By: Dianne Shoemaker, OSU Extension Educator
Give your farm business a gift that will keep on giving and dedicate a few hours to updating – or creating, if you don’t already have one- your farm business’s balance sheet. Whether you consider it a “year end” or “beginning” balance sheet, it really doesn’t matter. It will be your 2011 year end and your 2012 beginning balance sheet. What is really important is that it be completely and accurately done.
The balance sheet is a numerical snapshot of your business at a particular point in time. What was owned and what it was worth on that day balanced by how much was owed for what and to whom it was owed. While some of those whos, whoms and whats can be reconstructed fairly well months after January 1, others cannot.
There is no substitute for going out during the first week of the year and inventorying animals, feed, seed, fertilizer, fuel, supplies, and any other inputs that are used in production at your farm operation. At the same time you are gathering all sorts of financial information for tax purposes, update checking, saving and hedging account balances. When all final 2011 loan statements arrive in the mailbox or via internet, update loan information on the balance sheet as well.
Good, complete financial statements including balance sheets are important management tools for all farm businesses, large, small, beginning, and on-going. Once good balance sheets and other financial statements are developed, using them to manage the farm business is the next step. The Ohio Farm Benchmarking Project can help farms with enterprise analysis of 2011. Contact Dianne Shoemaker at email@example.com for more information.