This is a loaded question so bear with me.
I’ve baled hay for the past 5-6 seasons and am getting to a point that some equipment upgrades could help/are needed. I put up between 6-8k small squares a year and would like to grow it to 10-12k as time goes along. Vegetables are our primary source of income, the hay is a side gig that my dad and I do together. Income generated from the hay has its own own account that we use to pay all associated expenses, rent to the farm for equipment/land, seed/fert. for the next year, etc. and any profit remaining is essentially some bonus money that my dad and I split to help ourselves through the offseason on the farm.
My parents are the owners of our farm and retail store operation and my sister and I are both full-time paid employees. One day my sister and I will have 50/50 ownership.
I started the hay portion of the business and everyone is rather clear that it’s my baby/demon. My dad and I have talked a lot about turning the hay into its own LLC (or some other form) and me as the owner. I would continue to pay the farm rent, but essentially turn my dad into a paid employee and anything remaining after expenses would be mine to keep. (My current paycheck from our is the same hours every week .. if we work 80 I get paid for 55.. if I take a couple days once in a while with the family when things calm down it’s 55). I personally want it to be that way so I don’t feel like a strain on the business. My parents always do right by me. The hay money would sort of be a little catch up (if we have a good year) for all the times we work overtime, which is every week after Wednesday lol.
My dad has pretty much given me the option if I want to turn it into and LLC or not and it’s no rush to make a decision. I like the idea of doing it bc if we were to purchase some new equipment I would have some assets to my name and will be able to show some additional income to a banker if my wife and I would ever decide to buy land/build house/need a loan/etc. Not to sound like a jerk, but it would also provide a little separation from “mine” and “ours” between my sister and me. I am in no hurry for my parents to give us ownership in the overall farm. The farm and assets are willed to us 100%, but I know there are countless stories from guys and gals on here talking about how things go sideways after mom and dad have left the picture.
I understand that I will be responsible for a set of expenses that I don’t currently have to personally pay without an LLC (taxes, insurance, etc.) which are covered by the farm operation. My little operation has no current overhead. We run older equipment on land that is all bought and paid for. I guess I wondering if it’s a good time to get some paperwork squared away before I take on any new overhead?
Thanks for your 2 cents.
Do I need An LLC?
1 reply to this topic
Posted 02 July 2020 - 10:07 PM
I think there is more to this situation then you want to admit. I am guessing your dad feels you are getting the short end of the deal. What is your sisters idea of the farm after mom and dad are gone? There are families that work together and those that don’t. I do think it’s a good idea to get some assets in your name. A friend of mine was in a similar situation as yours when his father passed away his mother cut him out of the will and his sister locked his equipment up and sold his hay. To this day his sister is using the equipment he has receipts for and there is nothing he can do about it.
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