As a small, independent owner of a murder-for-hire business, I enjoy the frequent travel and the fact I don't have to pay Obamacare costs for my employees.
I’m a business owners, started 18 years ago. Sub chapter S corp.
Prepare to leave very lean the first few years.
I have personal experience with keeping books for self-employed people. The secret to success is MANAGEMENT. Keep track of everything.
Why?
No Partners at all... Period.
I don’t know about Ohio, but in CA you would probably be violating multiple regulations and have all kinds of state and local gubmint bureaucrats all over you as soon as they heard. Then some homosexuals would show up and demand that you provide cucumbers for their wedding.
1. Always define an acronym like CSA at least once
2. Write a business plan, especially the financial section for yourself. Check out the Small Business Administration’s website and/or visit your local SBA office or school program for free counseling.
3. Put everything in writing with your customers and with the friend who is going to allow you to use the land.
4. If crops fail, do the customers not receive refunds? If the customers pay by credit card, be prepared for chargebacks. Credit card companies favor customers no matter what your terms.
4. Research thoroughly the legal aspects of selling food products and the liabilities. Same with using the word organic, uncertified or not. Ideally, talk to a lawyer.
5. Taxes: make sure you pay them.
Best business advice: be prepared for 0 profit and worse, losses. Not intended to be discouraging. It’s reality.
Form an LLC and elect sub S treatment.
Find a successful CSA and model what they are doing so that you don’t try to create it from scratch.
Contract that covers liability issues and contingencies that you cannot control - blight, pestilence, kids choking, under what conditions they can get a refund or partial refund, what happens if they don’t pick it up, etc. Again, get a couple contracts from other CSAs and see what they are doing to protect themselves and how they do the logistics.
Always pay the Mafia first (US Gov’t IRS).
Deduct everything you possibly can that relates to your business, including cell phone, home office, if you have one, materials books, etc. Save every single receipt. I like Expensible for that. Take picture, saved digitally in cloud, create expense reports, etc.
Make sure you are complying with OH and fed government regulations and licenses. You may have to be a licensed farm, sadly. Hire an OH attorney.
Only grow what people want. If they don’t want it, you can’t make them not, not want it.
You better make a wheel barrow full of money to cover your legal and regulatory costs! Or is is just a very expensive hobby.
If you are successful, remember “you didn’t do that!”
This book is supposed to be excellent. Read the reviews.
http://www.amazon.com/gp/product/158979799X?psc=1&redirect=true&ref_=oh_aui_detailpage_o01_s01
Good luck to you!
Why sell to ten families when you can sell to one established organic restaurant?
Additionally, my neighbor will allow me the use of his field for free . . .
What could go wrong with that?
Every state is different.
Find out what the local, county and state regs are regarding sales tax, business tax, city/county/state business licensing, etc.
Your County and State should have plenty of info online for start-ups.
Same with FED. Initially, you would probably file under your SS#. If business is good, you would want to look into small business incorporation.
Do accounting with a microscope. Get receipts from your earthworms. Assume you’ll be audited by state, Feds, or both.
Have fun. I think it’s a nice idea.
Learn the tax code.
Keep pristine books.
Pay what you owe, when you owe it.
Research the appropriate healthcare taxes. Some are $100 per day per employee if you structure improperly.
You can never control your revenue but you can always control your costs. Make sure you do.
1. Sole proprietorship.
2. Register with your state comptroller as a small business.
3. Will you deliver the produce? If so, you might get agricultural discounts on your vehicle registration & insurance.
4. Some states allow you to purchase Ag supplies, seeds, tools, equipment without having to pay sales taxes on those items. But—see #2.
5. Absolutely protect yourself from liability. If customers or laborers will EVER be on your property, make sure your homeowner’s insurance covers possible injuries resulting from home-based business activities. Talk it over with your agent—don’t make any assumptions from reading your policy.
The best thing about running your own business is that you are free to pick which 80 hours a week you want to work.
T
Learn either Quickbooks or GnuCash and know how to read your accounting reports.
Dont skimp on tax advisers or lawyers.
