The author is the dairy development manager for Vita Plus of Madison, Wis. He is a member of the board of directors with Citizens State Bank of Loyal, Wis.
a meeting with your accountant can occur any time of the year. Generally, it takes place near year-end for tax planning purposes and after the first of the year for the completion of taxes. Some dairy producers request and have a desire to conduct quarterly meetings with their accountant to have a better feel of their financial progress. This is better than waiting for tax time when the horse has been out of the barn for 14 months.
The days of bringing in the shoe box with billing receipts should be long gone, but I know some accountants will tell you it still does happen. Proper preparation on the dairy producer's part will be greatly appreciated by the accountant. Many dairies will have a non-CPA financial consultant gathering financial and cattle performance information on a regular basis during the year. These professionals help interpret regular dairy analysis. They work with many farms and are helpful in making producers aware of trends, but the general accountant will still be needed for tax preparation.
Regardless of who gathers the financial information, here are some helpful hints for you to prepare meaningful information for them. Dairy margins are far too tight not to gather and monitor critical financial information that is to be presented to accounting professionals.
1. A good record-keeping system is the foundation for gathering your daily income and expenses. Depending on the size of the herd and amount of information being generated, handwritten records are still used effectively. However, there are a number of good computer-based systems that generate electronic data. These systems are efficient for any size herd. Talk with your financial consultant and accountant to get recommendations of programs that they are familiar with.
2. Regardless of your system, the information must be entered regularly. Daily would be the best and anything beyond a week will make entries cloudy and overwhelming. Make sure you fully understand the computer program before making categories and plugging in numbers. Get proper training in the program even though you may be excited to simply get started. If you have a staff person making entries, make sure they are well-trained.
3. The key entry work needs to be done when you or the person doing the numbers is fresh and wide awake. Sitting down after a long work day at 10:30 p.m. and trying to fill in the blanks is not going to lead to mistake-free entries. It is tough to go back and change information on many programs once columns are filled in.
4. There may be a limited amount of time and need for your tax accountant to see quarterly updates. In many cases, this is the function of the financial consultant. They can compare the ending quarters with a projected budget. This will assist both of you in measuring predicted progress. Doing next year projections should be important to you and helpful to the financial people you are working with.
5. Having a year-end balance sheet and previous balance sheet in hand when meeting with your accountant at year-end will speed up their time. Most accountants will send out a balance worksheet for you to put down feed and livestock inventories. If you are a corporation or doing accrual accounting, this information is a must for the year-end tax preparation.
6. Sending your income and expense information electronically before your meeting will give your accountant time to enter preliminary information, making your face-to-face meeting more meaningful.
7. Make an appointment in advance of the office meeting. Some accountants will come to your farm but they still need some information ahead of the meeting.
Come prepared with your questions. You may have read an article on tax law changes. You may be considering a change on your dairy operation such as expansion. It is never too early to discuss a transition to the next generation if you have family members involved who have future interest in the legacy of the dairy. If a future departing plan lies ahead, a few years of a heads up could save income taxes.
Businesses keep growing
This day and age of numbers with a lot of zeros on the balance sheet makes it critical to have good financial people. The more you can communicate and the better prepared you are for your accountant, the more they can help you.
This article appears on page 39 of the January 25, 2014 issue of Hoard's Dairyman.
a meeting with your accountant can occur any time of the year. Generally, it takes place near year-end for tax planning purposes and after the first of the year for the completion of taxes. Some dairy producers request and have a desire to conduct quarterly meetings with their accountant to have a better feel of their financial progress. This is better than waiting for tax time when the horse has been out of the barn for 14 months.
The days of bringing in the shoe box with billing receipts should be long gone, but I know some accountants will tell you it still does happen. Proper preparation on the dairy producer's part will be greatly appreciated by the accountant. Many dairies will have a non-CPA financial consultant gathering financial and cattle performance information on a regular basis during the year. These professionals help interpret regular dairy analysis. They work with many farms and are helpful in making producers aware of trends, but the general accountant will still be needed for tax preparation.
Regardless of who gathers the financial information, here are some helpful hints for you to prepare meaningful information for them. Dairy margins are far too tight not to gather and monitor critical financial information that is to be presented to accounting professionals.
1. A good record-keeping system is the foundation for gathering your daily income and expenses. Depending on the size of the herd and amount of information being generated, handwritten records are still used effectively. However, there are a number of good computer-based systems that generate electronic data. These systems are efficient for any size herd. Talk with your financial consultant and accountant to get recommendations of programs that they are familiar with.
2. Regardless of your system, the information must be entered regularly. Daily would be the best and anything beyond a week will make entries cloudy and overwhelming. Make sure you fully understand the computer program before making categories and plugging in numbers. Get proper training in the program even though you may be excited to simply get started. If you have a staff person making entries, make sure they are well-trained.
3. The key entry work needs to be done when you or the person doing the numbers is fresh and wide awake. Sitting down after a long work day at 10:30 p.m. and trying to fill in the blanks is not going to lead to mistake-free entries. It is tough to go back and change information on many programs once columns are filled in.
4. There may be a limited amount of time and need for your tax accountant to see quarterly updates. In many cases, this is the function of the financial consultant. They can compare the ending quarters with a projected budget. This will assist both of you in measuring predicted progress. Doing next year projections should be important to you and helpful to the financial people you are working with.
5. Having a year-end balance sheet and previous balance sheet in hand when meeting with your accountant at year-end will speed up their time. Most accountants will send out a balance worksheet for you to put down feed and livestock inventories. If you are a corporation or doing accrual accounting, this information is a must for the year-end tax preparation.
6. Sending your income and expense information electronically before your meeting will give your accountant time to enter preliminary information, making your face-to-face meeting more meaningful.
7. Make an appointment in advance of the office meeting. Some accountants will come to your farm but they still need some information ahead of the meeting.
Come prepared with your questions. You may have read an article on tax law changes. You may be considering a change on your dairy operation such as expansion. It is never too early to discuss a transition to the next generation if you have family members involved who have future interest in the legacy of the dairy. If a future departing plan lies ahead, a few years of a heads up could save income taxes.
Businesses keep growing
This day and age of numbers with a lot of zeros on the balance sheet makes it critical to have good financial people. The more you can communicate and the better prepared you are for your accountant, the more they can help you.
