M.Y.O.B. for Farmers, Graziers & Rural Business. A series of guides for specific industries

Transcription

1 M.Y.O.B. for Farmers, Graziers & Rural Business A series of guides for specific industries Data-Tech Software Pty Ltd ISBN First Edition, July 1997 Second Edition, November 1997; 2nd printing May 1998

2 Other publications in the M.Y.O.B. Insight series: PUBLISHED SEPTEMBER 1997 Building and Construction Tourism and Hospitality Manufacturing (a broad range of businesses which make and sell products) Professional Consulting (businesses from architects to computer consultants, geologists, lawyers, analysts, surveyors and much, much more!). Farming (including stud farms) Retailing (any business which buys products for resale) Subcontractors & Tradespeople Medical Practice (businesses with patient/client consultation) PUBLISHED NOVEMBER 1997 Accountants and Bookkeepers Education and Training Non-Profit Organisations Printing and Publishing Real Estate Service (small service business) Service Retail (shop-front service business) Wholesalers, importers and exporters This work is partly derived with permission from the Woodslane Press publication Making the Most of M.Y.O.B. (ISBN ). Woodslane Press may be contacted on (02) Case Studies. Please note that although the case studies used in this guide are based on actual businesses which use M.Y.O.B., the names of the businesses have been fictionalised for publication. Great care has been taken to ensure that the information found in this guide is both accurate and helpful. However, it remains your responsibility to verify the legal and accounting impact of any information which is used in your business. Data-Tech Software advise that changes to your accounting system should be discussed with your accountant prior to their implementation. In no event shall Data-Tech Software be liable for any direct, indirect, special, incidental, consequential or similar damages arising from the use of this publication. Farms 2

3 M.Y.O.B. for Farms Introduction 5 Which M.Y.O.B. program is best for me? 6 The Essentials 7 Step One Choose a Template 7 Step Two Review your Chart of Accounts 7 Step Three Check your Preferences 8 Step Four Set up Opening Balances 9 Step Five Ready to Go 9 Getting the information you want 10 Three key concepts 10 Understanding the difference between general ledger accounts and job numbers 11 The practicalities 12 Income and billing 12 How do I create an invoice in M.Y.O.B? 12 How do I create new invoice items? 13 Can I change the look of my invoices or receipts? 14 How do I record abattoir or yard fees? 14 How do I record income from market or roadside stalls? 15 How do I enter rebates and interest subsidies? 15 Case Study Essenside Farm 16 Dealing with expenses 17 What should I know as the very basics? 17 How do I record personal drawings? 17 How do I record purchases of new equipment, tools or land? 18 How do I separate primary production from non-primary production? 18 How do I allocate an expense to more than one job or cost centre? 19 How do I set up payroll for employees who are not on an hourly rate? 20 Will M.Y.O.B. remind me when regular expenses fall due? 21 Purchases and your suppliers 22 When should I use the Purchases command centre? 22 How do I record purchases in M.Y.O.B.? 23 Where do I record my sales tax exemption number? 23 How can I see at a glance how much I owe? 24 Farms 3

4 Managing livestock 24 What is the best way to manage livestock in M.Y.O.B.? 24 How do I record the purchase of animals? 25 How does M.Y.O.B. handle average cost? 25 Where do I record live births? 25 Where do I record deaths? 25 Can M.Y.O.B. give summary reports on individual animals? 26 Can M.Y.O.B. produce Livestock Trading accounts? 27 I use M.Y.O.B. FirstAccounts. Can M.Y.O.B. help my accountant produce a Livestock Trading Account? 27 Loans and Leasing 29 Loan repayments are a fact of life for my farm. 29 How can I show interest correctly in M.Y.O.B.? 29 How do I deal with hire purchase or leasing expenses? 30 Case Study Green Park Stud Farm 31 Vehicles 32 What is the best way to monitor vehicle expenses? 32 Can M.Y.O.B. help calculate my diesel fuel rebate? 33 Case Study Wolgin Orchards 35 Reports and End of Year 36 Can M.Y.O.B. show trends in sales and production? 36 Does M.Y.O.B. calculate depreciation? 36 What reports are most useful for farmers? 37 Why is the Balance Sheet such an important report? 37 What exactly is a cashflow report? 38 How can M.Y.O.B. help me produce cashflow reports? 38 What reports should I print at end of year? 39 Feedback 40 Farms 4

5 Introduction This M.Y.O.B. guide has been written specifically for farmers. It complements your M.Y.O.B. User Guide and provides answers to the most common questions asked by farmers. There is an emphasis throughout this guide on understanding how your farm works, taken from a business perspective. M.Y.O.B. provides you with tools to see how much profit you make, where this profit is made, and how to review your farm s finances over a period of time. The beauty of M.Y.O.B. is that this information is accessible at the click of a button in a way that you can understand, and in a way that can help you plan for seasonal cycles. This guide starts with a step by step guide to setting up M.Y.O.B. This is followed by commonly asked questions and answers, grouped under section headings. You ll find Case Studies throughout this guide where you can read about how real businesses have set up M.Y.O.B. A suggestion for new users is to read these Case Studies before browsing through the rest of this guide. Alternatively, users already familiar with M.Y.O.B. might refer to these case studies to discover tips and new ideas. If a topic is of particular importance, it is flagged with a warning sign and the word IMPORTANT! If you see an instruction such as Choose Setup>Preferences this means go to the Setup menu, shown at the top of your display, and choose the Preferences command. One more thing. You ll notice that for ease of writing, we refer only to M.Y.O.B. Accounting, and not to M.Y.O.B. Premier. However, this guide applies equally to M.Y.O.B. Premier which has all the features of M.Y.O.B. Accounting plus more, as well as providing multi-user access. Have fun! Farms 5

