Tag: farm

Determining How to Structure Your Family Farm Business, P.2

McBrayer NEW logo 1-10-13

In our last post, we began looking at the issue of business planning within the context of a family farm business. We’ve already spoken about the importance of appropriately structuring a family farm business because of the potential tax consequences. Between the various forms of business structure, tax applications vary considerably. Although this is a big issue to plan for, here we’d like to talk briefly about the way structuring a farm business can impact ownership and management of a family farm.

There are a variety of business structures one can utilize for a family farm. Four general forms are: sole proprietorship; general partnership; corporation; and limited liability company. Which one is selected depends on the needs and goals of the business and those involved in it.

Some of the things that need to be taken into consideration when structuring a business, other than tax issues, are:

  • How many family members are involved in the business?

  • Is there a desire to share ownership with children or siblings?

  • Is shared management appropriate?

  • Should ownership of the business be separate from its management?

  • Is there a desire to limit liability among owners?

These, of course, are only preliminary questions that should be considered when selecting a business structure. Sole proprietorships and partnerships are relatively easy to set up compare to corporations and limited liability companies, though the latter two forms carry their own benefits while the former carry certain risks.

Each family has unique dynamics, of course, and what is appropriate for one family may not be appropriate for another. In addition, the needs of a family business can change over time, and this should also be considered. Ultimately, each family farm business needs to come up with a business arrangement that is appropriate for its needs. Working with experienced professionals in forming such a plan is important, including an experienced business attorney.

Source: Agri-View, “Is farm business planning part of your New Year’s Resolutions,” Troy R. Schneider, Dec. 31, 2014.

To read part 1, click here.

Determining How to Structure Your Family Farm Business, P.1

McBrayer NEW logo 1-10-13

Regardless of the type of business you run, you need to put a well-thought-out business plan in place. Business planning covers all aspects of a business, from its legal structure, to marketing, to succession planning. Without putting a viable plan in place covering each important aspect of the business, companies are taking a risk. This applies as much to a family farm businesses as to multinational corporations.

Looking at the issue of the legal structure of a family farm, there are a number of options available. Although family farms may be operated as sole proprietorships, they may also be operated as corporations, limited partnerships, limited liability companies, or a unique combination of these legal categories. Getting the business form right is important because the form or structure the business takes can have an impact on important aspects of the business.

One of these is the valuation of the business for purposes of transfer tax. This refers to taxation which applies to the passing of title to property from one person to another, which includes estate tax and gift tax. Another way legal structure can impact a family farm, or any business for that matter, is by its effect on income taxation during the business’ operation and possibly even upon liquidation.

Selecting a business form which has a favorable effect from a tax perspective, without taking other factors into consideration, is not always going to be the best strategy, but it should at least be kept in mind when determining how to structure the business at its inception.

In our next post, we’ll look at another critical reason to carefully consider how to structure a family farm business.

Source: Agri-View, “Is farm business planning part of your New Year’s Resolutions,” Troy R. Schneider, Dec. 31, 2014.

ARTICLE BY

Business and Corporate Law Practice Group
OF
McBrayer, McGinnis, Leslie and Kirkland, PLLC

Boyz In the Agrihood: Planned Communities Trade Golf Courses for Working Farms in North Carolina

Womble Carlyle Law firm

I don’t play golf.  I like golf, I’ll go out and hit around with friends or colleagues, but I don’t “play golf”.  To me, playing golf means 18 holes on a weekend, maybe 36, and perhaps a round or two during the week.  No, I don’t play golf.

And I don’t think I’m alone in my generation.  Thus, we don’t see much development anymore around golf courses, even here in North Carolina — home of famed Pinehurst and beautiful Quail Hollow. Sure, it happens, but not nearly as often as it did in the 80s, 90s and even early 2000s.

So, what takes the place of that planned living community “working” greenspace, formerly ruled by gold courses and tennis courts and pools?

Nationally, a growing number of “agrihoods” are popping up, residential developments where a working farm is the central feature.  In northern Durham County, just next to Raleigh, a group of real estate developers are seeking to build a 230-acre subdivision with 140 single family homes and featuring a 15-acre fruit and vegetable farm.  According to conceptions, weekly deliveries of produce from the farm would be included in HOA dues for Wetrock Farm, and the farm will be professionally managed.  Raleigh already has its City Farm, as do other up and coming cities in America, so this new conception of planned living appears to strive to capture what’s next for the homeowning American.  It’s mutually beneficial, as well, both to developer and purchaser:  “‘As a developer it’s been humbling that such a simple thing and such an inexpensive thing [like the farm] is the moved loved amenity,’ said Brent Herrington, who oversaw the building of Kukui’lua [community development in Kauai, Hawaii] for the developer DMB Associates.”

There are sure to be land use planning and operational challenges, of course, and we’ll be curious to identify and solve those issues.

Land Use Litigatior

“Restrictive covenants include no asphalt walkways, no garish house colors, and extra carrots.”

Copyright © 2014 Womble Carlyle Sandridge & Rice, PLLC. All Rights Reserved.
ARTICLE BY

Michael C. Thelen
OF
Womble Carlyle Sandridge & Rice, PLLC

Michigan Commission of Agriculture Approves Revised Generally Accepted Agricultural and Management Practices' (GAAMP) Limiting Scope of Right to Farm Act

Varnum LLP

For over a year, the Michigan Ag Commission has considered expanding the scope of the “site selection” GAAMPs in order to bring even small livestock facilities within its scope. The site selection GAAMPs have traditionally applied to very large livestock production facilities, such as those that have at least 5,000 laying hens, 35 mature dairy cattle or 50 feeder cattle, and required those farms to be sited in agricultural areas. Consequently, because there were no siting requirements for small farms, these farms could be in urban areas – often contrary to zoning, which resulted in some conflict.

The Michigan Ag Commission recently voted to revise the site selection GAAMPs to eliminate the minimum animal threshold. Thus, the site selection GAAMPs now apply to all farms, and to comply with those GAAMPs, farms must be located in areas where local zoning allows for agricultural uses. Thus, the GAAMPs and local zoning are now in harmony rather than conflict.

According to Trevor Meachum, Vice-Chair of the Michigan Commission of Agriculture and Rural Development, “Local control is about being a good neighbor, and these GAAMPs – if farmers follow them – help people remain good neighbors.  Different communities have different ideas about what they want, and this accommodates those communities.” The changes to the GAAMPs were also endorsed by Michigan Farm Bureau. According to Matt Kapp, Government Relation Specialist with Michigan Farm Bureau, the new GAAMPs do not forbid livestock; they just allow for local decision-making. “While we think that will remove some conflicts, and if this new GAAMP does that, then it creates good neighbors. That’s what right-to-farm is all about, and that’s good public policy.”

Article By:

Aaron M. Phelps
Of:
Varnum LLP