By: Emily Wells Morrow, WVU Extension Agent, Jefferson County
When you run a small farm, business structure is usually the last thing on your mind. Is it even worth bothering with all the extra paperwork and hassle to set up anything other than a sole proprietorship? In short, the answer is yes.
Simply put, a sole proprietorship offers no legal barrier between you and your business. If, for example, a visitor becomes injured on your farm, a sole proprietorship business structure means a liability judgment could result in your assets – both your farm and personal assets.
A more formal business structure, such as an LLC or corporation, means there is separation between what the business owns and what you own, thus minimizing your legal risk.
An LLC is the favorable choice to many small businesses, as it is less complex than other options when it comes to both structure and filing taxes. However, it’s important to research all kinds of business structures to decide which one is best for your operation. Do multiple people have ownership in the farm? What are your future plans for the farm? Do you plan to pass the farm to the next generation? These are all questions to ask that will help guide your decision. There are advantages and disadvantages to each type of business structure, and only you can decide what will work best for your farm. Learn about the specifics of business structures and how to register your business, by visiting the go to the West Virginia One Stop Business Portal’s website to learn more.