeting because my husband needs to authorize the information since it is in his name. Gallons of fuel used; I call the fuel company and get the total gallons instead of adding the total myself at home from my receipts because they are in the BIG SHOE BOX, out of sight people.

A THREE RING BINDER occupies my desk from January until the tax meeting and everything that is sent to me regarding the end of year business and personal information is three-hole punched and put in there. Basically if it is important to send to me by the end of January then my accountant needs to see it. The three-ring binder includes everything for my accountant; the final totals for all my accounting codes, the notebook from my desk of important changes in the business, cattle movement, and 1099’s/W2’s. Sitting down at a 60 minute meeting to go over the binder generally results in my accountant having everything she needs and I don’t leave with a big to-do list of things to e-mail her. 

I hope these tips help those who are unorganized like myself. We can call ourselves half-assers OR we can just admit what is obvious – we don’t fuddle with the tiny details and instead focus our precious time on the information that is needed.  What are your tried and true tips for getting through farm paperwork?

Xo, Nicole

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