How’s Your Record Keeping?

Posted: March 16, 2015

Record keeping is an important part of managing any forest property, supporting better decisions and helping save time and money.

Forest landowners often neglect the important task of record keeping. It is important to be diligent. Good records are essential for a successful forest management program and for tax purposes. They show the status of the timber inventory, timber growth rates, current cost and revenue information, and projected cash flow for your forest activities. This information provides insights on the merits of proposed management options, enabling you to make informed choices in a timely manner. It also should show the relationship between your management decisions and the profit potential of your forest land. Adequate records also serve as historical documents to help you avoid repeating mistakes.

Record keeping is an important part of managing any forest property, supporting better decisions and helping save time and money. You should develop a systematic recordkeeping approach for your forest activities records, even for small tracts held as an investment. The type of journal you use depends on your forest management activities. If you simply use your land for personal enjoyment, then a simple diary or written journal is sufficient. Including photos in your journal showing changes and impacts over the years of implemented forestry practices can be worthwhile. Keeping records in a systematic fashion assists you in remembering past decisions and activities.

Organizing your records requires time and investment. One approach is to record enough information to present to your accountant or tax preparer. According to the Oregon State University Extension publication, “Recordkeeping: A How-to-do-it Guide for Small Woodland Owners” there are a number of items you should record. At a minimum, you should keep a journal of all expenses and income along with evidence of transactions such as invoices, receipts, canceled checks, contracts, meeting agendas, mileage records, workshops attended, and maps that pertain to your land and forestry practices.

One source of assistance is the Penn State publication, “Forest Finance 3: Keeping Record of Forest Management Activities,” which introduces record keeping, explores what you should record, and offers examples of simple recording systems. The publication is available for free online. Another resource is “The Forest Landowners Guide to the Federal Income Tax - Ag. Handbook No. 731” (Click on - Chapter 15 - Forest Records).

An additional resource worth mentioning is the National Timber Tax Website, which was developed for timberland owners, as well as a reference for accountants, attorneys, consulting foresters, and other professionals who work with timberland owners regarding the tax treatment of timber related activities.

Remember, keeping records is not only financially prudent, but results in more effective forest management.