Before you dive into setting up a corporation, it would be helpful to confirm that this is the right choice for your farm. Our free resource, Farm Business Structure Basics, offers several tips on forming farm business structures, including why you would form a corporation (or LLC) at all.
If you are ready for a deep dive into learning about corporations and farming, or are ready to actually set one up for your farm, turn to Chapter 5: C Corporations out of our Farmers’ Guide to Business Structures. In this guide, you will learn about the “C” corporation, which is often just known as the traditional corporation. After working through this guide, you will understand the benefits and responsibilities that come with having a corporation. If it’s the right business structure for you, follow our instructions and checklist for forming a corporation, also in Chapter 5.
But, don’t stop at forming a corporation if you want true legal resilience. Especially if you are working with others, disagreements can cause intractable problems for the farm business further down the road. You’ve heard the stories… fights about debt loads, mismanagement of budgeting, unclear communication causing stress… There is a solution. Although it’s often not legally required, we can’t stress enough the importance of a thorough governance document in preventing these types of problems before they harm the farm or ranch business (and the personal relationships of those involved). No matter the business structure chosen, write corporation bylaws that addresses unique needs of the farm or ranch business.
We provide a fully annotated model set of bylaws in Chapter 5: C Corporations of the Farmers’ Guide to Business Structures. It includes detailed descriptions of how and why the agreement was drafted as it was. Follow along with the fictional stories of the farmers creating the agreements so you can understand how they relate to your own operation. When you’re ready to draft your own set of bylaws, use the Farmers’ Workbook for Creating a Governance Document (20pgs) to support your journey each step of the way.
If you haven’t first considered your other options, such as an LLC, we recommend starting there. Check out our Farm Business Structure Basics. It answers the most frequently asked questions farmers have when choosing a business structure, such as: I’m not sure I want to form a business entity? Can’t I just sell my products or services? Which one is better – a corporation or an LLC? If you are more of a visual learner, and want to see all your business structure options, follow the flowchart in our free “Understanding the Options” which is Chapter 2 of our Farmers’ Guide to Business Structures. Through a series of Yes/No questions, this flowchart leads the reader to business structure options that are likely to fit the farm’s needs.
For audio learners, listen to our Podcast Episode 5: Farm Like You Mean Business! This podcast is a basic introduction to business entities for farms. You’ll learn about sole proprietorships, partnerships, LLCs, and corporations as the hosts explore the big question: What’s best for your farm enterprise? Hear directly from farmers about their personal experiences with tax issues, organizational documents, and more.