Sweet Grass County Farm Bureau is sponsoring Annie’s Project, a series of classes designed by women for women in Agriculture to foster problem solving, decision making and record keeping skills in women managing a modern farming and ranching enterprise. Our second class focused financial literacy and resources.
De-stress Your Tax Season
With tax time rapidly approaching, it is likely many of us are feeling a heightened sense of stress and worry in having to deal with year-end bookkeeping duties. For some, this truly seems like an insurmountable task while for others, it’s no problem at all, just business as usual. Obviously, some people are very comfortable with “the numbers” while others find money management and record keeping a source of anxiety and fear. Brandi Schweigert with Opportunity Bank of Montana and Jessica Duray from Northwest Farm Credit Services provided us with expert advice in understanding finances and lending tips and helped to sooth some of those fears.
According to the Small Business Administration, “Effective financial management gives you the tools to chart your course into the future, adjust your direction when needed and help you find your way through challenging times.” It’s imperative for your business to be profitable that you understand as much as possible about your entire financial picture.
On many family farms and ranches, the bookkeeping duties often reside with grandma, mom, or mother-in-law while the younger generation handles the physical day to day tasks of running the operation. What happens when that one person in charge of financially managing the business is no longer able or willing to do the job? The key to being able to one day take on those responsibilities is understanding what is being done and to seek advice from trusted sources to thoroughly grasp your business’ current financial status and bookkeeping system. Northwest Farm Credit Services website contains many free resources and webinars and e-learning options available to everyone. Visit www.northwestfcs.com and take a look at all they offer.
Financial Success on Your Farm or Ranch
When preparing your financial documents keep in mind who will need to see them and when. Your lender, accountant, shareholders, partners or family members all should have a clear and accurate picture of your business. You need to keep in mind that a Balance Sheet gives a “snapshot” of a moment in time while a Profit and Loss Statement along with a Cash Flow Statement will give a longer - term view of the business operations. Remember to prepare these statements at roughly the same time of each year to provide your lender with consistent information. The more detail provided to your lender, the better your changes are of being able to successfully meet your borrowing needs.
Both Schweigert and Duray stressed the importance of monitoring your credit report. Contrary to popular belief, checking your credit report will not have any effect on your credit score. You can get up to three free reports each year at www.annualcreditreport.com. Study your personal credit report, make sure it is accurate and immediately act to fix any errors. Be prepared to explain to your lender any credit issues that may be on the report.
Pay attention to the basics:
- Use business accounting software (QuickBooks, Quicken, Excel or apps for smartphones and iPad/tablets – check with your accountant or lender for advice)
- Open separate business and personal bank accounts – avoid co-mingling funds.
- Reconcile your checking accounts monthly
- Run a Profit & Loss Statement
- Pay yourself with an Owner’s Draw only after the business expenses have been paid