Checklist: Making your Flower Farm Business “Official”
Starting a flower farm and making your flower farm business “official” in the eyes of the government and regulatory agencies can be a daunting task. If you have absolutely no idea where to start, here’s a list of 8 steps to take your hobby and make it an official business. Making your business official involves reporting income to the government, and you’re required to keep track of revenue and expenses.
Keep in mind this is a very general list, and not every item may apply to your unique situation.
EVERY STATE IS DIFFERENT AND HAS UNIQUE REQUIREMENTS!!!
I am NOT a CPA, nor am I giving you any legal or tax advice in this article. I don’t know the rules in all the states (since every one is different), so you MUST do your own research. This is simply a list of things to consider when making your business official. Hope it helps!
CONSIDERATIONS WHEN MAKING YOUR BUSINESS “OFFICIAL”
Decide on your business name. Be sure to do plenty of research to ensure you can legally use this name (are not using another already established business’ name). You can do a business name search to see if the name you want to use is available in your state.
Decide on your business structure/create a legal business entity. This essentially registers your business. Legal and tax considerations should enter into this decision, I recommend speaking with your accountant and reading up on each structure type. There are pros and cons to all structures, and some are recognized differently depending on the state you do business in. The structure you choose will have a big impact on how you are taxed, so again, please consult a tax professional if you have questions. You may need to hire a lawyer to set up your business structure if you decide on anything other than a sole proprietor. The most common forms of business are:
Sole proprietor
This is the simplest and easiest way to register a business that is low-risk for litigation. However, keep in mind that there’s no separation between you personally and your business. That means that you (and your personal assets) will be personally liable for anything that happens in your business, which can be risky.
LLC
This is a popular structure for small business, because it separates you as the business owner from the business, giving you and your personal assets more protection in case of litigation. Most LLC’s use pass-through taxation, where the profits are passed through and reported on the owner’s personal tax return - but it can be different.
Corporation
This is popular for larger companies that want to keep profits within the company, or need a more sophisticated structure. There is often a lot of formality and paperwork involved that can be burdensome on small businesses.
Register for an EIN# with the IRS. Employer Identification Numbers are issued for the purpose of tax administration & is used to identify a business entity. You can easily do this online (find info HERE).
If applicable in your state/county, register your business with local government (file a DBA “Doing business as”, if applicable)
Some states may require a business license, do research in your own state to see if you need to acquire one.
Open a business bank account. You’ll need an EIN# to open a business account. Keeping all business finances separate from personal ones is a good practice, and is necessary under most business structures.
Register to collect and remit sales tax (if applicable in your state). Most state departments of taxation and finance have information on their websites, and many have help lines you can call to get assistance.
Check with your local town & county governments to ensure you are in compliance with regulatory licenses, permits and zoning laws.
ADDITIONAL CONSIDERATIONS:
General liability insurance. Pretty much any business should be aware of the benefits of carrying general liability insurance. There are many insurance companies that specialize in insurance for agricultural businesses, I’ve found it best to work with those.
Commercial auto insurance. If you will be having employees drive a commercial business vehicle you’ll need commercial auto insurance.
Hire a CPA/accountant. You can certainly do your own taxes and bookwork yourself, but I (personally) leave this up to the pros. Be sure your CPA is aware of the Schedule F that you’ll need to file (specific for agriculture on income tax returns).
Keep track of your finances (income and expenses, assets and debts, etc.). This is an obvious one, but for some reason A LOT of new businesses fail to keep good track of their finances. It’s not hard to do with a separate business bank account, since you get a monthly statement. We also have a business credit card that makes tracking expenditures super easy: simply put every farm expense through the card (we pay it off every month and get cash back rewards). I HIGHLY recommend using quickbooks or a similar finance program to track your expenses, but spreadsheets work too.
If you are hiring employees:
File as an employer with your state
Hire a payroll company
Get proper insurances if applicable (Family & Medical Leave, Workers Compensation, Unemployment Insurance, etc.)
Again, this is a GENERAL list of considerations and I want to make it very clear that I am NOT giving any legal advice, tax advice, or business advice. Be sure to check with your states laws, regulations, and requirements.
Comment below to let me know if this was helpful or not!