For New Farmers
What legal, tax and regulatory information must I know to run my farm?
There can be many legal, tax and regulatory requirements facing a farm business. Sometimes it's hard to know what the right questions are. There are also public policies that create legal and tax benefits and breaks for agricultural businesses. It's your business to find out about these too.
Here are some things to think about:
- You need to select and establish your farm business entity, and file the initial necessary forms, and routine forms as required. Check with your town clerk and tax assessors.
- You must be fully informed about paying federal, state and local taxes as a farm business.
State laws that affect farming vary from state to state. Sometimes there are multiple definitions of "farming" or "agriculture". Many states have resource protection laws for wetlands, forest management and nutrient management. Contact your State Department of Agriculture or Farm Bureau for information about your state's legal requirements.
- It may be necessary to register your business with your municipality and/or with your state.
- There may be other local regulations such as zoning and health by-laws that impact farm businesses.
- You must address all requirements regarding farm employees.
- Nearly every state has a "preferential property tax assessment" program (sometimes called "current use") that offers lower property tax rates for land in agricultural uses.
- There are specific federal, state and local laws and regulations regarding the processing of farm products, including livestock and poultry, and produce handling, cooking and packaging.
Here is a sample of resources:
The Legal Guide for Farm Direct Marketing is published by Drake University's Agricultural Law Center.
The National Center for Agricultural Law Research and Information has numerous articles and agricultural law bibliographies, including An Overview of Organizational and Ownership Options Available to Agricultural Enterprises.
Gempler's offers a Safety and Employment Law Compliance Kit; search their site for "Employment Law."
NOFA-NY publishes a guide to regulations regarding interns and apprentices.
The Internal Revenue Service (IRS) offers many tax publications and forms for downloading, including Publication 225, the Farmer's Tax Guide, which can help you determine whether to file Schedule C (self-employed) or Schedule F (farm income).
NRAES publications on this topic include Tax Planning when Buying or Selling a Farm; Workforce Management for Farms; and Horticultural Businesses Income Tax Management for Farmers .
The Tilling the Soil of Opportunity NxLevel business planning course covers many tax and legal issues. Access a list of course sites in your area at http://www.NxLevel.org