How to Set Up an LLC for Farm Operation
A Limited Liability Company (LLC) is a business structure that protects the personal assets of the owner and other members of the company from outstanding business debts. This protection also extends to judgments against the company resulting from a legal proceeding. Because of the risks of unpredictable crop yields, market prices, and government regulations it can be very valuable for a farm operation to be set up as an LLC. The LLC is formed by filing the appropriate forms with the state in which the farm will operate.
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Instructions
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Create a name for the new LLC. Most states require that you choose a name that does not indicate the business will engage in any unlawful activity and that the name is not already in use by another business inside the state. The website for each state government has a searchable database of registered names that you can use for this purpose. The name of the business will also need to end with the designation Limited Liability Company, LLC, L.L.C., or Ltd. Liability Co.
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Attain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN will allow you to set up a checking account under the business name, hire employees, and protect your Social Security number on business contracts (the EIN can be used in lieu of the SSN for this purpose).
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Prepare an Articles of Organization form to file with your state. This form will act as a basic business charter. It should include the name and physical location of the business, the purpose for setting up the business, and the name(s) of the owner and any other members. Be as inclusive as possible when stating the purpose of the LLC. If your farm focuses mostly on agricultural goods but you are planning on future animal husbandry, then you should include both. Anything not specifically designated here will limit your future operations. Most states have pre-prepared Articles of Organization that can either be downloaded and mailed or filled-in and submitted online for free.
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Appoint an individual to act as your registered agent. The registered agent can be any person outside the business that can accept legal forms and documentation on its behalf.
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Submit the Articles of Organization along with the required filing fee to your Secretary of State. The average filing fee is $125 but you should verify this amount with your Secretary of State. The fee amount and mailing address for each state can be found on the state government website.
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Tips & Warnings
When stating the purpose for forming the business, it is acceptable to write "for any legal purpose" in order to avoid future operating limitations.
There are private organizations that will offer to set up an LLC on your behalf. Note that these companies generally charge a fee far exceeding the basic fee for filing the Articles of Organization.
