With COVID and the election taking the headlines in 2020, we suspect most farmers are wanting to hit the fast-forward button to 2021. Before you jump into the time machine, don’t forget to consider these top 6 accounting year-end tips.
YEAR-END ACCOUNTING TIPS
- Reconciliation. Make sure to reconcile all accounts including your checking, saving, credit lines, and credit card accounts by using their statements. Traction makes this easy with an automated process while other systems might be a bit more manual. By not reconciling, you could end up with a payment due that you had not planned for.
- Backup or Archive Your Data. If you are using a desktop solution, it is important to make a backup before year-end. Because you are dealing with USBs and external hard drives, it is good to make multiple backups in case you experience hardware failure. When you move your operation to Traction, you will no longer worry about this step because your data is backed up automatically via the cloud.
- Enter Details for All Transactions. Make sure to enter all transaction details prior to year-end. One of the nice features of most accounting systems is being able to add a transaction without details, allowing you to keep working and worry about the hard stuff later. So don’t forget to go back and enter missing details prior to year-end. Accounting solutions like Traction reduce potential mistakes by offering filtering tools to find missing details easier.
- Verify Loan Balances. Match up your loan payment details to amortization statements or bank statements. If these amounts don’t match, it typically means a payment had the wrong principal and interest breakdown.
- Personal vs Farm Expenses. Make sure that you are not mixing personal (family living) expenses with your farm expenses. This can easily happen when personal items are being paid for with your farm checkbook.
- Review Your Account Balances. Look closely at your expense and revenue accounts, checking any obvious red flags. If you see any suspicious activity, click on the transaction to drill-down for more details. With Traction, virtually all reports (and account register) have a ‘drill-down’ feature to see more detail with little effort. This way you can easily fix transactions.
Following these easy steps will enable more control of your business and reduce the stressful moments going into the new year. Good luck!