![]() ![]() We comply with the Federal Trade Commission 1998 Children’s Online Privacy Protection Act (COPPA).Small and midsize producers provide new opportunities for American agriculture across the country. The 4-H Name and Emblem have special protections from Congress, protected by code 18 USC 707. Reference to commercial products or trade names does not imply endorsement by MSU Extension or bias against those not mentioned. This information is for educational purposes only. Quentin Tyler, Director, MSU Extension, East Lansing, MI 48824. Issued in furtherance of MSU Extension work, acts of May 8 and June 30, 1914, in cooperation with the U.S. Michigan State University Extension programs and materials are open to all without regard to race, color, national origin, gender, gender identity, religion, age, height, weight, disability, political beliefs, sexual orientation, marital status, family status or veteran status. MSU is an affirmative-action, equal-opportunity employer, committed to achieving excellence through a diverse workforce and inclusive culture that encourages all people to reach their full potential. For more information, visit the MSU Product Center website or call 51. The MSU Product Center, in partnership with Michigan State University Extension, provides business counseling to help Michigan entrepreneurs commercialize food, value-added agriculture, and natural resource products. In order to continue to be a qualified farm for tax purposes, 2/3 of your taxable income must come from the farm in the prior two years and your farming activities must show a profit in three of seven years.Įither a Michigan State University Extension Farm Management educator or an Innovation Counselor with the MSU Product Center can help you with a business plan and other steps mentioned here. According to the Internal Revenue Service, if you gross $1,000 or more in agriculture sales per year, you are considered a farm.You can complete a Sales and Use Tax Certificate of Exemption (form 3372) from the Michigan Department of Treasury and show it to vendors when making pruchases for your farm. If you meet the standards of being a farm in the production and sales of a commodity for profit, then you can qualify to make production input purchases exempt from Michigan sales tax.Be prepared to pay separate social security, Medicare and income taxes on farm profits. Treat your farming activities as a trade or business so you can complete a 1040 Schedule F form when filing your income taxes (normally due March 1, unless you pay estimated quarterly payments).You will be able to create a profit and loss statement quarterly anr/or annually with this information. Establish a farm checkbook where sales income is deposited and checks are written for expenses. Make sure to keep farm records separate from your personal records.Have a written business plan to help you map out what you are going to produce, along with how and when you will generate a profit.Here are some recommendations for a successful farm business: Farms that produce and sell commodities to other farms or agri-businesses are exempt from sales tax and do not require a license. ![]() If you are going to sell retail, you need a sales tax license from Michigan Department of Treasury. You also need to check for any regulations on the growing and/or sales of your chosen goods through the Michigan Department of Agriculture and Rural Development. Filing an LLC with the State of Michigan will protect your name statewide, but it is recommended that you seek legal assistance if you go this route. A more formal business entity is the Limited Liability Company (LLC). It is not necessary if you are using your own legal name as the business name. This is very important, as it is required on all government forms and applications. Next, you need to register your business name by contacting your County Clerk’s office. First and foremost, you should check with your local zoning official to make sure your idea will be an allowed use in your township or city. If you’re feeling confident that you could start and run an agricultural business, you could consider starting a farm enterprise-selling some type of commodity to make a profit such as livestock, crops, or even starting an agri-tourism venture, for example. Anyone who owns acreage and pays taxes wants to get as much value from the land as possible. ![]()
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