6 Which M.Y.O.B.? There are four members in the M.Y.O.B. range of accounting software: M.Y.O.B. FirstAccounts, M.Y.O.B. Accounting, M.Y.O.B. Accounting with Payroll and M.Y.O.B. Premier Accounting. There are important differences between each program, and you should review these differences to ensure you choose the one that s right for your needs. M.Y.O.B. FirstAccounts is intended for small service businesses (such as consultants and businesses which invoice based on labour and time). Features include: Sales, Chequebook, General Ledger, Purchases and Card File command centres Standard Jobs System, enabling cost and/or profit centre reporting. M.Y.O.B. Accounting has all these features, and adds: Full inventory management essential if you plan to use M.Y.O.B. for livestock management, including livestock reporting and average costing. Enhanced (multi-level) Jobs System, enabling advanced cost centre analysis and tracking the profit/loss on each stud animal. Advanced reporting (i.e. more reports, custom report options and close integration with other applications such as spreadsheets) Ability to budget for jobs, projects or cost centres. M.Y.O.B. Accounting with Payroll adds: Fully integrated payroll, a vital time-saver if you have three or more employees. M.Y.O.B. Premier Accounting adds to all these features: Multi-user capability. This means that more than one user can operate M.Y.O.B. simultaneously. For example, you could use M.Y.O.B. at reception for receiving payments and issuing receipts, and at the back desk for bookkeeping and reporting. Unlimited transactions, cards, contact details (limited effectively by the size of your hard drive). Improved password security and audit trails, complete with user log-in details for every transaction. Farmers and graziers will almost certainly use the features found in M.Y.O.B. Accounting. No matter which software you are using or choose to start with, upgrading to another member of the family is straightforward, cost effective and can be made at any time. Asset Management. Farners and graziers will find that M.Y.O.B. AssetManager provides powerful, easy-to-use management of fixed assets. This includes everything from vehicles, to tools, to buildings. It includes service details, serial numbers, owner details, asset groupings and component transfers. Calculation of depreciation is automated and AssetManager creates depreciation journal information which is a snap to enter directly into your accounting system. Further information on the M.Y.O.B. range of software can be obtained by calling Data-Tech Software on Farms 6

7 The Essentials The following five steps are a brief guide to getting started. Each step highlights important information with farmers specifically in mind. You should use this information in conjunction with the Getting Started guide that comes with M.Y.O.B. Step One Choose a Template Use the M.Y.O.B. Setup Interview to create a new data file for your business. Step 5 of the M.Y.O.B. Setup Interview asks you to Choose a Template. Choose the Agricultural Business template; it provides a sample chart of accounts, and is a good starting point for most farmers. Don t worry if this template isn t perfect - you can add, change or delete as many accounts as you like. Step Two Review your Chart of Accounts Before entering your opening balances, you need to adapt the standard M.Y.O.B. chart of accounts so that it that it suits the unique needs of your farm. What is the chart of accounts? The chart of accounts is a list of classifications to which you will allocate transactions in your business. There are eight major general ledger account categories, and it pays to understand each one so that you use the right ones at the right time. If your business needs to be separated into primary production and non-primary production, then you will need to structure your chart of accounts to allow for this. See How do I separate primary production from non-primary production? for further details. Refer to the User Guide that comes with M.Y.O.B. for more information on creating new accounts, editing accounts, or deleting accounts. Figure 1 (shown on the following page ) illustrates the eight major account categories. Farms 7

8 Figure 1. The M.Y.O.B. Chart of Accounts Assets Things you own, or that people owe you. Put your equipment, tool purchases, land and buildings here. Asset account numbers start with 1. Liabilities What you owe to other people. Includes loans, taxes payable and outstanding supplier accounts. Liability account numbers start with 2. Equity This is your stake in the farm, the profit or loss that it has made. Examples of equity accounts are retained profits, partners drawings, or capital contributions. Equity account numbers start with 3. Income Money in! Includes everything you sell, drought relief, government assistance, subsidies and interest income. Income account numbers start with 4. Cost of sales Cost of sales is the direct costs of running your farm, e.g. feed, farm labour, freight, or fuel. Cost of sales account numbers start with 5. Expenses Overheads. The day-to-day running costs of your farm, including bank charges, interest, or postage. Expense account numbers start with 6. Other Income Extraordinary income that is not really part of your everyday business. Could include capital gains or lottery wins! Other income account numbers start with 8. Other Expenses Extraordinary expenses that are not really part of your everyday business. Could include lawsuit expenses, capital losses, or storm damage costs. Other expense account numbers start with 9. Step Three Check your Preferences You can customise M.Y.O.B. so that it works for your farm the way you want it to. You can do everything from changing the appearance of your M.Y.O.B. windows, to automatically requesting a backup prompt each time you quit the program. It all happens via the Preferences command. To review your preferences, go to Setup> Preferences and explore the System, Reports & Forms, Chequebook, Sales, Purchases and Security tabs. Remember your choice of preferences does not commit you to this for ever and ever, for you can change your preferences at any time. Farms 8

