Sharing a farmer's market booth

We're working very hard getting this homestead up.  In the last few snowy days, I'm trying to trudge through the paperwork aspect.  Most of which I know nothing about.  Lots of reading.  We are very tight financially, so I'd rather read and learn instead of just paying a lawyer.

I sell herbal stuff online, but not enough for anyone to notice.  However, I want to start selling this Spring at the Farmer's market along with produce as it becomes ready.  My neighbor and I want to share a booth together to share the costs and the work.  She already has her LLC etc.

For our farm and for my herbal business (operating as 1 unit), I got my DBA (Fictitious name), applied for an LLC yesterday and working today on the State Tax ID #. 

So here are some questions.  Not looking for easy answers, but a point in the right direction would be nice.

1.  What would be the best way to combine forces with my neighbor so we can share the farmer's market booth?  Should we get yet another LLC or set up as some other entity?

2.  Where can I go to learn about the sorts of tax things I'll need to know for our farm?  Like what sorts of things we can write off, how to keep accounts, how often I have to file etc?

With trying to get a homestead going, new gardens, build a house and learn everything I can about perma-culture, I sure wish a magic genie would do all this paperwork stuff. 

Although I have no direct experience with sharing a booth at  a farmers market.  In my experience with linking a business with someone else, it is best to keep good boundaries.  I have been involved in a few ventures and what worked best for me was I keep track of my stuff and they keep track of theirs and the money gets paid to whoever it is owed.  I don't know if this is possible for your situation, but I would consider keeping a solid inventory of what you bring to market and what is sold at market and getting your money that way.  I wouldn't think you need another LLC (or the expense of filing for that).  Just keep communication up and define things like equal work time at the booth if you don't both plan on being there when it is open.  I am assuming there is a trust factor in place so a simple tally sheet could work for keeping track of inventory and sales.  As far as splitting a booth, I know that some farmers markets will allow you to do that simply by both parties paying their share.  Just a thought maybe you desire something more formal.
As for accounting resources, I don't know of any specific books or websites.  Maybe ask some of the other farmers at the market how they do it.  Or just find a good accountant and set up a meeting.  You might be able to get a free consultation, or maybe get you questions answered by a professional for an hourly fee.

Let's assume you're in the USA.

Your tax filing deadlines for the feds are easily found here: http://www.tax.gov/calendar/

For the farmers market, I would suggest having your legal structure complete before you contact them. Many markets have regulations around booth sharing to discourage it, or even prohibit it. The spirit of farmers markets is that everyone sells their own stuff in their own booth.

If you're only looking for a legal structure for farmers market sales but otherwise not working together, you could have an "unincorporated association." Give it a name. Have a piece of paper that says who is in the unincorporated association. The unincorporated association would apply to be at market. Keep a daily sales log covering whose products were sold for how much. Divide up all the funds at the end of each market. Each member of the association separately reports income and pays taxes. The unincorporated association is just the pass-through organization and would have no net income.

Caveat: you'd be a fool to take tax advice from a stranger on the internet. I'm just a farmer and not a CPA.

Most tax accountants will do a free Q&A with you hoping for your business. It's great to want to do things on your own but when it comes to liability, tax laws it's best to talk to someone whose job it is to know these things.

Ask around, find out who others are using for their small business.

I think this is a great conversation. (This entire post is all about question 1.)

First though, it would be awesome if everyone was using first name-last name, and put their location in their profile.

Disclaimer: I'm new to farm accounting, and I am not a CPA. (I can do much more than a bookkeeper, but am just below a CPA.) I'm also new to farmers markets and am curious to learn more. I help a lot of small businesses set up their bookkeeping systems and I offer a free one-hour consultation to new clients, so Greg's got a good point in that respect.

I'm surprised most markets don't let folks share booths. If your market does not allow that, I still don't think you need to go into some joint organization just to share a booth. Keep it simple. Observe first, before creating even more tax and paperwork obligations. Right?

What if you go the market one week, your neighbor the next, and each takes produce to sell for the other? It seems it would be simple to keep a tally sheet, deduct half the booth cost and then pay the other person for their sold items. I think most markets want to know total sales, but it doesn't matter that it's combined sales for the two of you, because it's not reported to tax agencies. From the one market I've just started to work with, they only use vendor sales amounts as part of total market sales for different kinds of market management stuff.

