How To Register Your Homestead Farm As A Business

Table of Contents

In the past, land ownership was communal. People built farmhouses, reared poultry, kept animals like goats and cows for food, and grew food crops.

However, many changes have recently occurred as farm owners use their lands to make a living and profit.

They raise vast herds of cattle, landscape the land into event grounds and grow cash crops.

But did you know that you can register your firm as a business? Converting the farm into a business is easy, but you must follow the correct steps.

We will guide you through your farm registration process, so relax and read through.

Are Farms Eligible For Registration As A Business?

The United States Department of Agriculture defines a farm as a piece of land that can yield agricultural products worth over $1000 or more in a year.

However, sometimes the farm could make less than $1000 in a particular year. It happens due to bad weather, diseases, or a change in marketing strategies.

The farmer should actively cultivate the land or manage it to yield profits. They can rear livestock, poultry, fish, and fruits and vegetables.

Once you convert your farm to a business, you should be able to deduct all the farm-related expenses or losses for the annual tax filing.

If you grow and sell small amounts of crops and livestock, your farm will be termed a hobby farm. However, you must declare the income you get from the farm when filing taxes.

But, if the piece of land is not your primary source of income, it doesn’t qualify as a farm.

What You Should Know Before Registering Your Farm As A Business

The farm business is like any other company. You require good training in managing your farm, and since you are the owner, you will likely wear many hats.

Some skills you will need are:

Organization

As the farm owner, you are responsible for completing all the paperwork. You will also ensure that everything on the land works well and oversee the staff.

It requires you to have the proper organizational skills for your farm business to thrive.

Management

With time, your farm will grow and need more members to help with production. As a farm owner, supervising the team requires the right management skills.

Once the farm grows even more significant, you should be able to motivate staff and match them to the necessary work.

Physical Fitness

Becoming your farm’s general manager doesn’t mean you will abandon your farm’s tasks. Most of these tasks are physical and require you to be physically fit to run your garden.

You will need this energy to show your workers what they require.

Regulations To Comply With When Registering Your Farm As A Business

Every state has its laws and regulations for registering a business. In some, farm business rules depend on your farm type.

For example, you must comply with health and safety regulations and all other laws around rearing animals and how to supply the produce. Some rules to learn are:

Registration Of Farm Vehicles

All the vehicles on the farm and those you transport the farm produce with must be registered with the Driver and Vehicle Licensing Agency.

If you transport meat, crops, and dairy products, ensure those vehicles meet health and safety requirements.

Meeting Food Standards And Accreditations

Your farm food products must be of high quality and traceable. Farmers should also use the correct organic farming methods according to the state’s laws.

To produce milk on your farm, you must register with the Food Standards Agency. They ensure food safety in the USA.

Planning Permission

You can learn more about the planning permission from the local authority. You will refer to the permissions whenever you want to change the use of your farm.

The planning permission is also applicable when you wish to build a house on the farm.

Process Of Registering Your Farm As A Business

Step 1: Confirm If You Are Eligible For Farm Registration With The USDA

To register your farm as a business, you must meet all the requirements of the USDA. Ensure you are older than 16 years.

You must also not be undischarged bankrupt. You can find more about eligibility for farm business registration here.

Once you confirm your eligibility, choose the type of company structure you want. You can register as a sole proprietorship.

In a sole proprietorship, the individual owns the business. You will also pay taxes from the business’s income as an individual.

A partnership is a business structure where two or more people agree to operate the farm. It is easy to form, and there are few annual maintenance obligations.

However, each partner is liable for any debts and obligations in the farm business. Other farm business structures to choose from are Limited liability companies and cooperatives.

Step 2: Fill Out The Correct Information In The Online Form

USDA provides farmers with an online form that should be filled out with the correct information and submitted.

You will give your details, licenses, location, farm size, and proof of residence. You could produce a utility bill to prove your residence.

The next step is to pay a registration fee to the urgency.

The USDA online farm business application form also asks you for a copy of your social security card and proof that you have not defaulted on any federal debt.

It would help if you also showed that you don’t have an ongoing felony or have not been involved in matters of dishonesty for the past ten years.

Step 3: Wait For The Review Of The Application

Once all your details are verified, you will receive an email with instructions on how to complete your registration.

It takes up to 10 weeks for USDA to review your farm business registration, so don’t panic about not getting a response in two, three, or four weeks.

Benefits Of Registering Your Farm As A Business

Registering your farm as a business has many advantages. First, you will pay lesser taxes, and you can get loans to run your business.

Check out the other benefits below.

Manage Taxes

When you turn your farm into a business, you can manage taxes more efficiently. You will start paying 12.5 percent on taxes.

The lower rates of taxes allow you to pay off debts and save more. You also get extra cash to expand your farm business and get higher earnings.

Easy To Get Loans

Getting loans from banks and other financial institutions for a registered business is more effortless. Registering your farm also increases your loan limits.

Access to more money means more chances of expanding, which is every business owner’s dream.

Separate Entity

Registering your firm as a limited liability company separates the business’s assets from your assets.

It protects you from any judgments against the business, be it debts or other lawsuits. Creditors will also not seize your assets to pay off the farm’s debts.