Resources for starting a Small Farm in TN
We are not financial advisors or tax experts, the information found on this page is for educational purposes only. The examples on this page for TN Specifically, other states should or may have similar programs.
All resources on this page are FREE! Meadow Green Farm has no affiliation with any of the companies mentioned on this page. We do not charge for the digital resources downloaded from this page, if you would like to make a small donation to support this type of content it is always greatly appreciated! Thank you!
Starting a small farm business can be daunting, especially to those who have never experienced the bookkeeping or logistical side of a business (like us). The information found on this page is what we used to start and maintain our small business. There is a lot of information on the web about how to start a small business, yet we found that finding information for a small farm was very hit or miss. This page includes a compilation of resources we used to start our business including answers to questions such as:
What kind of business to register with
Where to obtain a business EIN
State Sales Tax exemption (Tennessee specific)
Green Belt Property Tax Application (Agricultural Property tax relief)
Obtaining Corporate Business Sales Tax Exemptions (ex: Lowes, Tractor Supply, Amazon)
Basic bookkeeping
State Tax collection obligation (Nexus)
Federal/State Taxes and Tax Filing
Creating a Business phone number
What kind of business should I register?
First off, contacting a small business advisor is highly advisable if you are unsure which business type is for you. Generally speaking however, most small farms fall into one of two categories; LLC or Sole Proprietorship. For us the Sole Proprietorship was the clear choice. Both options have advantages and disadvantages to them (Taxes & Fees, coverage, write-offs). Selecting the type of business which you intend to operate is very important to establish before moving on, spend time to research the pros & cons of each, there are a lot of great articles and YouTube videos available. You can switch the business type later on as your business grows, this usually takes a little time and money at that point.
Where do I obtain a business EIN (Employer Identification Number)
EINs can be created directly through the IRS (our choice) or through a third party business. Each will have varying amounts of fees, generally these fees are paid one-time at business conception and between $50-$250 depending on the source. These fees typically cover Federal and State applications.
Click here to register with the IRS
This process typically take 2 weeks to complete, after which you will receive a letter from the IRS with your EIN as well as an electronic copy. You will need this EIN to complete the Sales Tax Exemption and Corporate Sales Tax Exemption portions of this process.
Where do I obtain a State Sales Tax Exemption for purchases?
For this example we will look at the process in Tennessee. However, most states have a similar process for farmers to remove the sales tax from their purchases, as long as the purchase is something that is used to produce their goods. Again, this outline is for Tennessee but the steps and fees (if applicable) are likely similar for other states.
Tennessee Residents will use the Tennessee Taxpayers Access Point (TNTAP) for their application. Click HERE for their web site.
Direct link to the Sales Tax Exemption PDF: Click HERE
Section 8 of the PDF lists 5 different categories your farm must fall into. If you are someone starting a farm (like we were) and had no revenue to show, section “e.” is where you fall. Follow the instructions on the PDF form, specifically 8.e. For this section we simply wrote the commission a letter explaining when we purchased the land, how many acres our business property contains, the breeds of livestock we were already raising and the plan(s) to make money (marketing strategy). This does not have to be a long letter, ours was only half a page and that was all that was needed to obtain the tax exemption.
You should receive a written response within weeks or so as well as an electronic copy of you Exemption paperwork (if approved).
TNTAP registration for sales tax is valid for 4 years. At this time there is no cost for the Application.
Green Belt Property Tax Application (Agricultural Property tax relief, TN only)
In 1976, the Tennessee General Assembly enacted the Agricultural, Forest and Open Space Land Act of 1976 (the "Act")-the law is commonly known as "Greenbelt". The Act is codified in Tennessee Code Annotated §§ 67-5-1001 through 1050. The purpose of the Act is to help preserve agricultural, forest, and open space land. This is accomplished by valuing land based upon its present use, rather than at a highest and best use. When property is valued at its highest and best use, the threat of development can bring about land use conflicts, create high costs for public services, contribute to increased energy usage, and stimulate land speculation.
In short, this lowers your property tax as a farmer.
Answers to common questions:
The application for Greenbelt must be filled out with the county you reside in, at the county clerk’s office (assessor of property clerk).
There are processing fees (not listed online but I believe only $25).
Greenbelt can save you approx. 1/3 of the cost of your property tax bill (May vary by county).
