Jenny (00:28)
If you have ever wondered if you are doing all of the right things to make your flower farm business official in the eyes of the government and other entities in the world, this episode is for you. Welcome back to another episode of the Six Figure Flower Farming Podcast. And like I said, today we're going to be talking about how to make your flower farm business official in the eyes of the government and regulatory agencies. It can kind of be a daunting task if you have absolutely no idea where to start.
Here is a list of steps to take your hobby and make it an official business. Making your business official involves reporting income to the government and you're required to keep track of revenue and expenses. And so I wanted to just give you a general list to make sure that you're not missing anything if you are deciding to make your flower farm business actually official. So.
The first thing to know about this is that every state is different and has unique requirements. So my state in the state of New York is going to be different from the state of New Hampshire is going to be different from New Mexico and California and whatever. So you do have to do your own research and you know, I am not a CPA. I am not a lawyer, so I'm not giving you any like legal or tax advice here. I don't know the rules and all the states since everyone is different. So you got to do your own research.
but this is simply a list of things to consider when making your business official. And if this interests you, we actually are talking about this. We cover it in my free Business Foundations course that I have running right now. You can sign up for that at trademarkfarmer .com forward slash startup. That's S -T -A -R -T -U -P. It's trademarkfarmer .com forward slash startup. And so this topic is actually covered.
a little bit more in depth and I have a free checklist for you within that free Business Foundations course. So if you're interested in that, go ahead and sign up for it now. But otherwise, I'm going to cover the basics here in this podcast today. So here are considerations when making your business official. The first thing is to decide on your business name, which you've probably already done, but maybe not.
But the important thing is to do plenty of research when picking your business name to ensure that you can legally use this name and not use another already established business's name in your state. You can do a business name research to see if the name you want to use is available in your state. You can go to your local county clerk's office. They can probably help you out with that. Or you can also search and see if your website domain is available.
So in the free Business Foundations course that I have running right now that you can sign up for, I go into depth about all these things. And so if you want more information on this, you can go ahead and sign up for that. But otherwise, just know that you need to make sure you're not taking someone else's name. Quick side story, there is actually a business in a town right near where I live that there was a business in California, so we're in New York and they were in California, that had...
the same business name as them and had a very similar business and they sent them a cease and desist letter and actually was taking legal action against them because they had the same name. And so they had to end up changing their business name and jumping through like all these crazy hoops of changing everything with their business. And it was just wild. So I highly recommend doing some research ahead of time to make sure that your business name is not similar or the same as someone else's. The second thing.
to consider when making your business official is to decide on your business structure or create a legal business entity. So this essentially registered your business as a business. Legal and tax considerations come into play here when making this decision. I recommend speaking with a lawyer and maybe your accountant regarding each structure type. So there are pros and cons to all business structures and some are recognized differently depending on the state that you do business in.
but the structure you choose will have a big impact on how you are taxed. So again, consult a professional if you have questions about this. I definitely recommend hiring a lawyer if you have questions about it. But the most common forms of business for brand new flower farms are a sole proprietor, an LLC, or possibly a corporation. But a sole proprietor is basically the simplest and easiest way to register a business that is low risk for litigation.
So however, keep in mind, there is no separation between you personally and your business. So that means that you and your personal assets, so your home or whatever else you own, will be personally liable for anything that happens in your business, which can be risky. So if someone sued you, they could potentially come after your personal assets.
But if your business is really low risk for litigation, it might not be a big deal for you. My business was a sole proprietor for years and years and years, and I felt totally comfortable with that, but maybe you don't. So the next most common form of business structure is an LLC, or a limited liability company or corporation. This is a really popular structure for small businesses because it separates you as the business owner
from the business giving you and your personal assets more protection in case of litigation. Most LLCs use pass -through taxation or the profits are passed through and reported on the owner's personal tax return, which is basically how a sole proprietor is set up, but it can be different depending on your LLC structure set up and how your state views it. And I am not an expert in this, so.
You know, I'm not gonna give you any like actual legal advice when it comes to sole proprietorships and LLCs, but this is just general information for you to be thinking about when you're doing your own research on how you wanna set up your business. Now the third most popular form of business is a corporation. And this is popular for larger companies that want to actually keep profits within the company or need a more like sophisticated structure.
