Farms are a massive part of the economy and daily life. This is because the goods they produce are some of the most fundamental parts of our modern diet: all of your milk, meat and vegetables come from a farm. Such an important business requires careful management to ensure its operations and finances are in good order.
This article will provide a few hints on managing a small farm’s finances and operations effectively. We’ll look at things like establishing partnerships, analysing your operating expenses, and more. The full list of topics we’ll cover includes:
- Establish a partnership
- Track your expenses carefully
- Consider using an accountant
- How Countingup can help with managing your farm’s finances
Establish a partnership
A farm is a challenging business to run, mostly because of the time-consuming nature of farming. Many of the tasks involved in maintaining a farm are very physical too, so you’ll need to be fit to do them quickly and efficiently. On top of all this, you’ll need to complete all the usual parts of running a business: managing finances, doing marketing, tracking sales.
The sheer amount of work that goes into running a farm means that it’s a perfect business to run as a partnership. Having two people to do the work means that you’ll find it much easier to balance your work and personal life, and everything should be done much faster with an extra pair of hands, too.
If you’ve already started your farm, it’s not too late: read our article on writing a contract for a business partnership to see how you can add someone to your team.
This is part of the reason why so many farms are family-run. If you have the land and family members interested in helping you out (whether they’re your spouse, siblings, or older children), look into how you can add them to your business plan. Just make sure you understand how to balance your work and family life — if you and your family share the same job, it can become difficult to separate your personal life from your business.
Track your expenses carefully
In farming, you’ll have a lot of large, expensive assets. This includes your specialised farming equipment, any vehicles you need for transportation, and even your livestock (if that’s the kind of farm you run). Maintaining all these requires a lot of money, so you’ll have a lot of expenses to record in your financial documents.
By keeping a careful eye on your expenses, you might find things you’re spending too much on or that you don’t need to buy at all. For a farm, these might be things like buying expensive food for your animals when there’s a better, cheaper alternative available. You also might notice you’re spending a lot on maintaining an old piece of equipment — you may actually save money in the long term by buying a new version.
Tracking your expenses with a simple app
If you have a business account, you’ll have a much easier time recording and tracking your expenses because those purchases will be entirely separate from your personal transactions. Countingup offers a great value business account, which is especially good for tracking expenses because of its receipt capture tool, automatic expense categorisation, and real-time profit and loss reporting.
A profit and loss statement is a financial document that shows how much money your company has made and lost over a set period. The Countingup app displays a real-time view of your profits and losses, updating as you make transactions on the business account.
This means you’ll be able to see and record any expenses as soon as they go onto your account. The app even gives you an idea of the overall health of your business, as it will show you net profit by automatically deducting the profits from the losses.
Consider using an accountant
Being a self-employed farmer means that you’ll need to split your time between working on your farm and running the business side of things. One of the biggest and most complicated parts of running a business is financial management. Without specialist knowledge or bookkeeping experience, it can be challenging to keep your finances organised and accurate.
As farmers have a lot to spend their time on, it might be smarter to delegate some tasks, and financial management is a great example. For example, instead of spending hours learning accounting, you can simply hire an accountant to do all of your bookkeeping.
Most accountants are highly experienced professionals — even if you spend the time learning how to manage your finances, an accountant will likely do the job more accurately and efficiently. As such, hiring one is a good idea to save time and cut down on any potential accounting mistakes.
It can be expensive to hire an accountant to do every aspect of your finances, so you might want to hold off on hiring one until you have a significant bookkeeping job that needs doing, like your Self-Assessment tax return.
In these instances (although it is more expensive), you may want to hire a chartered accountant. These are accredited accountants that have years of experience. They tend to have a particular speciality, too, so check if there’s an accountant in your area that specialises in doing accounting for farms.
How Countingup can help with managing your farm’s finances
Even with an accountant on hand to do the big jobs, running a farm means a lot of day-to-day bookkeeping that you’ll be responsible for. If you sometimes struggle with this task, consider using accounting software to make the job easier. The Countingup app is an excellent example of this kind of software.
Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are.
You can also instantly share your bookkeeping with your accountant without worrying about duplication errors, data lags, or inaccuracies. Seamless, simple, and straightforward!
Find out more here.