Laying the foundation for home based income

[cbcansurvive]

My wife and I are continuing to formulate our plan to purchase land and/or an existing home on a decent sized piece of land (10+ acres). Right now I work a regular 9-5 and she is a public school teacher who works in the town where we're looking to eventually buy, at the moment she has more flexibility in terms of being able to be home more (She gets home at 3:00 p.m. and of course has the summer off) than I do right now. Teaching jobs are scarce at the moment, but since I also hold a certification I plan to try to pursue a teaching career later on when the state's fiscal situation turns around. Up until now we've been coming up with a financial plan to save the money we'll need, pouring over tax maps, Google Earth, and other GIS data to determine where we'll end up, and looking at all of the physical aspects (home construction types, alternative energy sources, etc...) of the project. We have not given a whole lot of thought to earning income from the property however.

We're not sure how we're going to generate income or even how much we'll generate since neither of us hold any illusions of making a "living" off of the property. Crops and livestock raised will be primarily for our consumption, but it would be nice to find a little niche market to fill. Thanks to recent passage of a better woodland tax assessment law we can get a good property tax break on wooded land (which is primarily what we want) without having to sell any timber products. Previously land owners were required to sell at least $500 of timber products in order to receive woodland assessment, which was counterproductive since it required cutting the trees every year. Now all you need is to implement a forestry management plan-we'll still cut of course, but only those trees that the forester recommends be cut. That wood will be used for home heat, but I suppose we might sell firewood bundles-those are popular with the suburbanites with fireplaces around here. So our "business" would probably consist of firewood, eggs from chickens, maybe chickens themselves, and also odds and ends that I would buy and sell. Right now I pick up dead lawn equipment (mowers, tractors, leaf blowers, weedwhackers), fix it, and re-sell it.

My real question is should we plan on consulting an attorney about forming an LLC or something similar rather than just selling things on the side of the road like firewood, eggs, etc...? Would there be advantages to this in terms of taxes, especially when purchasing things related to farming such as equipment (log splitter, saws, chicken coops and related items) and material (feed, etc...)? Again, this will be a small time operation, but if it means more income and security for us and possibly a way to retire a little earlier it would be worth it. We're both on track to receive pensions at age 50, but if we could make it 45 and devote our full time to farm stuff that would be nice.

[MO_cows]

At the scale you seem to be talking about there might not be any advantage to the LLC. Just keep scrupulous records and do it as a sole proprietership to start. If your gross sales get up there and put you in a higher tax bracket you can always form the LLC later. You probably don't need an attorney to get more info. on this initially, a good CPA would likely be more helpful on the tax issues as well as cheaper to consult with.

[texican]

I wouldn't worry about LLC (incorporating), taxes, and whatnot, till you actually get the land. Keep records, so you can write off a lot of purchases on your taxes... until you get the hang of it, and know what your doing, I wouldn't count on any profits.

If you're getting only ten acres or so, I'd forget about making money off of timber... you're forest will be gone very quickly, if you start trying to make money off of firewood.

If your going to sell firewood (you have cut and split tons of wood "before", right?.... it's very very hard manual labor... for very little profit, especially if your using your own wood)... it's best to cut the wood off of other people's places... Get to know all the locals, and if you see a dead tree, ask if you can cut it for firewood. Never cut your own wood... if you do, unless you have a very large woodlot, you'll soon exhaust the forests capacity to replenish.

In short, wait till your actually making some money, before worrying about it... profits are iffy, under the best of circumstances.