Most farm operations use cash basis accounting over accrual. Cash basis records the transaction when money is exchanged. Accrual basis accounting occurs when the expense is billed, and revenue is earned. If your farm is on an accrual basis, it will influence which programs you can use. Accrual accounting is more complex, which requires a more complex accounting system.
Online (Cloud) or Computer Based System
Records systems can be installed on your computer or be entirely web-based. PC Mars, a very popular farm software, would be installed on your computer. Quicken and QuickBooks are offered through online subscriptions and cloud based. Manager.IO can be used as a desktop app or cloud (online) based.
Farm Specific or General Purpose
Some systems such as PC Mars and Red Wing are built for farm use. These powerful systems have ready made expense and income categories designed for farm operations. Quicken and QuickBooks are not farm-specific, but farm-specific categories can be created.
Double or Single Entry
Determine whether the system you need can work with single or double-entry accounting. In single-entry systems, the transaction is entered into one place and strictly records money in or money out like a checkbook. Double-entry systems utilize one entry recorded in two places. Money is recorded in one account, and money is simultaneously recorded out of another account. Be sure and ask your accountant/tax preparer which they would prefer, which is likely double entry. Quicken is a single-entry system while QuickBooks is a double-entry system. Double-entry systems require a higher level of accounting knowledge.
Account File Downloads
A farm records system can download your account into your chosen program. Many banks, credit cards, and other financial institutions have this feature. This will cut down on the time you spend recording transactions. You will have to make edits to ensure the transaction goes into the proper account on your farm records system, but this is much less time-consuming than writing the complete transaction. This helps to keep the wording for your reporting consistent between recurring transactions. For example, “July Interest Received”, then “August Interest Received”, etc., instead of “July Interest Received” becoming “Interest for August” the next month, which makes the report appear more professional.
Cost
The industry is price-competitive for all budgets, and programs will vary in cost. Some programs require an annual subscription. Others are a one-time expense, but over time the system becomes outdated. Manager.IO, a non-agriculture-specific double-entry system, has farm-friendly elements to it, and the desktop-based system is free. The online version has a subscription fee.
Inventory
Most farmers don’t use integrated inventory systems. Sometimes there is an add-on cost for integrated inventory. Take a close look at a system that will integrate changes in grain inventory with a sales transaction as this will improve efficiency. Even Quicken, which is not farm-specific, can keep an integrated inventory if you store grain in your 403b retirement account and understand shares are bushels.
Reporting
The beauty of a truly good system is in the reports that can be generated. Farm-specific software will generate reports with farm jargon. Manager.IO can create reports where the wordings can be changed to farm specific. Quicken is less flexible with reporting, but the reports are solid. When trialing records software, be sure and look at the generated reports. Quicken and QuickBooks can produce reports for IRS forms such as Schedule(s) F for farmers, E for cash rent landowners, and Form 4835 for crop-share landowners. Other farm specific software does not assign income and expenses to specific IRS forms.
Support
Good support is very important, and more so if the farmer's skills in bookkeeping and interpretation of accounting information is not strong. Don’t expect help with farm issues from general software. Some companies offer live support and others offer only guides. The less expensive the product is, the less live support will be available. Oklahoma State Extension has a good amount of material available if using Quicken online.
Mistakes
I once interviewed a programmer/CPA for a particular farm accounting software about handling mistakes. I mentioned that I was struggling to figure out how to correct mistakes I had made. His response was, “don’t make mistakes.” He was serious. Most double-entry systems have an audit trail where changes in recorded entries are tracked in an audit report so that if balances are off, you can retrace what happened to create the error. Using Quicken, it is very easy to correct mistakes, but the program does not leave an audit trail. Therefore, any corrections are lost forever unless you back up the program after each transaction mistake using a different file name. This can make reconciling mistakes very difficult.
In the end, find the right farm record keeping software based on your farm needs. Use free trials to test out how the program “feels” for you.
Source : illinois.edu