You are limiting the financial success of your farm business due to your bookkeeping mindset.
Maintaining good accounting records or any bookkeeping is generally regarded by many as more of a chore than something that can benefit your business.
Because the role of tax compliance is attached to your bookkeeping, and because this is compulsory and offers no direct benefit to your business, we can learn to resent it. The problem with this bookkeeping mindset is that you inadvertently lose all the actual value of bookkeeping for your business.
Financial record-keeping should not be just for your accounting and tax department; it should be a gift for you and your business.
The best way to think of your bookkeeping is to imagine that there is no tax compliance involved and that you are keeping your books purely for cash flow management, business intelligence, reporting, and analysis.
Business intelligence, reporting, and analysis are the core purposes of the Agrimaster accounting system. Like all suitable accounting systems, it manages tax well, yet it wasn't the core focus of its design. It was developed with the help of farmers and their advisors to help you optimise your farm business by maximising your business returns.
Good farm financial management software ensures that your day-to-day bookkeeping activities create a set of historical data specific to your farm business that you can trust. You can then use this data to track your actual performance against your forecast and analyse your business at critical intervals to improve each year.
Regarding tax, there are two crucial things to remember:
- Ensuring that you enter accurate data and have supporting invoices to back up that data in case of an audit
- Calculating your tax liability correctly
Any good farm management accounting platform should handle all this in the setup, so it's automatic in your general ledger and your cash flow budgets. Therefore, when entering your accounting records, the tax obligations are essentially on autopilot, freeing up your mind to focus on your farm business.
As a result, the time you spend recording your accounting data can be redirected to focus on improving the data captured and gaining insights for your business.
Financial record-keeping should not be just for your accounting and tax department; it should be a gift for you and your business.
Tax record-keeping is essential! Because if we don't pay it, we could end up in jail. However, I strongly encourage you not to approach your bookkeeping role with a tax-focused mindset.
You will change your relationship with bookkeeping once you update your bookkeeping mindset and view your farm financial record-keeping as a business intelligence and insights tool. It will no longer feel like a chore, as you can now see how it will benefit you and your business.