Dear Modern Farmer: How Do I Legally Start a CSA?
Make sure you are not running foul with any zoning restrictions in your area and check with your local agricultural extension office or your state department of agriculture for things like food handling, storage and safety and any labeling requirements. Check to see if there are any other CSA’s in your area willing to share their experiences and advice with you or if there are an CSA orgs you might join.
You may want to consider having written agreements with your members rather than just verbal agreements. Think about if you were a member, what you would want to see in such an agreement as well as what you need to have in it for protecting your own self interests. Think about what could happen if someone complained and wanted their money back, how would you handle that, and what are your legal responsibilities or what might happen if someone claimed to have gotten sick from your produce?
You also say it is “uncertified organic” but you better be clear as to exactly what that means because as soon as you use the word “organic”, even “uncertified organic” - what that means to you might mean something completely different to someone else so make sure you are not, even unintentionally misleading anyone.
You mention 10 families the first year, but is that what you are hoping to get or are you pretty sure you can get that many? Are these people family members or friends or co-workers? Keep in mind that doing business with family and friends can risk those relationships. If not, how are you planning to solicit your members? Will you be advertising?
And what happens if you only end up getting half or a third or less that many? Will you be in danger of losing money and if so, how much? What happens if you plant for 10 families plus yourself but only end up with only one or two members? Will they just reap the extra produce? But what happens if they don’t want that much? What will you do with it?
How much risk of your investment are you willing to make? Even if they pay in advance and you only plant what has been paid for in advance, what might happen if you only have two families ultimately sign up? Will the additional expense of growing the additional produce, including the value of your own labor really be worth it?
So run some numbers on the best and worst case scenarios. And do a budget that includes all possible costs and stick to it.
You also say that your “neighbor will allow me the use of his field for free”. I’d try to get that in writing. When your neighbor says “free”, make sure you and he both fully understand what “free” means, how much of his land you will be farming and what your rights are for accessing his land – when, for how long, how often, etc. Is his idea of “free” really the same as yours? And what could happen if he changes his mind mid-season and claims that the produce grown on his land as his own for example?
Really important - find a good CPA, preferably one with experience in small agri-businesses to help you determine what sort of business/tax structure makes the most sense. You may also want to look into whether any sort of liability insurance is necessary. That could come in to play if members are coming onto your property for pick up or you are making deliveries - think home owner’s and car insurance riders.
Keep detailed records of all incoming and outgoing receipts and expenditures. You can use something like Quickbooks but most likely in your case, a simple spreadsheet (and there are many free templates available on-line to help you get started) with hard copies of your records and receipts, kept in an organized manner (not all stuffed into a shoe box) will probably suffice.
Keep in mind that no matter what sort of business/tax structure you elect (sole proprietorship, corporation (C or S), partnership, or limited liability company (LLC)), you will most likely have to file estimated federal and state taxes on a quarterly basis and you will have to file an estimate payment returns even if no taxes are owed. Not filing or filing late can cause you big trouble. You will also have to register your business with the State of Ohio.
http://business.ohio.gov/starting/
Same with Ohio Sales and Use tax returns – you will most likely still have to file quarterly returns even if you have no sales or use taxes to report.
I was a partner in a small bookkeeping and computer services company some years ago for several years – didn’t make much money but I learned a lot. I also have done work on the side over the years programming custom Access databases and providing bookkeeping and PR for small business and providing general administrative services for a few non-for profits – helping them with fundraising mailings and working on and at special events. It was a great experience and I’m glad to have had the experience. But I found that many, including myself and many of my small business and bookkeeping clients and small non-profits don’t consider and greatly underestimate how much time and effort goes into not only the work (and we tend to underprice the value of our services) but also the time for keeping good records, keeping up with the tax filings and dealing with customers who are unreasonable in their expectations.
If and when you get a complaint (and if you are in business long enough, you will), don’t overreact and don’t take it personally. Try to make it right if you can but also know when to stand your ground. I learned the hard way that some customers are not worth keeping.
Best of luck and wishing you much success. Keep us updated on how it goes.