The Application form and additional information about Greenbelt can be found here: Click HERE
New applicants have until March 15th to file, filing can occur after March 15th but you are then subject to a $50 fee.
Reapplication under greenbelt is not required unless the ownership as of the assessment date (January 1) changes.
MOST STATES have a property tax relief program, the program’s property tax reduction percentage will vary by state as will the naming.
Obtaining Corporate Business Sales Tax Exemptions (ex: Lowes, Tractor Supply, Amazon)
Once you have a State Sales tax Exemption card, you can begin filing with companies to omit yourself from paying sales tax on applicable items. Some stores require you to use your own judgement when applying the sales tax exemption (Amazon), while others have certain items they automatically qualify you for (Tractor supply, Lowes). Some stores, like feed stores, are globally covered and everything they offer falls under exemption. Here are a few links to resources we used to get started:
Amazon Tax Exemption Program (ATEP)
Click HERE for the ATEP main page
Follow the “Tax Exemption Wizard”, completion only takes around 15 minutes.
Amazon applies a GLOBAL Tax Exemption. On a PC (only) you can toggle off the application of the sales tax, should you be making non-agricultural purchases with your account.
Registration is free.
Tractor Supply:
Present your Sales Tax Exemption card to any clerk and they do the rest!
Registration is free.
Feed stores/Co-ops
Most Feed stores or Co-ops are the same as Tractor Supply, just present the card and most stores with keep and electronic copy of the card information. This is usually associated with a phone number so if you want them to associate your tax exemption with a business number and not your personal number, see the last section on this page “Creating a business phone number”.
Registration is free, we have found so far anyways.
Lowes Tax-Exempt Management System (TEMS)
Click HERE to register for the TEMS.
Exemption is linked to a phone number, again, and a signature is required each time at checkout.
If you submit your phone number at checkout, the Exemption is applied globally to the transaction, so be careful.
Registration is free. May require a follow up at any Lowes service desk before use.
Basic Bookkeeping
Now that you are Registered with the IRS, State and local/global businesses you are well on your way to making money. You will need to keep exceptional records of your Income and expenses in order to avoid the IRS and maximize your tax returns. Again, we are not financial advisors but we do advise you to seek additional tax prep or bookkeeping help. For us, we use the Farm Bureau in Tennessee for most services but mainly tax prep. Their tax specialists have been outstanding and membership only costs $30/year (additional tax filing fee).
Over the course of our first year we developed our Small Farm Income and Expense tracker workbook, even the most novice Excel user can quickly modify this workbook to manage all of their payments and expenses. Our book has all expenses divided up into the categories found on your 1040 Schedule F IRS form making it easy to translate come tax time. It also easily tracks Assets, Income (by source) and profitability by category. Such built in features like profit projections are also included, you can also import the previous years’ Income as a benchmark to the current year. We are big on “Goals” so you may find the yearly goals sprinkled in as motivation.
State Tax collection (Nexus)
Nexus refers to your obligation to collect State Sales tax for Purchases made by your customers to the state which you reside . These purchases could be Tangible items (Tangible Personal Property; TPP ) or services, the tax rates and the rate at which you collect differs between the two type of sales. There are thresholds for both before you will have to pay in.
Click HERE to read about TPP and Service taxes to see if you qualify.
Click HERE for more information about your Nexus obligation.
Federal/State Taxes and Tax Filing
We strongly suggest the help of a licensed tax professional when preparing your business taxes. We chose to team up with the Farm Bureau of Tennessee and one of their excellent tax professionals to handle our Farm and Personal tax filings.
Click HERE to visit the TN Farm Bureau Website.
Services provided by the Farm Bureau include:
Insurance
Auto, Home, Renter & Life
Health Plans
Tax Services
Printing Services
Tennessee Farm Bureau Federation
P.O. Box 313
147 Bear Creek Pike
Columbia, TN 38402-0313
(931) 388-7872
Business Phone Numbers
There are many options for a business phone number including a second phone (new line) or a virtual phone number. We use a virtual Google Voice phone number and it has worked for use wonderfully. We simply forward the calls from the virtual number to my personal cell phone. This also includes texts, both texts and calls can be obtained on the Google Voice web site and you can even use a PC with your virtual number to make calls.
Click HERE to read more about Google Voice
Google Voice is a FREE service.
If you have found any or all of this information helpful and find the Downloadable Small Farm tracker workbook helpful please consider a donation, Thank you!