This is the part I'm not sure about. If the booth is in your name one week, and your neighbor's the next, do you lose your position/booth in the market? Or does the market require just one name for that booth for the season? If so, see if it makes more sense to use one business over the other, OR flip a coin. Seriously. Then it might make sense to create a simple agreement of how you'll staff and manage the sales, because one businessperson has stuck their neck out for both.

Ideally, the market would let you alternate weeks at the booth, and then you might not even need an agreement. Except for perhaps reviewing the full season calendar to make sure who's on which days is spelled out.

Any other ways to try to follow K.I.S.S.? I would love to hear more about how other farmers markets work.

sparticle wrote:
2.  Where can I go to learn about the sorts of tax things I'll need to know for our farm?  Like what sorts of things we can write off, how to keep accounts, how often I have to file etc?

Both NM Grower and Greg had good info for you. There's more--a few "it depends."

It depends on your state. SO MANY differences in state taxes and rules. Some states have excellent resources online about what's what - or even free classes. (The Washington State Dept. of Revenue offers free classes to help business owners understand the state excise tax rules. Excise aka B&O or business and occupation tax.) Some extension agencies offer farm business management and tax classes as well. In my area, there's CPA who offers free small business webinars on tax issues.

It depends on what type of LLC you are. There are three types:

[li]sole-member disregarded entity - taxed like a sole-proprietorship[/li]
[li]partnerships[/li]
[li]corporations - most commonly an s corp[/li]

It depends on the recent IRS whims (tax law changes), the wide and varied opinions of CPAs and how you want to manage your business. Some things are required by the IRS, such as keeping track of mileage, or booking large $ purchases as assets instead of expenses. But CPAs will vary in how they interpret what's required, so one CPA might say it has to be an asset, expensed over 5 years, while another might say it's an asset expensed over 7 years.

Even with all the rules, there are still things you can decide to do with your business income and expenses, and finding a CPA who fits with your management style will help.

sparticle wrote:
With trying to get a homestead going, new gardens, build a house and learn everything I can about perma-culture, I sure wish a magic genie would do all this paperwork stuff. 

There are magic genies! They're called bookkeepers or administrative assistants!   

But seriously, if you get busy enough and making enough money at the market or online, it might make sense to hire some help.

Best of luck!

I haven't worked in over two years.  There is zero chance of hiring help. 

Oh my, that is a harsh reality check. Sorry to hear that sparticle. Here's wishing you a MUCH brighter future.

Gently stepping aside now...what about sharing the market booth? Are you still going to do that with your neighbor? How did you decide to work it out?

Yes, my neighbor and I are going to share a booth which means we can split the annual fee.  The fee isn't high, but it'll be nice to split regardless. 

I have quite a good herbal inventory that I worked on last year so I'll have something to sell right off the bat, and my neighbor used to sell hand made jewelry and has a lot left that didn't sell, so she will too. 

Thankfully we get got out of debt before I lost my job and our land is paid for.  We don't have too many expenses, but we do have to try to do most things ourselves.  Once the gardens are going this year, our expenses will be greatly reduced.  Making a little money at the farmer's market sure would be nice!

  I'm not sure if it's the same in the US or maybe certain states,  but in Canada if you have a farm there is a difference in the way taxes are done.  If you qualify not only is the business taxed different but property taxes are lower.  There are people who specialize just in farm taxes.   

  Here there are a number of organizations that help farmers and they're good sources of information.  I've found the best people and info though comes from farmers themselves and particularly farmer groups, like associations be they provincial or national.  People that already have experience natvigating whatever system is in place are like gold.  I would try seeing what might be available in you area. 

  The best piece of advice they gave me was to keep a record of every single thing be it equipment or inputs that comes onto the property because as a 'farm' it all can count towards business expenses.  Even recording gas and milelage when picking up or transporting goods is important because a certain amount can be written off.   

  It also is important because in some cases there are programs that farms can qualify for and in the farming world any little bit can help.  Like for instance in my country there is a grant program for local food producers which gives a tiny bit of help every year with money directed to a specific area.  This year it will likely be a few hundred dollars for signage be it on property signs or signs for markets.  Not a whole lot of money in the big scheme of things but I'm not going to say no.