And so there is often a lot of formality and paperwork that is involved that can be burdensome on small businesses. So it's something to consider.
it's something to think about and might be the right choice for you and your business. The next thing to consider is to register for something called an EIN number with the IRS. So an EIN number is an employer identification number, and these are issued for the purpose of tax administration and is basically used to identify a business entity. So you can easily do this online. You can find more information at
IRS .gov and I have a direct link in my free Business Foundations course if you want to sign up for that. I talked about it earlier in the podcast and I'll talk about it at the end of the podcast. But if you want more information about this,
You can head on over to our website and sign up for a free business foundations course. So if applicable and your state or county, you may need to register your business with your local government. If you are a sole proprietor, most likely you'll have to file something called a DBA or doing business as. So when I first started my business, I was a sole proprietor. So it was me, Jennifer Marks, doing business as Trademarks Flower Farm.
And I had to register that with my local government and I just went to my county clerk's office to do that. So something that you might have to do in your state, in your county. Some states require a business license, so you'll have to do research in your own state, in your town to see if you need to acquire one.
The next thing that you'll need to consider when making your business official is opening a business bank account. And now I guess you don't necessarily have to do this to make your business official, but I highly recommend that you do. In order to open a business bank account, in most cases, you will need your EIN number first to open the account. So you have to get your EIN number first and then go open a business bank account.
Keeping all of your business finances separate from your personal ones is just a good practice to have, and it's honestly necessary under most business structures. I started my business and I didn't have a business bank account at first, but when I was just getting started, I used some of my own personal money to buy things for the business, because that's just what you have to do when you get started. But then very shortly after that, I decided I really needed to keep my personal expenses separate from the business expenses, because...
You have to legally track your business income and expenses. And so it's just so much easier. Just keep it totally separate. And I gifted myself a sum of money. So I took money from my personal bank account and I gifted it to my business bank account. And then anything that I needed to purchase from the business came from that new business bank account. Then any money I made from the business went into my business bank account. And so everything was totally separated from there.
The next thing you need to consider when making your business official is to register to collect and remit sales tax if it's applicable in your state. Here in New York state, we are required to pay sales tax. so depending on the state you're in, you may or may not have to do that. The majority of states have to collect and remit sales tax. So most state departments of taxation and finance have information on their websites and many have helplines you can call.
to get assistance and they can help you figure out what you need and help walk you through it. If you want more information about how this works and what you're responsible for, you can go sign up for that free business course I talked about earlier. Then finally, the last thing to consider when making your Fire Farm business official is to check with your local town and county governments to ensure that you're in compliance with regulatory licenses, permits, and zoning laws.
And a quick story about this that I ran into is that when we put up our first hoop houses, we actually got funding from USDA and our CS equip program to put up those houses. And I got paperwork from the state that said these are not permanent structures. So they're not liable for, you know, zoning. You don't need a zoning building permit for it. And so I was like, great, all set. Don't need to go talk to our county or town zoning. Don't need to worry about it.
Well, come to find out, we went to our zoning department to get a building permit for our barn and our studio later on down the road. And they were like, you have hoop houses. You need to get a permit for that. And I was like, no, no, I don't need a permit says right here in this paperwork from the state. But turns out I actually did need a zoning permit, which all I had to do was pay money to them. I didn't have to like do anything else. I just filled out a piece of paper. They wanted a couple hundred bucks. It was no big deal.
But I'm telling you the story because it can be really, really confusing and really complicated to find the information you need. And so just going, I found that with my zone department, just going and like being upfront with them, but also like doing your own research and standing up for like your rights and what you know is right, is also helpful as well. But being upfront and being proactive about learning about what you need to do is going to just take the stress off of you in the long run. So.
Those are my top things to consider when making your flower farm business official, but there are some other considerations that I just want to mention here, things that you should be considering and thinking about when you're actually starting a business of any kind. So the first one is insurance. So this is kind of a big one, but general liability assurance in general, it's just cover your butt. And I recommend you look into this no matter what kind of business you have.
