advantages for a business

Lyvia · #1 07/26/13, 07:46 AM

Hi. Should I start a business?

I am just setting up my land, 4 months after moving in. Barely unpacked, just bought a tractor. My thought was to mainly raise food that fits my needs and my allergies; if I target every crop at four times what my family consumes, I would hope to have plenty, and maybe a bit to share/sell. Maybe a CSA someday. My mid-life crisis is pushing me towards experimental things that just might help feed the world someday. So my business would be more focused on research and development than actual sales. Last time I looked, the tax breaks were not available unless you show intent to profit, i.e. use established pesticides etc. Not my style.

So I was thinking of a business facebook page, and registering the name. If I have no sales, and no tangible property, then the Virginia paperwork looks pretty simple. The page would help me get the land established and let friends and family know what's up (i.e. identify my weed of the week!, and eventually free food for harvest help, etc).

So is it worth starting a business for this? Is there a better path? What do you think?

Two Tracks · #2 07/31/13, 09:36 PM

What do you mean that your business would be more focused on R&D? than Sales? Is this for a season while you figure out being a farmer growing the food and feeding your family first? If you grow the 4x's right off, you'll need an outlet...Farmers mkt, CSA, Roadside. Is this a supplemental business? Can you figure your costs and labor into foods you grow? Maybe a specialty niche could be your bulk operation with the other things for "eating for your family" I'm not an expert here just wondering because I'd like to be a small organic farmer as well and to sell overflow too, now we support ourselves, but like you I'd like to be of help feeding the world and not be always a "taker" of food others have produced. I realize not everyone has that desire or ability but if you do I say "Go For It!" What could it hurt, any overflow could even be a write off to local food banks. ~Chris

DEKE01 · #3 07/31/13, 10:19 PM

YES - every homesteader should own a business if they have other income and need to shelter income. Do you need a new computer in your house, a printer, TV? have the business buy it and it is tax deductible as long as it meets a legit business need and most of its use is for the biz. Building a barn, putting in irrigation, seeds, pasture renovation? All tax deductible *if* they are in support of your business.

You have to show some attempt to be profitable and that the expenses are legit in the sense that you must show a business need to buy a TV (you show commercials at your farm stand?), or that you use the computer to learn more about planting the heirloom tomatoes you sell or do your farm accounting, etc. All the rules are too extensive for me to list here, but this is the sort of thing that can save you thousands by reducing your tax bill.

I'll be surprised if someone doesn't come on here and blast me for this advice, but I did not write the tax laws, I just use them in a legal and business-like manner to my best advantage, no different than GE or your local Subway franchise.

Lyvia · #4 08/04/13, 06:01 AM

Thanks. This is all still a mess in my head. It began as a midlife crisis, with some job dissatisfaction. I would love to invent something small-farm related, like better fencing, or maybe just contribute to (or organize) knowledge on duckponics or hillside farming or some such, integrating modern materials. So far I have two acres of weedy unfenced pasture, a six stall barn, a brand new Mahindra Max tractor, and a work at home steady job. There's three more acres of steep woods. Plenty of opportunity, as long as I can refrain from getting animals until the infrastructure is better. Except for a puppy, one little puppy won't, umm, what was I thinking?

Deke you hit the nail on the head - Last time I looked at this, I was discouraged because it seemed that deviation from accepted pesticides and crops, etc, would be viewed as a non-attempt to be profitable. So maybe I become a non-profit research company, and put all the money (both pennies lol!) back into equipment fencing etc. If I publish studies, would that make my business different from a shaky tax shelter? Darn it, I might have to read some tax law. Or I could go look at puppies!

DEKE01 · #5 08/04/13, 02:11 PM

Lyvia, i of course have no background knowledge of your skills, knowledge, and abilities to judge if your plan has merit or not. But if you have a homestead and make any money on the side, it is almost always worth it to create an LLC or S-corp. The IRS may shut you down after 5 years if you aren't showing a pathway to profits, but as long as you aren't committing fraud, they aren't going to take away all the deductions you used during that 5 years.

I give this advice based on a homesteader building a farm even if there were no tax benefits. IOW, if you are doing it anyway, grab all the benefits you can. But if you are planning on investing time, mental energy, and finances on a biz you wouldn't be doing otherwise, tread slowly and plan out everything before you start spending cash.

unregistered358895 · #6 08/05/13, 12:28 AM

I'm in a totally different industry, but...

I own a small business that is very heavy in r&d and one-off custom creations. It is wonderfully fulfilling... and very expensive. I highly recommend that you find an easy "add-on" that can produce profits while you are in R&D stage. We accomplished this by adding a showroom at the front of our shop so that we can do retail sales. As mentioned above, you may be able to easily accomplish this with a roadside stand, an outbuilding turned corner market, or farmers markets.

Not only will this help you to offset the costs associated with your R&D, but it will also help you to build a customer base and business relationships that can help you to break into the market once your R&D turns in to production ready product.

jjvon · #7 08/18/13, 05:39 PM

I am retired, 76 yrs old. I live in a village +- 200 people. My property is short of 1 acre. I have 2 gardens and sell a lot of my "organic" produce to two different stores...and I get a premium because it looks great and is organic. Aside from that, consider getting a A2A2 certified cow and sell the extra milk. i, know, i know, problems but they can be overcome. People are looking for it....excellent food. Small business!!!! absolutely., just one cow could be a small business. Do you intend to loose money? most likely not...then you qualify for small business. 2-6 hrs a week on the business is all that is required to meet the requirements. Learn the rules from a book (I dont sell it) Home Business Tax Savings Made Easy, Ronald Mueller. I am retired now living in Iowa. I have started 9 businesses (East Coast) and I cant tell you how much I learned about keeping your hard earned money from the book above. My tax people were uninformed. It also tells you a lot about how to run your business. Consider two or three small businesses. Don't depend on just one. Good luck. First make some money. Second, keep as much as possible.

I am putting together the 10th business right now (a Home based business) and I am going to make the book an integral part of the package.