1. Entity Selection: Business and Tax Planning Considerations
Farming for the Future Conference January 19, 2017
Donald C. Timmins, CPA
Timmins, Jacobsen and Strawhacker, LLP
10550 New York Ave
Des Moines, Iowa 50322

2. Thanksgiving Dinner, 1956

3. CHOICES

4. Who will be involved in the entity?
What are your goals for the entity?
Why are you forming this entity?
When will the entity begin operating?
Where will the entity operate?

5. Who? Yourself only? Yourself and Spouse? Generations?
Unrelated persons?
Unrelated entities?
Your banker (hope not)?

6. What are your goals? Build and improve on current operation?
Build a legacy for future generations?
Tax savings?
Become ridiculously wealthy?

7. Why? Because you need a job?
Provide a living for yourself and your family?
Need a change in entity due to change in circumstances?
Because I always wanted to farm?

8. When? Beginning of operation Changes Proper timing may be crucial
Expansion
New partner
Succession (generational transfer)
Proper timing may be crucial

9. Where? Local operation only? Multi-county operation?
Multi-state operation?
International?

10. Tools for the toolbox: Sole proprietorships Partnership Corporations
General partnerships
Limited partnerships
Corporations
S Corporations
Limited Liability Company (LLC)
Multi-owner
Single member

11. Comparisons Sole Proprietorship Partnership Corporation S Corporation
Limited Liability
Company
Income tax
Form 1040
Form 1065
Form 1120
Form 1120S
Self-employment tax
Yes
Yes, if an active
partner
No (W-2
Employee)
member
Estimated tax
Not if filing by 3-1
Not if filing by
3-1
Corp may need to pay estimates
Owner may need
to pay estimates
Employment taxes
on employees
Yes (not child
Under 18)
Yes (Partners are
not employees-no W-2 wages)
Yes, including
owners
Yes, (Members are not employees-no W-2 wages)
Information returns
(1099s)
Single member LLC
Similar to sole
proprietorship

12. More tools for the toolbox:
IRS publication 225 Farmers Tax Guide
IRS publication 51 Circular A Agricultural Employer’s Tax Guide
Good reading A Thousand Acres by Jane Smiley

13. Thanksgiving 2056

14. Quote of the day
There’s a lot of money in farming. Sometimes it is a little hard to get it back.
George Timmins, Jasper County, Iowa