Hi, so to start, i want to start a smallish blueberry farm, @ 18-20 acres. I already have the land, but No/little irrigation as our well will run dry on hot summer days if the water is on all day, and an old beatup tractor. I have looked and around at the cost of plants and can find the affordable and close to my location in eastern WA. My question is do i start the farm first and pull out a bussiness license a year or too later once profits are made, or do i pull one out before i purchase anything and claim a loss for the first year or so and use farm items on tax write offs? Does anyone have any good insight?
Look into what kind of business you want to run, from a sole proprietorship to an LLC to an Inc. Each one is different and has different implications, and can vary from state to state. My wife and I chose a sole proprietorship for our new farm even though we're hardly a farm yet and the only thing we currently sell are eggs. We partly did this to, as you mentioned, write off expenses, make farm purchases tax exempt, and claim losses. Something else you may want to do, which we have already done and is separate from the "business" side of things is a) put your land in the green belt and pay less property taxes, which is also what is needed to get a tax ID number and b) get a USDA farm number if you want to participate in the NRCS programs provided by the USDA. These programs are grants, and there are many different kinds of programs, but for example one that we are going to enroll in is livestock fencing. They won't pay for perimeter fence, but will pay for interior partition fence, and not pay for 100% of it, but it certainly helps with the burden of certain farm expenses. It's free money that you don't have to pay back.
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Brett Holm wrote:Hi, so to start, i want to start a smallish blueberry farm, @ 18-20 acres. I already have the land, but No/little irrigation as our well will run dry on hot summer days if the water is on all day, and an old beatup tractor. I have looked and around at the cost of plants and can find the affordable and close to my location in eastern WA. My question is do i start the farm first and pull out a bussiness license a year or too later once profits are made, or do i pull one out before i purchase anything and claim a loss for the first year or so and use farm items on tax write offs? Does anyone have any good insight?
Thanks in advance!!
You want to get going as a farm first. I say that because for the USDA and IRS it only requires a person to be "trying to produce $1000 per year in profit". The key word there is try, there are many, many farms that never achieve a profit for years. And the $1000 per year is not likely to change either. Not with Buy Local being a huge driver today, and it being political suicide for any congressman to try to get that figure higher as so many small farms abound now. For property tax abatement, the profits per year can be higher, but that is another story; in my town it is $2000 for instance.
You really want to be filling out a Schedule F Form...yesterday. The USDA again does not care if you are making money, their goal is to be putting food on the national food chain...so they want to see that you are showing any profit or loss, and through that, that food is being kicked out for this nation to eat, and the Schedule F is how it is done. It is the first thing they will look for.
You will also have to file a letter with the local USDA-FSA Ag Committee with your general farm plan, and they will vote on whether or not you meet the criteria as a farm. Don't sweat that, most people do, and once done, it is filed for life.
You will want to do all this because a lot of programs are available by the USDA-NRCS for irrigation, and as we all know, blueberry crop production REQUIRES irrigation, even here in Maine where we get plenty of rain. It is not so much how much rain blueberries get, but rather when they get it. These programs work well within the USDA-NRCS EQUIP cost share programs as well as separate irrigation programs. Removing rocks is also a conservation practice covered because with rock removal, berries can be mown instead of burned saving on air pollution. Ultimately you will probably want a pond built to hold this irrigation water, and that too is covered, which is now very hard for other farm commodities. So you would be surprised what is covered for small, start up blueberry farms.
Getting "grants" is another topic altogether. These are not really "grants" but rather cost share programs.
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