Tammy Bryant, Varney & Associates / Julie Spiegel, Varney & Associates

1. QuickBooks Top 5 Tips
for Effective Bookkeeping
Our QuickBooks Team can
provide you with
customized training,
support, tips & more
Tammy Bryant & Julie Spiegel
785-537-2202
www.varney.com

2. Profit & Loss Setup
• Setup income accounts based on tax reporting
• Use sub-accounts if you want more details

3. Profit & Loss Setup
• Setup expense accounts based on tax reporting
• Use sub-accounts if you want more details

4. 1099 Tracking
• Setup of vendors using proper names
• Enter addresses
• Check the box if you know they are eligible for 1099
• Obtain W-9s & enter Tax IDs

5. 1099 Tracking
• Use 1099 Wizard –
Vendors – Print/e-
file 1099s
• Vendors should
already be selected
from previous
setup
• Warnings of
missing vendor
information
• Map vendor
payment accounts

6. Structure of Loans
• Create Liability Accounts for each lender
• Create sub-accounts for each loan per lender
• Break out principal payments vs interest
• Separate mortgage interest from other interest

7. Segregate Personal Items
• Use Other Income and Other
Expense Account Type
• Setup accounts for itemized
deductions for Sch A reporting

8. Reconcile, Reconcile, Reconcile
• Bank Accounts
• Credit Cards
• Loans

9. Reconcile, Reconcile, Reconcile
• Pay attention
to outstanding
items – might
be duplicates,
errors, things
that need
voiding, etc.
• Difference
should always
be zero when
done

10. Thank You!
Contact us today to
explore options on
cleaning up your
QuickBooks. We look
forward to working with
you!
Tammy Bryant & Julie Spiegel
785-537-2202
www.varney.com

11. Top 5 Tax Tips
Do you have the RIGHT
financial partner for your
farming, ranching or
agribusiness operation –
someone who understands
the agricultural industry?
Julie Spiegel & Tammy Bryant
785-537-2202
www.varney.com

12. Depreciation
• Section 179 - $500,000 (2016)/$510,000 (2017) new and used with
15-year life or less (permanent – indexed for inflation)
• 50% Bonus – unlimited on new assets with 20-year life or less (2016
and 2017). Percentage declines in 2018-19; gone after 2019
(NOTE: Machine sheds qualify)
• Asset lives:

13. Depreciation (continued)

14. HRA
• An HRA is a Health Reimbursement Arrangement
• Two examples:
• Farmer employs spouse as only employee: Rather than taking
deduction of health insurance premiums on front page of tax
return (limited to farm net income), allowed to deduct health
insurance and out-of-pocket medical expenses on Schedule F –
lowers net income and reduces self-employment tax
• Farm businesses with multiple employees: Offers employee
attractive benefit package. Tax free benefit to employee and
tax deductible expense to business

15. Classification of Livestock
How you account for livestock makes a difference!
• Raised livestock
• Example: Calf sales
• Report on Schedule F – ordinary income
• Breeding livestock
• Raised breeding livestock held at least 24 months is eligible for
more favorable capital gains tax treatment (0% or 15%
typically)
• Purchased breeding livestock has been depreciated and is
subject to depreciation recapture and taxed at ordinary gain
rates
• Report on Form 4797 – capital and ordinary gains

16. Repair Regulations
• New guidelines issued in 2014 – taxpayer friendly
• In 2014 and 2015, a de minimis safe harbor was created
to expense amounts below $500
• In 2016, IRS increased the $500 de minimis safe harbor
threshold to $2,500 per unit of property.
• Applies per invoice or per item
• Must be substantiated by invoice
• Election must be made annually on the filed tax return
De Minimis Safe Harbor

17. Repair Regulations
• Safe Harbor - less than $200 can be expensed
• Incidental (Not Inventory and consumed in 12 months or less)
Materials & Supplies
Repairs
• Taxpayer can deduct amounts paid for repairs and maintenance to
tangible property as long as not required to capitalize as an
improvement.
• Recurring activities expected to keep a Unit of Property (UOP) in
ordinary operating condition
• Cleaning, inspection, testing, replacing parts
• (i.e. annual maintenance on tractor or combine)

18. Repair Regulations
• Betterment
• Corrects a material condition or defect
• Makes it materially more efficient or productive
• (i.e. modify farm equipment to do same thing better)
• Restoration
• Makes an asset like new again after the end of its class life
• Replace major component or substantial structure
• (i.e. 15-year old tractor – restore engine)
• Adaptation
• Adapts tangible property to a new or different use
• (i.e. convert old barn to office space)
Improvements

19. Cash versus Accrual accounting
• Cash basis – report income when received and expenses
when paid
• Most farmers report cash basis accounting on tax return
• Examples: Prepaids can be expensed; contract grain and
insurance claim proceeds can be deferred to a future tax year;
credit card charges are considered expensed when charged
(not when paid); fixed assets are based on when placed in
service (not when paid).
• Accrual basis – report income when earned and
expenses when incurred
• Benefit: Better management reporting and overall picture of
operations

20. Thank You!
Contact us today to
explore options on
becoming financial
partners. We look forward
to working with you!
Julie Spiegel & Tammy Bryant
785-537-2202
www.varney.com