How to improve your business:

1. Start with yourself.  Prepare yourself to be successful.
2. Find a problem, then solve it.
3. Understand your numbers. (Sales revenue, gross profit, variable cost, fixed cost)
4. Find the correct customer.
5. Keep personal and business money separate.
6. Manage you cashflow.
7. Expand your offerings.
8. Understand your business debt.  Know where the debt is.
9. Train your team.
10. Continue to improve.  Always learning. 

Managerial accounting is focused on providing information for the farm owner with operational decision making.  This involves collecting and analyzing information about the farm and providing reports.  Examples of questions managerial accounting will help solve:

• Buy or rent land?
• What is the correct size of the farming operation?
• What crops should be grown?
• Do I need to purchase additional equipment?
• How much labor is required for the farm business?

Revenue Recognition is an accrual accounting principle that determines when to record and report a sale.
A sale may be recorded when the following has occurred:

• You have provided something for your customer (product or service) and it is complete
• Agreed upon a price
• An exchange has taken place

Accrued interest is the amount of loan interest which has accumulated since the initial loan or since the last loan payment, which interest has not been paid.  In other words, interest which is due but has not been paid.

For the borrower the accrued interest amount is recorded as a current liability on the balance sheet and as interest expense on the profit and loss statement.

Rate of return on farm assets is a financial ratio which measures the profit earned based on the farm's assets.  

To calculate:  Rate of Return on Farm Assets = Net Income / Total Assets

The higher the ratio, the better.  The greater the number, more profit per dollar of farm assets.

This will help you evaluate if the farm is using the assets efficiently. 

It is important to watch the numbers.  Be Smart!

Investment in Growing Crops is a prepaid expense reported on the balance sheet.  These are prepaid expenses to produce a crop which is not yet harvested.  Each month during the growing season, these costs are accumulated on the balance sheet.  When the crop is sold these costs are removed from the balance sheet and reported as cost of goods sold on the profit and loss statement.  Example  of costs to include in growing crop investment would be:  farm labor, repairs & maintenance, seed, fertilizer, fuel, insurance, utilities and any other direct cost associated with the growing crop.

One of the biggest mistakes business and farm owners make is mixing business cash with personal cash.  This is a NO NO!

You own a business and you have free access to the business funds, but those funds are not for your personal use.  The business earned the revenue and paid the expenses the remaining profits are the businesses.  As an employee of the business your are paid  a wage for your work and should be compensated.  The other money should remain in the business.

Keep two separate checking accounts.  One for the company and another for your personal use.  Do not mix the funds.  Pay your personal expenses out of your personal account and the business expenses out of the business account.

This is the first step in getting a handle on your finances.  

Build your wall!

Working Capital my hold the key to your farm's success.  It is the money available to meet your current expenses.

How to calculate working capital:
Total current farm assets - Total current farm liabilities = Working Capital

The higher the number, the better able the farm will be to cover their short-term obligations.

Cash keeps the wheels turning.

Transportation cost to market - this is the cost of moving finished farm products from the farm to the market.  This cost does not increase the value of the product, merely moves it to the market.  Transportation cost to market is not included in the production cost, but is a variable operating expense.

This is a short 5 step, how to register a business in Idaho:

1. Choose a name for the business
2. Check if the name is available in Idaho by searching here:  Idaho Business Search
3. Apply for an Employer Identification Number (EIN):  Apply Online Now
4. Register your new business with the State of Idaho:  Create An Account  (There is a $100 fee to register with Idaho)
5. Register with the Idaho State Tax Commission by clicking on the bottom of the page:  I am ready to register my new business

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