The Farm Business

Laura and Adam started out structuring Loon Organics as a partnership. They didn’t marry until fall of 2008 but wanted their business to be a 50:50 venture from the outset, so a sole proprietorship wasn’t appropriate. Because they weren’t sure at first how long they would be farming, they didn’t want to spend money on incorporating.

Once Adam and Laura were ready to purchase their farm, they restructured to a domestic family farm corporation. It gives them several benefits, including greater liability protection than they had as a partnership. The main driving force behind incorporating was the regulations surrounding the type of loan they obtained for purchasing the farm. The corporation now owns the property and the farm assets.

The decision about whether to incorporate a farm or use another business structure tends to be very specific to each farmer’s set of circumstances. Professional advice is highly recommended, but the resources below provide a starting point for understanding the different options.

Michigan State University’s Beginning Farmers Web site has a useful post about Farm Incorporation.

The University of Wisconsin Center for Cooperatives has a comprehensive comparison chart of business structure types that is tailored to farming.