When starting a farm in Illinois, you must take several steps to ensure that your business is properly registered and licensed. The registration process includes selecting an appropriate business entity, filing registration forms, applying for farming licenses and planning for tax obligations.
Choose a Business Entity and Register
Before filing any registration forms, you must decide what business entity is most appropriate for your farm business. Appropriate business entities for a farm in Illinois may be a sole proprietorship, partnership, limited liability company, corporation or not-for-profit corporation. Every farm business must register with the state, and the forms will differ depending on which business entity you choose.
If you plan to buy or sell livestock for a fee or assume ownership of livestock to resell for a profit, you must obtain a license from the Illinois Department of Agriculture. The application must be accompanied by the required bond and fee. The licenses are issued for one-year terms. The department may reject an application, or revoke a license, if you misstate information on your application or violate Illinois laws pertaining to livestock. Further, you may register the brand you use on your livestock by submitting a sketch of it to the department.
Grain dealers and warehouses must be licensed through the Department of Agriculture. For grain dealers, there are a number of requirements before you may apply for the license. You must demonstrate that you have a good business reputation, a permanent business location, and have sufficient up to date books and records. Further, you must obtain property insurance, and new farms are required to pay into the Illinois Grain Insurance Fund for their first three consecutive years. In applying for a new license, you must include proof that you are a registered business, schedule of rates, copies of leases, and filing fee with your application.
Nursery and Egg Licenses
The Department of Agriculture also requires a license for nurseries and facilities that sell eggs. The application for greenhouse or nursery certification is less cumbersome than for grain farms, and requires a determination of how many acres are devoted to what type of agriculture. Egg licenses must also be applied for on a yearly basis, and requires egg dealers to allow inspection of their premises.
Once your farm business is registered, you will be responsible for a number of taxes. It is best to plan for and understand your tax requirements at the time of business registration. At the state level, Illinois farms are responsible for property tax and sales tax. The state has specific regulations regarding the assessment of farm lands, which takes into account erosion, streams and waterways and other factors to determine how much of the farm land is considered usable for tax purposes. At the federal level, a farm business may be responsible for corporate income tax, payroll tax or self-employment tax.
Elizabeth Rayne earned her J.D. from Penn State University and has been practicing law since 2009, advising clients on issues ranging from employment law to nonprofit management. For two years, she served as a contributing editor for the "Vermont Environmental Monitor."