How do you want to organize your business? Depending on how many people are involved in your operation and what your goals are, this question may take some time to answer. You need to talk to key individuals who are or will be in the business to get their input.
Advisors should be consulted to help you think through “what if” scenarios so the best type of business structure is established for you. A publication called Questions to Consider When Starting or Restructuring a Business is available for download (PDF) for you to get some ideas on business structures. Visit Cornell’s Business Structures Strategies website for more information on this topic.
In the beginning, most farms are sole proprietorships, so if this sounds like you, you may not need to spend much time on this question up front. If you are a sole proprietorship, or even a partnership, the only thing you need to do to formalize the farm is to register a DBA (“Doing Business As”) form with your County Clerk, and set up a separate farm business bank account at your financial institution.
Many farms choose to organize as an LLC (Limited Liability Corporation) to protect the family’s assets in the event of a lawsuit against the farm.
Farms with a specifically charitable or educational purpose need to apply to the IRS for 501(c)3 status, a process that can take several years.