amy g. Posted July 3, 2009 Share Posted July 3, 2009 We met with an accountant today to discuss building a dairy and commercial kitchen. We want to sell milk and cheese and eggs and bread and soap to off set the cost of keeping so many animals. We also want to provide a place for the older kids to do real work for wages. Since we are going to sell food products, we will get liability insurance, and make customers sign a release form before allowing them to buy raw milk. We want to make sure that the business is kept seperate from our other assets so that if something happens, we can not lose our house or other things we have worked for. It looks like we will need to start a corporation instead of a sole proprietorship for protection. The next step is to meet with an attorney, which is going to be costly. Assuming we can do most of the filing and paperwork ourselves, what do you think the cost will be just for licenses and filing fees? I'm only looking for a ball park figure. Are their any major drawbacks in setting the dairy up as a corporation? Dh wants to lease the building and animals to the dairy so that the company actually has very few assets in it's name. Quote Link to comment Share on other sites More sharing options...
Renee in NC Posted July 3, 2009 Share Posted July 3, 2009 No. Please do set it up as a corporation - there are liability and tax reasons why this is a much better option than being a Sole Propriertorship. I hope they don't charge you too much - it isn't a difficult process and they have software that generates generic documents with your info plugged in. Look up your secretary of state's office to see how much it costs in your state. Here it is $125.00. Can your accountant not handle it for you? Let me say this, though - if you become a corp, you come under federal wage and hour laws for your children. The laws for agricultural work are a little more lenient, though. Quote Link to comment Share on other sites More sharing options...
amy g. Posted July 3, 2009 Author Share Posted July 3, 2009 Thank you so much. I was hoping you would weigh in. The accountant we saw today deals mostly with horse businesses. She does sole proprietorship and partnerships only. She said that in our case, a corporation would be better, but we would need someone else to help us. She was going to research the laws concerning the kids and wages. Of course, the whole purpose is that I want to pay them a fair amount, so either way, I think we can work it out. My oldest and I will be the only people working at first. She cares nothing about money, so we agreed that we would reinvest anything we made for the first year. I know it is a crazy time to be starting a business, but we are not borrowing any money, and Dh says that if it doesn't work out, we can use the building as an awesome school room with a kitchen! I also know there are people looking for commercial kitchens to rent by the hour, so I'm just going to do it. Quote Link to comment Share on other sites More sharing options...
Satori Posted July 4, 2009 Share Posted July 4, 2009 I set up a corporation, my lawyer thought it was a good idea and we thought we'd save some money on taxes. But I was in a different industry than agriculture, so I'm no help. Quote Link to comment Share on other sites More sharing options...
creekland Posted July 4, 2009 Share Posted July 4, 2009 Hubby's business is set up as a Corporation, but it's in Civil Engineering and was set up 10 years ago, so I'm afraid I'm not much help either. I know he didn't need a lawyer - it was all pretty clear just looking on our state website and filling out papers/paying the fees. I can say it's better tax-wise to not have other employees, but instead to hire 'private contractors.' Of course, that's perhaps because we don't need anyone on a regular basis... just now and then for some field work. As private contractors they pay their own taxes - which for the younger set, tends not to be all that high. Mine have not had to pay anything as of yet (again, not working all that many hours in a week). You definitely want a corporation... wouldn't want to get sued by some fluke and lose all YOUR assets! Quote Link to comment Share on other sites More sharing options...
LizzyBee Posted July 4, 2009 Share Posted July 4, 2009 We met with an accountant today to discuss building a dairy and commercial kitchen. We want to sell milk and cheese and eggs and bread and soap to off set the cost of keeping so many animals. We also want to provide a place for the older kids to do real work for wages. Since we are going to sell food products, we will get liability insurance, and make customers sign a release form before allowing them to buy raw milk. We want to make sure that the business is kept seperate from our other assets so that if something happens, we can not lose our house or other things we have worked for. It looks like we will need to start a corporation instead of a sole proprietorship for protection. The next step is to meet with an attorney, which is going to be costly. Assuming we can do most of the filing and paperwork ourselves, what do you think the cost will be just for licenses and filing fees? I'm only looking for a ball park figure. Are their any major drawbacks in setting the dairy up as a corporation? Dh wants to lease the building and animals to the dairy so that the company actually has very few assets in it's name. Go to the website for the Secretary of State of your state. You can file the articles of incorporation yourself if you want to, and in many states, you can even do it online. You can apply for a federal EIN online at http://www.irs.gov. If you incorporate, you will probably want to be an S corporation. That is done by filing federal Form 2553. The biggest drawback of being a corporation is filing separate tax returns. There may be annual fees, too, depending on your state. You can get liability protection without the need for a second tax return by being a single-member LLC. Single-member LLC's are disregarded tax entities, but separate legal entities. In some cases, LLC's owned by a husband and wife can choose to be treated as a single-member LLC. Your accountant should be able to determine whether your business would qualify. Good luck! Quote Link to comment Share on other sites More sharing options...
LizzyBee Posted July 4, 2009 Share Posted July 4, 2009 Can your accountant not handle it for you? No, that would be considered practicing law without a license. The process of incorporating falls in the legal rather than accounting arena. Quote Link to comment Share on other sites More sharing options...
Renee in NC Posted July 4, 2009 Share Posted July 4, 2009 No, that would be considered practicing law without a license. The process of incorporating falls in the legal rather than accounting arena. Oops. Good thing I only did it for family, huh?:lol: I was thinking it fell under "Business Consulting." I won't do that again! Quote Link to comment Share on other sites More sharing options...
LizzyBee Posted July 4, 2009 Share Posted July 4, 2009 Oops. Good thing I only did it for family, huh?:lol: I was thinking it fell under "Business Consulting." I won't do that again! :lol::001_smile: Quote Link to comment Share on other sites More sharing options...
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