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previous page Previous Page: Publication 225 - Farmer's Tax Guide - Farmer's Tax Guide
next page Next Page: Publication 225 - Farmer's Tax Guide - Kinds of Records To Keep
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pubs/p225-001.htm#en_us_publink1000131396

Chapter 1
Importance of Records(p3)

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Importance of Records

taxmap/pubs/p225-001.htm#TXMP26177aabIntroduction

A farmer, like other taxpayers, must keep records to prepare an accurate income tax return and determine the correct amount of tax. This chapter explains the benefits of keeping records, what kinds of records you must keep, and how long you must keep them for federal tax purposes.
Tax records are not the only type of records you need to keep for your farming business. You should also keep records that measure your farm's financial performance. This publication only discusses tax records.
The Farm Financial Standards Council has produced a publication that provides a detailed explanation of the recommendations of the Council for financial reporting and analysis. For information on recordkeeping, you may download Financial Guidelines for Agricultural Producers at www.ffsc.org. For more information, contact Countryside Marketing, Inc. in the following manner.

taxmap/pubs/p225-001.htm#TXMP614dd17e

Useful items

You may want to see:


Publication
 51 (Circular A), Agricultural Employer's Tax Guide
 463 Travel, Entertainment, Gift, and Car Expenses
See chapter 16 for information about getting publications.
taxmap/pubs/p225-001.htm#en_us_publink1000131397

Benefits of Recordkeeping(p4)


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Benefits of Recordkeeping

Everyone in business, including farmers, must keep appropriate records. Recordkeeping will help you do the following.
taxmap/pubs/p225-001.htm#en_us_publink1000131398

Monitor the progress of your farming business.(p4)


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You need records to monitor the progress of your farming business. Records can show whether your business is improving, which items are selling, or what changes you need to make. Records can increase the likelihood of business success.
taxmap/pubs/p225-001.htm#en_us_publink1000131399

Prepare your financial statements.(p4)


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You need records to prepare accurate financial statements. These include income (profit and loss) statements and balance sheets. These statements can help you in dealing with your bank or creditors and help you to manage your farm business.
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Identify source of receipts.(p4)


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You will receive money or property from many sources. Your records can identify the source of your receipts. You need this information to separate farm from nonfarm receipts and taxable from nontaxable income.
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Keep track of deductible expenses.(p4)


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You may forget expenses when you prepare your tax return unless you record them when they occur.
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Prepare your tax returns.(p4)


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You need records to prepare your tax return. For example, your records must support the income, expenses, and credits you report. Generally, these are the same records you use to monitor your farming business and prepare your financial statements.
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Support items reported on tax returns.(p4)


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You must keep your business records available at all times for inspection by the IRS. If the IRS examines any of your tax returns, you may be asked to explain the items reported. A complete set of records will speed up the examination.
previous pagePrevious Page: Publication 225 - Farmer's Tax Guide - Farmer's Tax Guide
next pageNext Page: Publication 225 - Farmer's Tax Guide - Kinds of Records To Keep
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication