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  1. #1
    Join Date
    Jun 2008
    Location
    Vermont, USA
    Posts
    75

    Default hobby/small sideliner

    I am wondering -

    Those of you who are operating smaller operations 15-30 hives. How do you handle the business side?

    Does anyone know the pro's and cons of running the business under your name?

    As a taxable hobby?

    or creating an LLC?

    I am just curious what others are doing, and why, as I start to move to the next stage. Maybe there are other options I overlooked. Thanks

    Nate

  2. #2
    Join Date
    Feb 2009
    Location
    Knox County, Ohio
    Posts
    2,694

    Default Re: hobby/small sideliner

    I don't claim it as a business because I am not aware of exercising any federal privilege involved with my honeybees, which is necessary to meet the Internal Revenue Code statutory requirements to be classified as a business.

    Of course, if you want to claim that it meets the legal requirements to be classified as a business (even if it doesn't) then the IRS would be more than happy to treat you like a slave.

    Personally, I choose to know what the IRS laws say is taxable (and what they don't say is not taxable.) www.losthorizons.com

  3. #3
    Join Date
    Jun 2009
    Location
    Morgan County Indiana
    Posts
    51

    Default Re: hobby/small sideliner

    Beekeeping is considered agriculture. You file all of your expenses and income on a schedule F attached to your 1040.

  4. #4
    Join Date
    Jun 2008
    Location
    Vermont, USA
    Posts
    75

    Default Re: hobby/small sideliner

    Is there a liability difference between the different options, especially when you are talking pollination for orchards?

    I have insurance tacked on to my homeowners policy, it just seems to me to be smart to be safe in today's world of malicious law suits.

    I was thinking LLC would be a safer shield, but I am fairly ignorant about such things.

    I will look at the forms for taxes. I was under the understanding, that I could use an LLC to deduct all my expenses from my income, while if I attached it to myself as an ag product, I could deduct less. I am fairly confused about what exactly to do.

  5. #5
    Join Date
    Jun 2009
    Location
    Morgan County Indiana
    Posts
    51

    Default Re: hobby/small sideliner

    I do not believe there is any liability difference. The main issue is to be liability insured.
    Not true about deductions. The only difference is if you have an LLC you will have a very large accounting fee to deduct that you can avoid operating as Agriculture. Plus being a "farm" will allow you to be exempt from sales tax on things you buy for your apiary. Anything purchased directly related to food production is sales tax exempt, at least in most states, if not all.

  6. #6
    Join Date
    Mar 2008
    Location
    Keller, Tx
    Posts
    334

    Default Re: hobby/small sideliner

    To get and agricultural exemption on our property taxes you have to show business for 5 out of 7 years. Thats the only reson I am going to do it. It will save me $5-7 K in taxes if I can pull that one off!

  7. #7
    Join Date
    Jan 2003
    Location
    Kiel WI, USA
    Posts
    2,368

    Default Re: hobby/small sideliner

    Quote Originally Posted by Countryboy View Post
    Personally, I choose to know what the IRS laws say is taxable (and what they don't say is not taxable.) www.losthorizons.com
    Seriously?

  8. #8
    Join Date
    Feb 2009
    Location
    Knox County, Ohio
    Posts
    2,694

    Default Re: hobby/small sideliner

    I'm very serious.

    The IRS/DOJ has brought criminal tax charges against Hendrickson 3 times. Each time, they dismissed the charges because of a lack of evidence. They can't find anything he is doing wrong.

    Of course, the latest stunt by the IRS is to sue him in civil court (and you can sue anyone for anything) claiming that the Treasury is somehow harmed if Hendrickson doesn't pay a tax he doesn't owe. The IRS wants a judge to force Hendrickson to pay more than his fair share.

    It would be hilarious if it wasn't so serious.

    The income tax is an excise tax (tax on privilege). It is not a direct tax, (prohibited by Constitution) although many people think it is. The income tax is a tax on federal privilege that you use, measured by the dollars you gain by using that federal privilege.

  9. #9
    Join Date
    Apr 2003
    Location
    Greenville, TX, USA
    Posts
    4,397

    Default Re: hobby/small sideliner

    Quote Originally Posted by lupester View Post
    To get and agricultural exemption on our property taxes you have to show business for 5 out of 7 years. Thats the only reson I am going to do it. It will save me $5-7 K in taxes if I can pull that one off!
    Actually, if you go read the Texas Appraiser's Handbook (downloadable), bees do not qualify you for an Ag property tax exemption in Texas except for the actual footprint of the hives. In other words, no grazing exemption for bees.

    Pizzitola v. Galveston County Central Appraisal District, 808 S.W. 2d 244 (Tex. App.-Houston[1st Dist.] 1991, no writ history). In this case the court starts by stating, "This case presents the question of whether a bee is like a cow." The court held that bees are not like cows. And why does this matter? Because the Plaintiff was contending that they were entitled to an "open-space valuation" on their property taxes for the 63.17 acres of their property because the entire acreage was used by the beekeeping operation (and their bees). They wanted the same tax rate ranchers get for land used to graze cattle. They called as an expert witness an entomologist with Texas A&M, who agreed that bees need land for forage. The court agreed with the Appraisal District, who had determined that the three acres around the hives and honey house qualified, but not the rest. The court held that, "the tending of the bees--the preparation, maintenance of the hives and equipment, and the honey extraction--took place on the three acres, not on the Property [as a whole]." Id. at 250.
    You will find this quoted in the Appraiser's Manual and believe me, they know it's there.

  10. #10
    Join Date
    Mar 2008
    Location
    Keller, Tx
    Posts
    334

    Default Re: hobby/small sideliner

    That is what I am counting on. I only have 4.1 acres on which I have distributed hives around...except for the pond for the bees. My acreage is valued at $75 and acre....I will take the ag exemption for that. Is there a place I can find a copy of the handbook? I like to have my facts straight. In theory that helps my case because now I can have an AG exemption on small acreage where before they would not let me have it for 4 acres with cattle.

  11. #11
    Join Date
    Mar 2005
    Location
    El Dorado County, CA
    Posts
    605

    Default Re: hobby/small sideliner

    [QUOTE=Countryboy;437104]I don't claim it as a business because I am not aware of exercising any federal privilege involved with my honeybees, which is necessary to meet the Internal Revenue Code statutory requirements to be classified as a business.

    i do not pay a tax on the honey or other things i produce. i do pay a tax on the money i use. i did not produce money and the federal government owns it, i rent it.
    i don't have to use money but find it conveniant to do so. i pay for the use of it.
    all that is gold does not glitter

  12. #12
    Join Date
    Apr 2003
    Location
    Greenville, TX, USA
    Posts
    4,397

    Default Re: hobby/small sideliner

    http://www.window.state.tx.us/taxinf...apmanuals.html
    Bee aware, many tax districts take this to mean that bees don't qualify as Ag.

  13. #13
    Join Date
    Mar 2008
    Location
    Keller, Tx
    Posts
    334

    Default Re: hobby/small sideliner

    Well I think I just stumped the appraiser. I called to let him know my intentions next year of filing and he immediately said the Manual for appraisal of agriculture said no bee keeping. I asked him to read it and then he realized that, as with the case, they provided an exemption for the 3 acres not the 63. Well I told him that is what I am looking to claim, 3-4 acres not my whole neighborhood. Then he had to take a second to think about it. He told me he would have to see how far that case made it up the court to see if it set a standard. Then I asked him to reread his manual which states only the land the apiary is on can be claimed. I definately have him thinking. I asked him to research it a little more in the next year, because I would be filing. That would be 210K of land taxed at ag would save me about 5K....well worth keeping those hives!

  14. #14
    Join Date
    Jul 2003
    Location
    Bartonville, TX USA
    Posts
    456

    Default Re: hobby/small sideliner

    consider doing multiple things. bees and livestock for instance.

    stocking rates on livestock is what they look at. In our area it is 1 cow / 3 acres average. More than that you are feeding not grazing. Consider sheep or goats. Go down and talk to the county appraisal office and ask for the ag person. As them what they require. Yes they are sceptical of 4 acres but if it is fenced and you can prove 5 years of ag use you can get it. You'll need pictures, vet records, purchase records, etc.

    you could do hay but it will cost you 350 to have your acres cut and baled each time and you would be lucky to get that much back out of it if you don't have your own equipment.

    Bees alone probably won't get it. Doubt you can run a big enough operation to justify the whole thing as bee ag without getting your city and neighbors aggravated. also you will have to exclude your residence.

    you could also buy a couple of calves in the spring and sell them in the fall. Do that each year and show you are actually grazing them not just fattening them with cubes.

    with 4 acres you have a lot of scepticism to overcome with the county. might be easier to just buy more land
    "Beware of all enterprises that require new clothes"
    Henry David Thoreau, Walden

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