Good farm records backed up by an organized filing system
can increase efficiency and profits in your farm business.
"Ideally, you should be able to retrieve any receipt in a few seconds," says Erlin Weness, farm management educator with the University of Minnesota Extension Service.
Your filing system has a dual role: easy retrieval of documents for personal reference or proof of payment, and verification of income and expense items if the Internal Revenue Service audits you.
Set up individual files for each income and expense item, Weness advises. He says the labels on your files should be the same as your account codes in your farm accounting system. Other files you'll need include government transactions, capital items purchased, money borrowed and loans repaid, and non-farm income and family living expenses. Then add files for 1099s received and sent, and an "income tax" file.
More detailed information is available in a new article by Weness and co-worker Jim Christensen titled "Establishing a Farm Filing System." You can find it http://swroc.coafes.umn.eduat. Or, ask a county office of the U of M Extension Service to download it from the Internet.