9 One preference setting is recommended, especially for new users. Make your data file changeable. If you make mistakes, you can correct them, without needing to make complicated reversing journals. To do this, go to the Security tab in Preferences. Remove the checkmark from Data File Records CANNOT be Changed; Saved Entries Must be Reversed. For more details on how each preference setting works and what it does, refer to the User Guide that comes with M.Y.O.B. Step Four Set up Opening Balances Next you need to enter your farm s opening balances. To enter opening general ledger account balances, click Setup>Balances>Account Opening Balances. To enter opening balances for outstanding customer accounts, click Setup>Balances>Receivables. To enter opening balances for outstanding supplier accounts, click Setup>Balances>Payables. To get up and running, you only need to enter opening balances for a few accounts. Bare essentials will probably include your bank account, total customer accounts outstanding and the amount you owe to suppliers. Your opening account figures won t balance, but M.Y.O.B. will store this out of balance amount in the Historical Balancing account. You or your accountant can fix this later. If required, refer to Getting Started guide that comes with M.Y.O.B. for more information on opening balances. Step Five Ready to Go Some last comments before you launch into action 1 Always remember to save as you go: press CTRL-S (Windows) or CMD-S (Macintosh). All current M.Y.O.B. software also has an Autosave preference. All you need to do is go to Setup>Preferences>Security and set the time interval between saving to, say, 5 minutes. If you don t save, and there is a power failure or computer crash, you will lose all the work you ve done that day. 2 Work out how to back up your data file onto floppy disk, or other removable media, now. You might have been lucky so far, but nobody can guarantee continued immunity to power surges, theft, fire or hard disk failure. If you don t know how, read the manual, or phone a friend. But don t put it off! If you don t work it out now, you ll probably forget about it until it s too late and then you ll be sorry. Farms 9

10 Getting the information you want Three key concepts Every transaction that you record in M.Y.O.B. can include the following information: 1 The Name of your customer or supplier. 2 The Allocation Account. This is the general ledger account number from your chart of accounts, and refers to the type of income, or type of expense. 3 The Job Number. This job number can be used for jobs, projects, locations or cost centres. Figure 2. Analysing your business performance with M.Y.O.B. Every transaction you record in M.Y.O.B. can include the following information: Customer or Supplier NAME Job number, Project number or Cost Centre Income type, Cost of Sales type or Expense Type The Card File Sales and deposits can be grouped according to customer name, e.g. Customer A Customer B Purchases and cheques can be grouped according to supplier name, e.g. Supplier A Supplier B General Ledger, Jobs List Cheques, deposits, sales and purchases all include a job column. If you wish, jobs can be grouped together to track cost centres, projects, jobs or ventures, e.g. Job description Job # Eastern Brae Farm E Poultry EP Sheep ES Western Creek Farm W Poultry WP Sheep WS General Ledger, Chart of Accounts All transactions ask for an Allocation Account, which refers to income and expense types, e.g Income market stalls Income egg sales Income cattle sales etc Cost of sales cattle purchases Cost of sales feed Cost of sales seed etc Advertising Bank charges Computer supplies etc Farms 10

11 In the Write Cheques window below, you can see how this concept works in practice. The Name of the supplier is recorded in the Card field, the type of expense is recorded in the Allocation Account field, and the job code is recorded in the Job column. You can use job numbers to track jobs, projects, locations or cost centres Understanding the difference between general ledger accounts and job numbers General ledger accounts are the names that you choose in order to categorise your income and expenses. For example, income accounts might include Produce Sales, Livestock Sales and Subsidies. If you like, you can create Header Accounts, with Detail Accounts underneath. For example, under a Header Account called Produce Sales you can have Detail Accounts such as Wheat Sales, Barley Sales and Rice Sales. Important! Jobs provide an additional way for you to categorise your income and expenses and can be used as cost centres. Cost centres are useful if your farming business has two or more separate arms to it. For example, you might have farms in different locations or you might be running different business ventures as part of the one farm. Job Profit & Loss reports allow you to report separately on each location or venture, as well as allowing you to report on your farm s operations as a whole. Jobs can be grouped in a way similar to general ledger accounts, with both Header Jobs and Detail Jobs. This means that you can have cost centres within cost centres! For example, you could create Header Jobs for each separate farm. Below each Header Job you could create Detail Jobs for each cost centre within these farms, such as sheep farming or lucerne production. Farms 11

