Many farm operations exhibit characteristics of a small, sole-proprietor, family-operated business. These family operations often do not have separate checking accounts or separate records for farm and family activities. For such businesses, their creditors will often ask for both business and non-business assets and liabilities since it is often difficult to distinguish one from the other, and intermingling of funds is a common occurrence. As a result of these characteristics, it is common for farm balance sheets to include both personal and farm business assets and liabilities.
Some farms, primarily larger operations or those organized as corporations or partnerships, develop farm-only balance sheets. If a balance sheet is intended to represent only the financial position of the farm as a business, then personal asset and liability information should not be entered. However, personal asset and liability information can easily be included on the balance sheet and can offer substantial additional information. Separate balance sheets for farm and non-farm information are preferred. However, when combined, separate farm and non-farm sections should be used.
Many popular computerized record-keeping programs make it easier to distinguish between farm and non-farm assets, liabilities, incomes, and expenses. Cooperative Extension educators involved in farm management educational programming often have significant experience with these types of record-keeping programs and can provide a great deal of sound advice about their use.
