In most instances, getting “official” recognition for your farm is as easy as filing a DBA (“Doing Business As”) form with your County Clerk’s office. The transaction usually costs around $25, and it serves to protect your farm name within your county. Then you can take this DBA to your bank and use it to open a business account for your farm. Use this account to keep all farm income and expenses separate from your home bank accounts. It’s the very beginning of good farm business practices and recordkeeping.
Once you’ve done this, you can qualify to be exempt from paying sales tax on most farm purchases, for which you’ll need to get an ST-125 form (in NY – likely has a different name in other states) from the State Dept. of Taxation and file it with any store from which you make farm purchases. See the Fact Sheet #17 on Sales Tax Exemptions from the Guide to Farming in NY for more information.
Once you’ve made $1000 in sales in a calendar year, the IRS will officially recognize you as a farm and you can count your farm supply purchases as business expenses on your taxes. At this point you will need to file a Schedule F. See the Farmers Tax Guide from the IRS for more info.
If your business involves processing food in a kitchen, selling dairy products, processing meat, making wine, or selling nursery plants, you may need to apply for licenses or comply with special regulations. See Fact Sheet #27, Marketing Regulations, in the Guide to Farming in NY for more details.
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