12 If you re not sure of the best way to use job reporting for your farm, read the Case Studies in this guide. Stud farmers might also refer to Managing Livestock, where it is suggested that a separate job number is created for each animal. The Vehicles section of this guide gives further examples of creative job reporting. The practicalities 1 Customer names and supplier names are recorded in the Card File command centre. Click Cards and then New. Select your Card Type carefully and complete the card details. 2 General ledger account numbers and names are recorded in the General Ledger command centre. To change or to add new account categories, click Chart of Accounts and then Edit or New. Header Accounts will create headings within the body of your Balance Sheet or Profit & Loss report. Detail Accounts will sit below these headings. 3 Job numbers and names are recorded in the General Ledger command centre. To change or to add new jobs, click Jobs List and then Edit or New. Header Jobs create headings within the body of your Job Profit & Loss report. Detail Jobs sit below these headings. Income and billing How do I create an invoice in M.Y.O.B? To record income, go to the Sales command centre and click Sales. Even if you sell directly to an agent or abattoir, and you are not required to provide an invoice, you must still record income in this way. Although M.Y.O.B. offers three invoice types, Service, Professional and Item, the Item invoice is the best choice for farmers. Item invoices require that you create item names and descriptions for everything that you sell. Depending on your farm, these items can be anything: eggs, sheep, labour charges, cartage, etc. To record a sale, follow these easy steps: 1 Go to the Sales command centre and click Sales. 2 In the Customer field enter the customer name. If this is the first time you have billed this customer, M.Y.O.B. will ask you to click New to create a new customer card. 3 Click Type and then Item to select an Item type invoice. 4 Record the Date of the sale. 5 Enter the quantity in the Ship column, and the item name in the Item # column. If this is the first time you ve billed for this item, you will need to type in a suitable name, tab, and then click New to create this item in your Items List. If required, see How do I create new items? for more information. 6 Tab through the sales window and complete discount, job numbers, comments and shipping details if required. 7 Click Record to complete the sale. Farms 12

13 It s easy to create a sale in M.Y.O.B How do I create new invoice items? To create a new inventory item, go to the Inventory command centre and click Items List and then New. Enter a logical and easily remembered code for the Item#, and a short meaningful entry as the Description. If you intend to keep an inventory count on this item, click I Buy This Item, I Sell This Item and I Inventory This Item. This is appropriate for livestock, or for any goods that you buy for resale. If you produce this item yourself, then click I Sell This Item only. This is appropriate for items that you produce yourself, such as feed, grain, eggs, etc. If your selling price varies from week to week, then leave the Selling Price blank. Creating a new item Above is a typical Item Information window for a sheep. Note the account selections for tracking inventory, sales and purchases. Farms 13

14 Can I change the look of my invoices or receipts? Yes. You can customise your invoices so that they look exactly as you want them to look. All you have to do is go to the Sales command centre, select Print Invoices and click Customise. You can insert boxes, lines, logos, or comments, and you can change the fonts and sizes of any of these. You can also delete unwanted information and columns: for example, if you are using Item invoices you can delete the sales tax totals and backorder columns. Receipts are similar to invoices, although they are usually somewhat smaller and show clearly that the invoice has been paid. It is easy to create a receipt by customising a sales invoice, using the Comment or Journal Memo field to record payment method and details if desired. If you wish to be able to produce both invoices and receipts from M.Y.O.B., then you can customise a Packing Slip to use as a receipt. Customising invoice layouts can be a fairly detailed and time-consuming process, so take your time with it. For more information and tips on how to do this, refer to the User Guide that comes with M.Y.O.B. How do I record abattoir or yard fees? When a farmer sells livestock, abattoir or yard fees are often deducted from the sale. For example, an agreed price per goat might be $50 a head, but you will only receive $48.50 per head, with $1.50 per head deducted in miscellaneous fees. Strictly speaking, these fees need to be shown when recording income. To do this, first go to your Inventory command centre and click Items List and then New. Create a new item called something like Fees. Click against I Sell This Item and choose a cost of sales 5- account called something like Abattoir/Yard fees as the Income Account for Tracking Sales. M.Y.O.B. will warn you that your account is normally an income account, not a cost of sales account, but you can ignore this warning what you re doing is fine. Now go to Sales. Enter the Quantity and Price of the livestock sold, but then add an additional line item for fees. Enter a minus figure of 1 in the Ship column, Fees in the Item # column, (the example below shows AF for Abattoir Fees) and the total fee charged in the Price column. Farms 14

15 By recording sales in this way, your livestock trading account will show the true selling price per animal sold, and your profit & loss report will show your total abattoir or yard expense. How do I record income from market or roadside stalls? When you sell directly at markets, income is recorded in a different way from invoice sales. Obviously, you don t want to create a customer sale for every pot of honey or kilo of tomatoes that you sell! Go to the Chequebook command centre and click Make a Deposit. Enter the day s takings in the Amount column. Tab past the Payor field and type a description in the Memo field. As the Allocation Account choose an income account such as Market Stall Income or Roadside Stall Income. Enter a Job number if desired, and click Record to complete the transaction. How do I enter rebates and interest subsidies? Go to the Chequebook command centre and click Make A Deposit. Record the Date, Amount and Payor. Select an income Allocation Account. This will start with 4- and should be called something like Income from Fuel Rebate or Income from Interest Subsidy. Enter a Job number if required and click Record. Alternatively, if you are sometimes owed a subsidy for some time before you receive it, you may wish to show this subsidy as income in your Profit & Loss at the time it falls due (as opposed to the time it is received). This will ensure that your accounts are as accurate as possible on a month-to-month basis. To do this, go to the Sales command centre and click Sales. Create a new sale, with the relevant government department as the Customer, and choose a subsidy or rebate income account as the Allocation Account. This subsidy will now appear in your Profit & Loss as income, and will show as an amount owing to you in your Aged Receivables and Balance Sheet. Later, when you receive the subsidy, record this in Customer Payments. Farms 15

