If your farm is classed as a hobby farm, your land may not be considered “qualifying farm property” and, when you want to sell, it may not be subject to capital gains exemption. Additionally, your farm’s land may increase in value over time. Hobby farmers cannot deduct any farm expenses on their tax return, however. Hobby farmers may not have to report their farm income on tax returns, whereas full-fledged commercial farms do. Many hobby farms will gain some profit from the sales of their crop or livestock, but they aren’t putting in the work to market their products. That does not mean, however, that hobby farms generate no revenue. Most of the time, farmer hobbyists will have a source of income outside of their ranch or farm or they may even be retired. Hobby farmers are generally individuals and families who live on acreages, spent their childhood on a farm, or inherited a farm from a relative and wish to conduct farming activities purely for pleasure. Hobby farming is recreational and holds no expectation for profit. Hobby farms still need insurance, but that insurance may look a little different. The only time a farm may not be considered a “small business” is in the case of hobby farms. Even if it doesn’t, it’s still imperative to have this coverage to give benefits to any injured or ill workers. If your farm has workers, you may also be required to carry workers’ compensation insurance as state law may apply. Discuss with a Hitchings Agency representative if you offer a special activity or service and are not sure if your policy covers it. Liability for damages to any farm buildings that are being rentedĭepending on the activities you provide or the assets you own, you may also consider additional (optional) liability coverages, including animal show liability, farmer’s market liability, and agritourism activities liability.Legal liability for the ownership, occupancy, or use of your farm.Accidental damages caused by you or your employees. Your small farm business insurance may include liability coverage for the following: This will cover your farm if a visitor or guest is harmed on your property, or if your operations are the cause of damage to their property. Liability CoverageĪs a business, farms need liability coverage. Insurable machinery and equipment may include boilers, automatic feeders, monitoring equipment, electrical panels. Farm machinery may require special coverage to reflect the unique value of the tools you use in your everyday operations. Your farm likely uses a range of different equipment to carry out its operations. Separate coverage may be necessary if you have horses, as horses may be used for a wide range of activities and can vary in value. Covered animals may include cows, swine, poultry, sheep or alpacas. This may include coverage for your livestock in transit, accidents and attacks by wild animals or dogs, or natural disasters. If your farm raises livestock, whether for butchering, showing, agritourism activities, you may need livestock insurance. A small farm business insurance policy may include your farm barn, outbuildings, structures – like silos, sheds, equipment garages – and so on. Your homeowners’ insurance may cover your farm’s dwelling, but usually, coverage will be limited on business structures. Your policy can include coverage for a multitude of assets on your farm, activities, property, and so on. If something were to happen, you wouldn’t want all that hard work to go to waste. With farming, if it’s your regular occupation and you are practicing solely to generate a profit, you’re putting forth significant effort – and a lot of it. Small Farm Business Insurance for Your Bottom Lineįarmers are a breed apart. Here’s why small farm business insurance is imperative for your operations. You wouldn’t want that to go to waste if something were to happen. Any business owner strives to make their operations successful and puts in a great deal of time, money, and effort to make that dream a reality. If your individual farming activities are carried out with the intent of profit, then yes – your farm is a small business.Īs a business, your small farm needs business insurance. A business can be a profession, a trade, a manufacturer, or an undertaking of any kind with evidence to support the intention for profit. Is farming considered a small business? A business, in layman’s terms, is an activity or series of activities carried out with the intent of profit.
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