Chart of Accounts for a Grain Farm (With the List)

A chart of accounts is just the list of buckets your money goes into. Get the list right and the year-end statements build themselves. Get it wrong — or accept the default list that came with generic accounting software — and every February you're re-sorting a year of transactions by hand.

Two rules before the list

• Every expense account should map to a Schedule F line. If it doesn't, you'll rebuild the mapping at tax time.
• Keep the account list short and push detail into fields, crops, and enterprises instead. Forty accounts across twelve fields beats four hundred accounts.

Assets

• Checking and savings — one account per real bank account, no more.
• Accounts receivable — grain delivered but not yet settled, custom work billed out.
• Grain inventory — bushels on hand, valued separately from the receivable.
• Prepaid inputs — seed, fertilizer, and chemical paid for this fall for next year's crop.
• Growing crop / deferred crop expense — cost put in the ground that hasn't been harvested.
• Machinery and equipment, at cost.
• Accumulated depreciation — a contra account, not a subtraction you do in your head.
• Land, buildings, and improvements.
• Breeding livestock, if you carry any.
• Investments in cooperatives — patronage equity your lender will ask about.

Liabilities

• Accounts payable — input supplier and custom operator bills outstanding.
• Operating line of credit — the balance drawn, shown as current.
• Accrued interest.
• Current portion of term debt — the next twelve months of principal on equipment and land notes.
• Equipment notes, non-current portion.
• Real estate notes, non-current portion.
• Deferred taxes, if your lender requires them on the balance sheet.

Income

• Corn sales, soybean sales, wheat sales — separate accounts, not one 'grain sales' line.
• Crop insurance proceeds.
• Government program payments.
• Custom work income.
• Patronage dividends.
• Gain or loss on equipment sales — kept out of operating income.

Expenses

These follow the Schedule F lines closely on purpose. Seed; fertilizer and lime; chemicals; crop insurance; custom hire; fuel and oil; repairs and maintenance; machinery lease; storage and drying; trucking and freight; labor, payroll taxes, and benefits; cash rent; interest — mortgage and other, split; utilities; property taxes; professional fees; office and administrative; depreciation.

What makes it a farm chart of accounts

Three things generic software leaves out: separate crop revenue lines, prepaid inputs and growing crop as real asset accounts, and a current-portion-of-term-debt split. Those three are what let a balance sheet produce a current ratio a lender can read without a phone call.

Setting it up once

The cleanest start is to import last year's Schedule F and Form 4562, let those define the expense accounts and depreciation schedule, then add the five or six farm-specific asset and liability accounts above. You end up with a chart that already reconciles to the return you filed.