16 Case Study Essenside Farm Business Name: Essenside Farm Business Profile: Essenside Farm is a small sheep farm, with a sideline of keeping chickens and selling free range eggs to local outlets. Overview: Essenside Farm have set up M.Y.O.B. in a very simple way, minimising bookkeeping work but maintaining a clear picture of their farm finances. Description: Essenside Farm use M.Y.O.B. inventory to track the purchase and sale of sheep, the purchase and sale of chickens, and the sale of eggs. They use Item invoices and Item purchases, and make inventory adjustments from time to time for births and deaths. Essenside Farm have a simple jobs list: one code for sheep, one code for chickens and one for general overheads. All transactions are coded with a job number, which allows the farm to see separate profit & loss reports for sheep, for chickens and for the farm overall. All expenses are recorded in Write Cheques and all purchases of livestock are recorded in Purchases. Income from sales is recorded in Sales and other miscellaneous income such as subsidies is recorded in Make a Deposit. The bank account is reconciled regularly to ensure that all entries and reports are accurate. Essenside Farm provide their accountant with important financial reports every six months. Monthly Item detail reports form the perfect basis from which the accountant can build livestock reports. Summary: Essenside Farm use M.Y.O.B. inventory to track their livestock. They use job codes to provide additional analysis on the three arms of their farming business. They use Item invoices for sales and item purchases for purchases. They record expenses using Write Cheques, and balance the bank using Reconcile Accounts. Farms 16

17 Dealing with expenses What should I know as the very basics? Here are some basic tips to get you going when recording your expenses into M.Y.O.B. 1 Understand the difference between Write Cheques and Vendor Payments. If you want to track outstanding supplier accounts, record purchases in the Purchases command centre and use Vendor Payments to record payment of these accounts. Alternatively, you can record all purchases and expenses when they are paid using Write Cheques. Refer to When should I use the Purchases command centre? for more details. 2 Don t forget to enter bank charges and periodical payments from your bank statement. Just go to Write Cheques to do this, but override the Cheque No. field with a small description, such as Fee, FID, or LEASE. 3 The easiest way to deal with a credit card is to think of it as if it were a type of bank account. Create a new liability account in your Chart of Accounts and make it a Detail Credit Card Account (Postable). To record credit card expenses, go to Write Cheques and select your credit card account as the account in the drop box at the top of the Write Cheques window. 4 IMPORTANT! Learn how to reconcile your bank accounts. It may seem an awesome task at first, but it is actually quite easy once you get going. Reconciling your bank accounts is the ONLY way to ensure that the information entered into M.Y.O.B. is correct. How do I record personal drawings? Many farmers have one bank account that deals with all their finances, whether these be business or personal. How you record personal drawings depends on whether your farm is set up as a company, a partnership, or a sole trader. If you are a company, personal drawings should either be recorded as Wages (a 6- account), or as a Loan to Director (a 1- account). If you are a partnership or sole trader, drawings should be recorded as Drawings (a 3- account). If you are still unsure as to the best way to show personal drawings in M.Y.O.B., consult your accountant. Farms 17

18 How do I record purchases of new equipment, tools or land? With great care! Basically, the rule is this: If the new purchase cost over $300 In this case the tax office considers the purchase to be an asset, and you should choose a 1- account as the Allocation Account. This account might be called something like Plant & Equipment or Freehold Land. Be careful to include a good description in the Memo field, as your accountant will rely on this information at the end of financial year. Also, make a special note to your accountant if this purchase is a replacement for old equipment that you have sold or scrapped. The exception to this rule is lease payments. Lease payments are tax deductible, and you should choose a 6- account and record them as a Leasing expense. If the new equipment cost less than $300 In this case the tax office considers the purchase to be an expense, and you can write it off as a deduction straight away. Use a 6- account as the Allocation Account when recording the purchase. This account might be called something like Tools-Replacement, or Repairs & Maintenance. Be careful to include a good description in the Memo field, as your accountant is sure to scrutinise these accounts. How do I separate primary production from non-primary production? The best way to do this is to use general ledger header and detail accounts in combination with header and detail jobs. This way M.Y.O.B. can produce a Profit and Loss for primary production activities, a Profit and Loss for non-primary production activities, and a Profit and Loss for all your business activities combined. All your accountant could ever dream of! Here s what to do: 1 Go to the Chart of Accounts in the General Ledger command centre and click the Income tab. 2 Click New and create two new Header Accounts: one called Primary Production Income and another called Non Primary Production Income. 3 Adjust the account numbers of all your income accounts so that Detail Accounts are grouped correctly under one or other of these header accounts. For example, you would group Income - eggs under Primary Production, and Income - Bed & Breakfast under Non Primary Production Income. 4 Go to your Jobs List, and click New. Create two new Detail Jobs: one called Primary Production and another called Non Primary Production. 5 If you are already using jobs for another purpose such as tracking cost centres, then these new jobs should be Header Jobs, and you should renumber your other jobs so that they are grouped under the correct header job. Now, you re ready to go! Farms 18

