When structuring your business, do you choose sole trade? Partnership? Or limited company? There are a variety of factors that need to be considered. In this blog, I take a look at the different options.
Historically, most farms were relatively small family run businesses which on the whole were best served by operating as partnerships. Nowadays, as businesses have grown and diversified, the partnership structure is not always the best option. Reasons have intensified to reconsider the structure and to take into account capital protection and tax motives that may favour incorporation.
Over the past decade, the farming industry has changed – farm assets are now managed differently. Many farms have more enterprises today than ever before, ranging from renewable projects and converted residential property lets to holiday lets, contracting and diversification into a new farm sector. With all this upheaval, it’s productive to ask yourself the following questions:
- Has my farm recently been through some changes or will it in the near future?
- Have I considered my farm business structure?
If the answers are YES and NO respectively, then it is time to act and seek advice.
Incorporating everything into a single larger partnership or limited company may have succession planning, income tax or inheritance tax consequences that should be considered before making the final decision. There are some existing and new taxation rules which could make companies appear more attractive, however on the other hand there is the inherent added administration which comes with them. Many diversified businesses now operate under multiple business structures to take into account the different risks and rewards associated with the changes in the business.
It would be great if I could say exactly what the best option would be for every farm business, however the one-size-fits-all turn of phrase does not apply here unfortunately.
Each farm business differs from the next.
To discuss your business structure, please get in touch. There’s no obligation attached to meeting or talking with us, and we expect to leave you with some ideas that make the time spent more than worthwhile.
Rural Business Specialist