This Level 1 financial record-keeping module is designed for producers that are new to farm financial record-keeping or who may already keep records but are unsure of what information is worth keeping or how these records can be used.
Keeping your farm financial records up to date can be one of the most effective ways to measure profitability and achieve a higher return for your effort. Preparing and understanding your operation’s financial situation is an important step.
What are the benefits of keeping farm financial records accurate and up to date?
- Easier to prepare accounts at year end
- Help plan for GST/HST/CPP payments
- Avoid over/under tax payments
- Ability to pay bills on time
- Identifying gaps in cashflow
- Identify strengths and weaknesses in the farm business profit centres
Records are situation dependent.
The type of information your records contain will depend on your situation and other factors such as8:
- Business type: whether you are full time, part-time or hobby farm
- The format you use to keep your records (paper, electronic or a combination of the two)
- If you have converted any paper records or supporting documents into an electronic version
- If you are involved in e-commerce such as online sales
- If you are a GST/HST registrant
- If you are an employer
For many producers, you may not have a lot of background in accounting practices or have the time available to do your own accounting. Hiring an accountant, bookkeeper and/or tax advisor may be worth the investment for your operation. This can also ensure your business is up to date with any yearly changes to Canada’s agricultural tax codes; saving the farm time and money.
Prepare before meeting with a financial advisor.
Before meeting with an advisor there are some things you can do ahead of time to save time and money:
- Store all documents (receipts, invoices, statements, etc.) in one location. This will make the information you need easier to find and save you some time later.
- Separate documents according to category (income, expenses, payroll etc.). This will again save some time but will save you some dollars because your accountant will charge you to do this.
- Speak with an accountant about the goals for your operation. Your accountant can help you reach your goals and make a financial plan for the next year.
- Meet with tax advisors to help navigate the system and make the best choices for your operation.
- Review your financial records quarterly or annually to compare to your financial goals.
- Keep an up-to-date list of items that will depreciate in value such as buildings and equipment.
Learn more
- For more information about what can be claimed on your taxes in Canada, visit the CRA website.
- For more information about specific records to keep for income tax purposes, there is an in-depth section on the CRA website.
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Record-Keeping Version 1.0
Ce contenu a été révisé pour la dernière fois en Janvier 2020.