19 This system requires that every cheque, deposit, purchase, sale or general journal includes a number in the Job column to indicate whether this is a primary production transaction, or a non primary production transaction. If you forget to enter a Job number, go back and edit the transaction. This way your reports are sure to be accurate. Some expenses might be hard to allocate, such as bank charges or motor vehicle lease payments. In this case you will need to split these expenses across both jobs. To do this, refer to How do I allocate an expense to more than one job? When it comes time to report on your primary and non primary production activities, refer to the question What reports are most useful for farmers? How do I allocate an expense to more than one job or cost centre? Often you may encounter an expense that belongs to more than job. This happens frequently if your business is a combination of primary and non primary production, and if you are using M.Y.O.B. jobs to separate these. If you have a single expense, purchase or deposit that you wish to split across more than one job, all you have to do is create one transaction line per job, and use the same Allocation Account on each line. Farms 19

20 You can split expenses across more than one job In the above example, a motor vehicle lease has been split across two cost centres. The allocation account for Motor vehicle - lease has been entered twice, but each line has been allocated to a different job. How do I set up payroll for employees who are not on an hourly rate? Many farmers employ casual employees on a piece rate, such as a rate per bucket of fruit picked. How does M.Y.O.B. Accounting with Payroll adapt to this situation? 1 Go to the Payroll command centre and click Payroll Categories. Select the Wages tab and click New. 2 Type in a suitable name for the wages, such as Apples - large crate or Oranges - bucket and click Hourly as the Type of Wages. 3 Click Fixed Hourly Rate and enter the rate per bucket or crate. 4 If you would like to show these wages as their own category in your Profit & Loss report, check against Optional Account and enter a wages account specifically relating to this category. A good choice might be a Cost of Sales account called Wages - fruit pickers. 5 Click Employees and select the employees who are paid this rate. Farms 20

21 Setting up a new payroll category The illustration above shows a new payroll category called Apples - large crate. This payroll category is linked to a cost of sales account called Wages - apple pickers. Now all you have to do is show the number of crates or bins picked in the Hours column when in Write Paycheques. M.Y.O.B. will complete the rest of the calculations for you. Will M.Y.O.B. remind me when regular expenses fall due? Farmers have many regular expenses, including income tax, superannuation, Fringe Benefits Tax, and loan repayments. M.Y.O.B. can monitor these regular expenses, and the To Do List will remind you when they fall due. The trick to getting M.Y.O.B. to remember when expenses are due is to save regular transactions as recurring. If you save a transaction as recurring, then M.Y.O.B. names it, remembers it and will remind you when it next falls due. To create a new recurring entry: 1 Go to Write Cheques and enter the cheque for tax, super or any other recurring payment as you normally would. However, once complete, click Save Recurring instead of Record. 2 In the dialogue box that appears, give a name to the recurring transaction and specify how often it recurs. Click Record to save this transaction as recurring. 3 You will return to the original cheque. Now you can click Record to complete the entry. Farms 21

22 To use this recurring entry the next time: 1 Go to Write Cheques and click Use Recurring. A dialogue box will appear listing all your recurring transactions. Choose the transaction, and click OK. 2 The transaction will appear. Now all you have to do is click Record, although if you wish, you can edit any details or amounts. 3 IMPORTANT! You need only save a transaction as recurring once. Don t save it as recurring every time you record it. Once you have set up transactions as recurring, M.Y.O.B. will prompt you when they fall due. All you have to do is click your To Do List and then the Recurring Transactions tab. Check the date in the Next Due column. Purchases and your suppliers When should I use the Purchases command centre? It s up to you. Many farmers find that having an accurate picture of who they owe money to, and how much, is invaluable to the efficient running of their farm. If you find it important to know how much you owe at any one time then you should use Purchases to record all outstanding supplier accounts. IMPORTANT! You can record a purchase in two different ways. The first way is if you wish to produce a printed purchase order from M.Y.O.B. To do this, create a Purchase but once complete, click Pending instead of Record. Pending purchases will not affect your Profit & Loss, your supplier balances, or your inventory counts. Later, when the goods arrive, you can convert this purchase from pending to actual. The second way to record a purchase is if you don t want to produce a purchase order and simply want to record an outstanding supplier account. To do this, create a Purchase in M.Y.O.B. and click Record once complete. It s also possible to run M.Y.O.B. without using the Purchases command centre at all and only record suppliers bills once they have been paid. This means that you go to Write Cheques in the Chequebook command centre and work from your cheque stubs, entering all expense and purchase payments. This is quicker, but has the disadvantage that M.Y.O.B. cannot provide you with a record of how much you owe to your suppliers. Farms 22

23 How do I record purchases in M.Y.O.B.? To record a supplier invoice, go to the Purchases command centre and click Purchases. Click Type to select your purchase type. Use an Item type purchase to record the purchase of livestock; use a Service type purchase to record all other types of expenses. A typical Item purchase. When you record a Service purchase, you need to select an account number in the Acct# field. If the purchase is for feed, freight, seed or livestock then the M.Y.O.B. account number will be a cost of sales account starting with the number 5. If the purchase is for overheads, such as telephone, bank charges or postage, then the M.Y.O.B. account number will be an expense account starting with the number 6. With all purchases the Journal Memo field is used to record important accounting information about the transaction. Your accountant will usually review these memos when finalising your accounts and therefore it is important to enter a useful explanatory memo whenever you can. Where do I record my sales tax exemption number? Go to Setup>Company Information and enter your exemption number in the Sales Tax Number field. Your exemption number will now print at the top of your M.Y.O.B. purchase orders. Farms 23

