Do not use the excuse, “I’m not an accountant.” Many farmers are more production oriented and feel less comfortable with the record-keeping end of the business. You may need an accountant and in many some situations it will be important to the farm business; however, you will feel more comfortable with time and experience.


Spending time with your accountant and setting up an organizational system that helps produce the numbers needed at tax time will make life less stressful for both you and your accountant, as well as assist with management of the farm business.

Increasing your comfort level and knowledge of the numbers that drive both the production and financial ends of your farm business will help you make farm decisions beyond tax planning. Decisions such as adding a son or daughter to the business or determining if there is a need for off-farm employment can be aided by having complete financial records to review. Estate planning is another activity requiring sound financial records.

One last step to organization of the farm financials is to set-up a regular place to work, and the kitchen table doesn’t count! Dedicated office space and file space makes organizing paperwork easier. Some things to think about including in your office space include: computer, printer/fax/copier, financial software and spreadsheets, phone and Internet access, filing space and most importantly work space to organize paperwork.

Once the information is organized, it will be easier to pull out the needed numbers to develop financial statements that provide a picture of where the farm stands financially. Annual development of financial statements will be the yardstick by which the progress toward financial goals of both the farm and the family can be measured. Lenders are also interested in reviewing the farm business’s financial statements before extending credit.

One important financial statement to the farm family and also one lenders will ask for each year is a balance sheet. The balance sheet is a snapshot of how funds are invested in the farm business (assets) and the financing methods used to purchase such assets (liabilities) at any one given point in time. Assets include items such as: fertilizer and supplies, livestock, stored grain, machinery, land, and cash. Liabilities are unpaid accounts, notes and mortgages. The farm’s net worth or equity is determined by the value of total assets less total liabilities.

Farm managers can use the comparison of balance sheets over several years to determine if the farm’s net worth is increasing or decreasing. Also, the comparison between total current assets to total noncurrent assets will help you determine if too much or too little capital is tied up in permanent investments. If your balance reflects primarily noncurrent assets, your business will be less flexible than one with sufficient current assets. Some flexibility is good for the business. These are just a couple of examples of how a balance sheet can be useful to your farm business.

The balance sheet is typically developed at the same time each year. What better time to put together your farm’s balance than at the start of a new year?

There will be a free Landowner Seminar on Preserving Farmland, Natural Areas and Waterways with Conservation Easements 6 to 8 p.m. Jan. 29 in the Wilmington City community room at 69 N. South St.

Speakers will include Kristen Jensen from the Farmland Preservation Office of the Ohio Department of Agriculture. Krista Magaw of Tecumseh Land Trust along with Laura Curliss of the Clinton County Open Lands, Inc. ODA is making this one of their “official” trainings, for the Agricultural Easement Purchase Program (AEPP). Voters passed the Clean Ohio Bond issue renewal in November, which is allowing the AEPP to continue. The AEPP program is a competitive program that funds the purchase of agricultural easements on farms in Ohio. Farms are scored based on several criteria (soils, acres, conservation practices, location, etc.). Kristen Jensen will talk about the specifics of the AEPP and their donation program. Krista Magaw and Laura Curliss will also talk about conservation easements in general and the role of local land trusts in land preservation.

To learn more about the AEPP program, go to http://clean.ohio.gov/ and at the bottom of the page click on the “Farmland Preservation” icon. It will take you to the Clean Ohio Farmland Preservation page. This program is hosted by: The Ohio Department of Agriculture, Office of Farmland Preservation, Clinton County Open Lands, Inc. and Tecumseh Land Trust. For more information contact: Kristen Jensen (614- 728-4203) or Laura Curliss (513-600-7171) with questions.

Ohio State University Extension embraces human diversity and is committed to ensuring that all research and related educational programs are available to clientele on a nondiscriminatory basis without regard to race, color, religion, sex, age, national origin, sexual orientation, gender identity or expression, disability, or veteran status. This statement is in accordance with United States Civil Rights Laws and the USDA. Keith L. Smith, Associate Vice President for Agricultural Administration; Associate Dean, College of Food, Agricultural, and Environmental Sciences; Director, Ohio State University Extension and Gist Chair in Extension Education and Leadership. TDD No. 800-589-8292 (Ohio only) or 614-292-1868.

EDITOR’S NOTE — Tony Nye is an Extension agent for The Ohio State University Extension office for Clinton County in natural resources and agriculture.