I think pretty much any business should be aware of the benefits of carrying general liability insurance. There are a bunch of insurance companies out there that specialize in insurance for agricultural businesses specifically, and I found it best to work with those. So my insurance company specializes in providing insurance for ag businesses. So they understand what needs to be covered or things that should be covered if I'm having people come to the farm. So if someone comes and they break an ankle,
you know, and I get sued, my general liability insurance will help me out with that. Whereas if I'm not doing that, you know, maybe I don't need that kind of insurance, but they will better understand your coverage needs. So general liability insurance, may need some other insurances depending on the kind of business you have. Commercial auto insurance is one that I didn't realize I needed at the very beginning when I had my business, because I was just delivering flowers in my...
Honda CRV, spilling buckets of flowers in the back of it. And so that was real fun, not, but that's what I was doing at first and it was just me. So I didn't think that I needed commercial auto insurance, but then I had employees who were going to be doing deliveries and driving farm vehicles. And so if you're going to have employees that, and will drive a commercial business vehicle, most likely you will need commercial auto insurance. So you're covered if something happens, if they back up and do a stop sign or they get.
know, rear -ended or something like that. So something to consider. Another consideration, which I've already mentioned several times, but just to reiterate, is hiring a CPA or an accountant and or a lawyer. So you can certainly do your own taxes and your book work yourself, but I, you know, personally, I just leave this up to the professionals. Making sure that your CPA is aware of, you know, certain things that you'll need to file, like if you're a sole proprietor,
as a farm, you'll probably need to schedule, you'll probably need to file something called the schedule F form, which is specific for agriculture on your income tax return, you know, things like that. can, accountant will be aware of, and I just think it's, you know, worth the cost.
Also, if you're going to be hiring employees, you need to file as an employer within your state. You know, most likely every state is different. I'm not going to pretend to know what every state is like, but here in New York, I had to file as an employer with my state. I also hired a payroll company to take care of payroll for me because I think if I mess up on my payroll, there could be really serious consequences. And I, just didn't have the time.
to do it and B, I wanted to be covered and I wanted someone who really knew what they were doing to do that for me. So hiring a payroll company and then also getting proper insurances if applicable. Here in New York state, we have to pay things like family and medical leave, workers' compensation insurance, employment insurance. There's a whole slew of things that come with having employees that just need to be considered. So those are things that you just need to be thinking about as well as
keeping track of your finances. So having income and expenses, your assets and your debt, you know, this is an obvious one, but for some reason, you know, a lot of new business owners failed to keep good track of their finances. And it's really not hard to do with a separate business bank account, you know, get your own business credit card or debit card that will keep all of your expenditures in one place, keeping track of them all together. And I highly recommend using
QuickBooks or a similar accounting program to track your expenses, know, spreadsheets work too if you're just starting out and you don't wanna pay for QuickBooks or an accounting software. Okay, so I think that I've gone over pretty much all the things I can think of to consider when making your flower farm business official. This is by no means an absolutely comprehensive list, but.
I just thought that this would be a helpful checklist of things for you to get started if you're deciding to make your flower farm business official. So I wanna make it clear that I'm not giving you like legal or tax advice. Be sure to check with your state's laws, regulations and requirements and hire a professional like an accountant or a lawyer to help you sort through some of these things if you have questions about it. But if you want more information about these things, if you want a checklist on
All the things to consider if you want some more information about some of these things we went over in this podcast. I encourage you to sign up for my free business foundations course at trademarkfarmer .com forward slash startup That's S T a R T U P trademark farmer .com forward slash startup. This free business foundations course goes into depth with
Seven different modules, anything from finances to this business checklist. We're talking about marketing and a bunch of other things. So it's only available for a limited time. So if you're interested, make sure you go sign up now and please tell a friend that might use this information. You know, I don't run ads on this podcast and I spend a lot of time just putting out a ton of free information and I love it. I love doing it. I'm really passionate about it.
But it would really help my mission of helping as many flower farmers as possible lead fulfilling and prosperous lives and support their families and their dreams. And you can help me by just telling someone else about the podcast or the free business course to help another flower farmer out. So on that now, I am out for today, but I'll catch you later in the next episode of the Six Figure Flower Farming Podcast.
