Taxes - claiming your small farm as a business?

[Harbisgirl]

At this point I'm not sure if I should call it a 'business' or not. Currently we have a small hobby farm for our own food - egg layer chickens, dairy goats, and a vegetable garden. We've had the garden and chickens for a few years now and added the dairy goats in May of 2014. I was happy just to include them as part of our hobby and wasn't really interested in complicating things. Unfortunately, in October I was a victim of mass layoffs due to corporate downsizing. Soo...I'm rethinking things. Last month (Jan 2015) we started a small orchard and will be adding meat chickens and honey bees in the spring. Depending on finances, we'll add pigs this later this year or early next year. I do have plans of expanding our little farm regardless - but expanding for ourselves or enough for income is the question here. Unfortunately since I didn't plan on claiming the goats on my taxes, I was not diligent about saving receipts for the costs of all the new fencing, housing, supplies, milking equipment, etc. If I had intended to claim this as a business I would have set up a whole separate account for easier tracking.. Also, how would that impact my unemployment benefits? There is no way we could survive without my EDD checks right now so that would be sort of a deal breaker. So I guess my questions are: At what point is it worth it to call this a business? What does upgrading to an official business entail? What are the pros and cons? I realize those are big questions and I'm sure the answers depend on alot of variables - but I need to start somewhere Any help would be greatly appreciated.

 

[Hens and Roos]

maybe start by looking at the USDA website and maybe your state website for information. Hopefully others will have more suggestions for you!

 

[Bossroo]

I would hire a CPA that SPECIALIZES in farming as you would be able to file a form with the IRS to amend your last years tax return just be sure that you have backup information with your checking account and your credit cards as proof of payment for those items that you can't find receipts for and you will have to show paper trail proof of payment for them. At this point, getting into hogs may not be in your best interest ( pigs do a lot of damage to the land and facilities ) as if you should establish your farm as a business, you will have to show a profit in 3 out of 5 years. So it would be more to your benefit to go with what you already have and expand on them so that it would be more profitable in the long run. Or shut those efforts down and establish a new line of farming. Expanding in a helter skelter method is not the best way to operate profitably especially in the begining. Choose what you want to specialize in so that you can make a profit sooner and continue profitably into the future.

 

[Harbisgirl]

I'm definitely getting into pigs one way or another. I'm not getting a large commercial breed, I'll be getting the smaller American Guinea Hogs that are much easier on land. I'm very familiar with them so I'm comfortable adding them. Plus, I like diversity