24 How can I see at a glance how much I owe? From the Purchases command centre, click Payables in the M.Y.O.B. Analyst. You will see a summarised Analyse Payables report, aged as at the current date. See how much you owe at a single glance. Click the zoom arrows to go to a detailed breakdown of any supplier s totals or click Print to print the report. Managing livestock What is the best way to manage livestock in M.Y.O.B.? The best way to manage livestock in M.Y.O.B. is to create a separate inventory item for each type of animal you farm. In other words, if you farm both sheep and cattle, then create two inventory items: one for sheep and one for cattle. If you have a stud farm and wish to keep records separately for each animal, then you must create a unique job number for each animal as well as a separate inventory item for each type of animal. This job number can let you build up a financial picture of all income and expenses relating to each animal, and provide you with an overall history that spans from the birth or purchase of an animal until its sale or death. To create a new inventory item, go to the Inventory command centre, click Items List and then click New. Enter an item number that is easy to remember as the Item# and a short description as the Description. Click I Buy This Item, I Sell This Item and I Inventory This Item. In How do I create new invoice items? you can see a typical item setup for a sheep. Note the account selections for tracking inventory, sales and purchases. IMPORTANT! In order for M.Y.O.B. to calculate average cost correctly, you must only have one inventory item per type of animal, and not one inventory item for each animal. Farms 24

25 How do I record the purchase of animals? Go to the Purchases command centre and click Purchases. Click Type and then Item to select an item type purchase. Enter the Quantity and Price of the animals purchased. If you are a stud farmer, create a separate line item for each animal purchased. Use the same Item# each time, but allocate each animal to a separate Job number. How does M.Y.O.B. handle average cost? In M.Y.O.B, Average Cost is calculated by dividing the current inventory value by the number of units in inventory. It s as simple as that! Average Cost does not include freight or early payment discounts. In the farming world, average cost is calculated in the same way. However, when live births occur, these are costed at the list price according to taxation schedules. This list price is usually less than the market purchase price and therefore live births tend to bring down your overall average cost. M.Y.O.B. will continually adjust and calculate average cost correctly. All you have to do is record the number of animals you sell and purchase and periodically make inventory journals, as explained in the following two questions, for live births and deaths. Where do I record live births? 1 Go to the Inventory command centre and click Count Inventory. Change the amount in the Counted column so that the Difference column reflects the quantity of live births. Click Adjust Inventory. 2 M.Y.O.B. will ask you for a Default Adjustment Account. Select an income account called Income from Natural Increase. If you do not already have an account with this name, then create a new one in your Chart of Accounts. Click Continue. 3 This takes you to the Inventory Adjustments. For stud animals, record the date of the birth in the Date and the name of the animal in the Memo. For other animals, record the date of the journal in the Date and record the quantity and value (as per Taxation Office) in the Memo. 4 Enter the Quantity and for the Unit Cost use the reference amount as given by the Taxation Office for value at birth. If you are using Jobs for stud animal tracking or for any other purpose, record the Job number. Where do I record deaths? To record deaths, follow the procedure as outlined above in How do I Record Live Births? The Difference in Count Inventory should be a minus figure and the Default Adjustment Account should be a cost of sales account called Death from Natural Causes. Farms 25

26 Can M.Y.O.B. give summary reports on individual animals? Yes. In the question What is the best way to manage livestock in M.Y.O.B it was suggested that stud farmers create a unique job number for each animal. If you are using this system, all income and expense transactions recorded in M.Y.O.B. will have a Job code. (If a transaction is of a general nature and cannot be allocated to a particular animal, then it can be allocated to a job code for General Expenses, or General Income). When you wish to report on the overall profit made on an animal, go to Reports>Index to Reports, click the General Ledger tab and select the Job Profit & Loss report. Job Profit & Loss reports provide excellent summaries If desired, more detailed reports can be obtained by printing a Job Activity [Detail] report for this animal. For example, this report can give a break up of each veterinary expense for a particular animal. If descriptions have been recorded in the Memos of these expenses, this detail will also be displayed. Farms 26

27 Can M.Y.O.B. produce Livestock Trading accounts? M.Y.O.B. can supply your accountant with all the information necessary to produce a Livestock Trading account, with only a few clicks of the mouse. Assuming you have set up each type of animal as an inventory item, all you need to do is go to Reports>Index to Reports and print the following: An Item Sales [Detail] report, found under the Sales tab. An Item Purchases [Detail] report, found under the Purchases tab. An Account Inquiry report, found under the General Ledger tab. Click Filters and then Selected and choose Income from Live Births as the account. An Account Inquiry report, found under the General Ledger tab. Click Filters and then Selected and choose Death from Natural Causes as the account. A typical Item Sales Detail report I use M.Y.O.B. FirstAccounts. Can M.Y.O.B. help my accountant produce a Livestock Trading Account? Yes. There is a simple way to provide your accountant with much of the information they need in order to produce your Livestock Trading Account. When you purchase animals, whether you do this in Write Cheques or in Purchases, record the quantity and price of these animals in the Memo field. Similarly, when you sell animals, whether you do this in Make a Deposit or Sales, record the quantity and price of these animals in the Memo field. Farms 27

