Article: Especially if you're self-financing your small farm business, you may think a formal business plan isn't necessary. However, a formal business plan can help you start to think of your farm as a business and treat it seriously. Rely on your market research to come up with profitability predictions. Keep in mind it typically takes small farms several years to get off the ground. If you plan on running your farm as a side-business or a hobby farm, a business plan can still help you organize the finances for your farm and keep it from taking over your personal funds. Once you've finished your business plan, have a business startup or financial advisor critique it and offer suggestions to improve. Look for someone who has extensive experience working with successful small farm businesses. Check with a government farm services office or a regional farm group if you're having a hard time finding a good advisor. Staff at any of those locations typically can provide a strong local recommendation or two. When you're starting out, you have the choice to run your small farm business as a sole proprietorship, an LLC, or a corporation. The form you choose depends on your business goals and the level of personal risk you want to assume. If you organize your business as a sole proprietorship, your farm is not separate from you and your personal finances in any way. This may be the easiest option if you're just running your farm as a side-business and have a full-time job. A corporation gives you the most personal protection, but also is the most expensive and time-consuming form. You can incorporate at any time, so wait until your farm starts turning a profit. An LLC, or limited liability company, provides all of the benefits of a corporation and a sole proprietorship with none of the downsides of either. Choose this form if your goal is to make your living from your farm someday. Even if you don't hire any employees (although you probably will), you will need a separate tax ID number for your farm business so you can pay taxes on farm income. If you're in the U.S., you can get an employer identification number (EIN) fairly easily. Simply answer a few questions about your business and you can get your EIN immediately. Write it down or print it out and keep it in a safe place. You may need a separate tax ID number for state or local taxes as well. If you haven't already made friends with staff at your nearest farm services office, now is the time to do so. Schedule an appointment to register your farm so you can take advantage of any government subsidies or benefits. Bring property documents along with proof of personal identity and business organization documents. Once you're registered, make sure you report any changes in the ownership or organization of your business as soon as possible, and keep your contact information up to date. You may be required to file regular acreage reports and other documentation. Depending on the crops or livestock you're raising, the state or local government may require regular inspections and licensing of your farm operations. For example, if you're selling crops to the public, you may need a license certifying that your storage facilities meet local health code requirements. Your local town or county government office is one way to find out what licenses are needed. You can also talk to neighboring farmers and find out from them what you'll need. Your state university agricultural extension program typically has specific information and resources to help you handle any licenses or permits you need at either the local or state level.
What is a summary of what this article is about?
Draft a formal business plan. Go over your plans with an advisor. Choose your small farm's business structure. Get a tax ID number for your small farm business. Register your farm with farm services. Get all required licenses and permits.