Need some tax protection.

Discussion in 'Homesteading Questions' started by seedspreader, May 18, 2005.

  1. seedspreader

    seedspreader AFKA ZealYouthGuy

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    We (our family farm) are looking to incorporate or form an LLC. Most of the money that we make (as a family) comes from our small trucking business, which is really an extension of our family farm. Any pro's vs. con's? Any advice? Any good websites (preferably not Pay-to-use services) that have great information?

    I am in Ohio. Who has done what and what's the best advice you can give. I want to be able to consolidate several different streams of income and then redistribute them to the officers, as best benefits us. My parents live on the farm with me, my wife and four kids.

    And on top of that, how does that play into our "farm" status, if at all? I have NOT qualified for CVSA yet (I need to wait my 3 years) but do want to take advantage of that too.
     
  2. rambler

    rambler Well-Known Member Supporter

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    What is CVSA?????

    You might get better thoughts from a real ag discussion site:

    http://talk.newagtalk.com

    or one I boycott because of some past practices they've had, but would be right down your alley: talk.agriculture.com

    --->Paul
     

  3. seedspreader

    seedspreader AFKA ZealYouthGuy

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    Thanks for the links Paul. CSVA should really be CAUV... LOL, bad typo on my end. Current Agricultural Use Value for lowering taxes on Ag land.

    Are you incorporated at all Paul?
     
  4. rambler

    rambler Well-Known Member Supporter

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    Where I live farm land is getting higher than other uses almost, so don't need to mess with that. I believe my state calls it 'Green Acres Law' for the same end.

    Nope, just little old me on a little old farm, so don't need to bother with incorporation. If you have a lot of family members & different enterprizes, it can help out a lot tho. sounds like you are on the right track.

    --->Paul
     
  5. fin29

    fin29 Well-Known Member

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    Sounds like what you need is asset protection, not tax protection. If you have an accident or mishap with the trucking (as an extension of your family farm, which isn't currently incorporated), your personal assets are on the line in a big way. An LLC is an important part of planning a diversified family farm, IMO. You're dealing with a sue-happy public in an big-ag world. One LLC should cover all your endeavors (trucking, cropping, animal sales, etc.), provided they're accounted for in your Operating Agreement. My LLC covers a CSA, catering business, broiler business, farm stand operation, etc.

    I think you need to get thee to your Secretary of State's (or appropriate state agency for your state) website and form an LLC yesterday--worry about taxes later, because chances are they won't change much. After all--with most LLC arrangements, you're taxed at your regular rate, whether that be income tax, land use tax, etc. An LLC won't change that. You should be more concerned about protecting your personal assets. Sure, incorporation doesn't completely remove personal liability, but it sure does help to prove that the business is a separate entity rather than a mere extension of your personal assets, which is a notion that comes in real handy when someone decides your "business" didn't treat them right.

    Setting up an LLC is easy and you should do it yourself. You create an "Operating Agreement" outlining the structure of your corporation (Google "sample operating agreement" for samples) and file "Articles of Organization" with the state. Pay the fee and you're set. Start separate checking and credit accounts. Pick which vehicles will be for business use and switch the insurance, registration, etc. over to your business and don't use them for personal use. Switch all insurance policies covering your trucking business to the LLC and pay for them with your LLC's money. In short, create a long paper trail that proves beyond a shadow of a doubt that your LLC is being run separately from your personal finances.
     
  6. Conni

    Conni Well-Known Member

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    Who should have an LLC? I mean, how do I know if I need an LLC?