28 Record the quantity and price of animals in the Memo field At the end of the financial year, click Inquiry from the M.Y.O.B. Analyst and click the Account tab. Select your Purchase account, choose appropriate From and To dates, and click Print. Repeat this for your Sales account Your report should look something like this: Your Account Inquiry report provides vital information The ID# column refers to the deposit or cheque number, the Memo refers to the quantity and price of the animals sold or bought and the Debit column refers to the total value of the sale or purchase. Farms 28

29 If you find that your reports print the name of the person to whom you paid the cheque, rather than the Memo, then you need to change your preferences. Go to Setup>Preferences, and click the Chequebook tab. Remove the checkmark from Display Payee, Rather than Memo, in Registers. Loans and Leasing Loan repayments are a fact of life for my farm. How can I show interest correctly in M.Y.O.B.? Many farmers have substantial borrowings with a large proportion of their outgoings consisting of loan repayments. These loan repayments are usually a mixture of interest and principal. Only the interest component is an expense, for the principal component is reducing the amount of the loan. If you want your M.Y.O.B. Profit and Loss report to be accurate, you need to make adjustments to show the split between interest and principal. You also need to reconcile your loan account in the same way as you reconcile your bank account. To make these adjustments and balance your loan accounts, follow these simple steps: 1 Record loan payments by going to Write Cheques. Allocate the payment to the loan liability account (a 2- account). This will be called something like Equity Loan, Mortgage Loan or Bank Loan. 2 Every quarter or six months, request a bank statement for your loan account. When you receive this statement, go to the General Ledger command centre and click General Journal Entry. 3 Create a separate journal entry for each month s interest, dating it for the month when the interest was charged. Record the amount of interest charged by debiting your Interest Expense account and crediting your loan liability account. Insert any bank fees by debiting Bank Charges Expense and crediting the loan liability account. Click Record to complete each journal. Farms 29

30 Journalling interest on loan accounts 4 Go to the Chequebook command centre and click Reconcile Accounts. Enter the loan account number in the Account field. 5 Reconcile the loan account against the loan account statement in the same way as you would reconcile your normal cheque account. This procedure may seem complex the very first time you do it, but reaps the benefit of providing you with an accurate picture of what you really owe and how much interest you are paying out. How do I deal with hire purchase or leasing expenses? If hire purchase or leasing expenses are regularly debited directly from your bank account, record these in the following way: 1 Go to the Chequebook command centre and click Write Cheques. 2 Override the Cheque No: and replace it with DD, standing for Direct Debit. Enter the Date and Amount and the name of the bank or finance company as the Card. In the Memo write a description of the equipment that is being purchased. 3 Ask yourself, is this equipment on hire purchase, or is it leased? If you re not sure, refer to the original contract documents. It is important to distinguish between the two, as your accountant has to deal with leasing and hire purchase in completely different ways. 4 Enter either Leasing Expense or Hire Purchase Expense as the Allocation Account. If you don t have such an account, go to your Chart of Accounts and create it. 5 Enter a Job number, if relevant. 6 Click Save as Recurring. Check that the Frequency and due date is correct and click Record to return to the cheque. Click Record once more. Farms 30

31 You have now recorded this charge as a recurring transaction. This means that M.Y.O.B. will remember all the details of this entry and will complete these automatically for you each month. Next time the lease or hire purchase is debited from your bank account, all you have to do is this: 1 Go to the Chequebook command centre and click Write Cheques. 2 Click Use Recurring, select the relevant charge, and click OK. 3 Replace the Cheque No. with DD and click Record. Do not that if your equipment is hire purchased (rather than leased) then your accountant will need to make some adjustments at end of financial year to your Hire Purchase expense account. Case Study Green Park Stud Farm Business Name: Green Park Stud Farm Business Profile: Green Park Stud Farm breed and train thoroughbred horses. Business Overview: Green Park rely on M.Y.O.B. s job list to report on the profit (or loss) made on each separate horse. Green Park have substantial borrowings and make full use of M.Y.O.B. s financial analysis reports and budget features. Description: Green Park use M.Y.O.B. inventory to record the purchase and sale of horses. Although they only have one inventory item called Horse the Jobs List includes a separate job number for each animal. This means that Green Park can obtain detailed reports on every transaction that belongs to a particular animal, as well as overall Profit & Loss reports for each animal. Green Park teeters on the edge of financial viability and relies on M.Y.O.B. for up-to-date information. All outstanding bills are entered into Purchases so they can see what they owe at any time. Bank loans are itemised in the Balance Sheet and are reconciled regularly so that the split between interest and principal is evident. Budgets are created at the beginning of each year and revised regularly. M.Y.O.B. budgets are exported to a spreadsheet program to produce cashflow projections for the bank. M.Y.O.B. has provided Green Park with a solid basis for future planning and has put an end to their previous pattern of continuous cashflow crises. All assets are itemised using M.Y.O.B. Asset Manager and depreciation journals are imported monthly into M.Y.O.B. Important reports are printed monthly and are analysed carefully using key reports found under the M.Y.O.B. Analyst. This Year results are compared against Last Year results and Actual results compared against Budgets. Summary: Green Park Stud Farm use job numbers to provide separate reporting for each animal. All outstanding bills are entered into Purchases. All bank accounts are reconciled regularly, including loan accounts. Actual results are compared to budgets; budgets form the basis of cashflow projections. M.Y.O.B. Asset Manager maintains a detailed asset register and calculates depreciation. Farms 31