Welcome to the January installment of my Month-By-Month blog series. This month is all about the money (or lack there of), but before I get to that let's review job functions on the farm.
Everyone on a farm has roles that they specialize in: owner-operator, bookkeeper, truck driver, equipment operator, meal preparer, logistics (i.e. person that gives rides back and forth from the fields)...the list goes on and on.
Travis is the operator of our farm. His name is on all of the paperwork, and as far as the government is concerned he is the owner of our business.
Currently, I am our operation's only employee. It sounds wrong on so many levels, but my "boss" is my husband...or so I let him think.
We also share many responsibilities and resources with my in-laws, even though their business is considered separate from ours'.
Our roles may change from day-to-day, but we each have certain things that we specialize in. It is similar to how a couple might split tasks around a household, only on a larger scale.
Since we do not raise any animals on our farm (besides our children), much of our time during the winter months is spent in the office doing paperwork and planning for the upcoming growing season.
January is just that for me: the month of bookkeeping.
|No fancy office here - our bedroom and office share a room.|
And when I say "month," I mean literally almost every weekday, sitting in front of a computer, entering income and expenses, and then auditing myself.
Not exactly what you think of when you think of a farmer, is it? Some farmers may hire someone else to do their bookkeeping, but we do it in-house.
Typically I like to wrap-up our books for the previous calendar year within the first week of January. This year, I was a bit behind schedule.
Somehow by having an infant and two other children under age five, and working full time in the field during the growing season, I failed to maintain our bookkeeping in our farm management program on a regular basis.
I still was organized. I balanced our checkbook and credit card transactions almost everyday through out the year using Mint.com. I put our receipts in the binders I use to sort by category within the computer program (crop sales, fuel, repairs, etc.).
|One year of bank statements, check stubs, and (mostly) receipts.|
It is not unusual for me to daily
hound ask Travis for receipts or break-in search his email
for information on a certain online transaction.
I constantly have a pulse on our cash flow, which is important in farming because you do not get paid on a regular basis. Having a regular paycheck deposited into your checking account every two weeks may only happen if a spouse has a job off of the farm, which is not in our case.
Most of our income is planned months in advance based on grain contracts - many times for crops that are not even in the field yet. Travis can only contract, or promise to deliver, a reasonable percentage of our estimated yield (the amount of grain that is grown). The estimated yield is based on many factors including type of crop, the soil on a certain field, to the amount of fertilizer used (plant food), and the amount of water a field receives...and we don't control the weather.
Sure, we hope that a crop grows a lot more than we plan for, but we can't promise to deliver an exaggerated amount of grain to the elevator!
Contracts are based on the market price for certain types of crops, but we also have to make sure we time crop sales and contracts correctly based on foreseeable large expenses in our business (seed, fertilizer, and chemical purchases, crop insurance premiums, etc.).
However, a sometimes a budget only goes so far. Sometimes the best laid plans don't go according to plan.
Farmers might have unexpected repairs or equipment purchases that throws of the plan altogether, a crop does not produce as expected, or the market price for grain that you didn't have on contract is much lower than expected. That is when a farmer may have to borrow money to keep the farm going without bouncing checks.
This is where good bookkeeping really comes into play. At the end of the year, Travis puts together a balance sheet based on the reports I print out on our income and expenses. It is much like a report card for our operation.
|33 pages and 1,844 transactions later...|
Although Travis and I avoid debt as much as possible, it is as much a part of farming as it is with any business. There are loans available - if you have a healthy business that a banker is willing to lend to.
We have a relationship with a lender that meets with Travis each winter to discuss our balance sheet and our plans for the upcoming growing season.
Season? Did someone say tax season?!
I did my part in January by getting our finances in line by our completing 2014's bookkeeping - even if it was a month later than expected. Now Travis gets to complete our taxes by March 2nd, the deadline for farmers' taxes.