Structuring A Family Farm Business

No matter what type of business you operate, a well-thought-out business plan is essential to your success.  Business planning covers all aspects of a business, from its legal structure, to marketing, to succession planning.  Businesses that forego putting a viable plan in place are taking tremendous risks.  This notion applies as much to a family farm business as it does a multinational corporation.

Family farms may be operated as sole proprietorships, corporations, limited partnerships, limited liability companies, or a combination of these legal entities.  Getting the business form correct is an important first step in planning because it can have a large impact on other aspects of the business. 

One of these is the valuation of the business for purposes of transfer tax.  This refers to taxation, which applies to the passing of title to property from one person to another, including estate tax and gift tax.  Another way legal structure can impact a family farm is by its effect on income taxation during the business’ operation and possibly even upon liquidation. 

See Determining How to Structure Your Family Farm Business, P.1, National Law Review, Jan. 3, 2015.