Introduction and How to Use These Resources

With an initial decision in hand to form an LLC, farmers need to know exactly what it takes to form one. How does a person set up the LLC? What documents need to be filed and with whom? What should be included in the operating agreement? This section is filled with hands-on tools to help guide you through the process of creating and maintaining an LLC as well as preparing your farm LLC’s operating agreement.

The Checklist: Creating an LLC sketches the basic process a farmer follows to form and organize an LLC; it’s designed to help farmers understand the big picture as they comply with the laws and outfit their farm for success. It’s best to start with the checklist to get a sense of what will be required.

The sample Brief Operating Agreement for Happy Couple Farm, LLC includes the foundational provisions that are particularly important for a married couple  LLC. It presumes that the couple’s communication and working relationship are relatively good. It also assumes that if the couple divorces, marital or family law may dictate the division of assets to a certain extent, aside from what an operating agreement might require. So the provisions are not as elaborate as some operating agreements. If you think that you will eventually take on new business partners outside your family, you may want to take a look at the sample Extensive Operating Agreement for Sun Sisters Farm, LLC. This extensive agreement provides more elaborate provisions to handle various scenarios that may arise in an LLC with members of diverse backgrounds and interests who may come and go. These sample operating agreements serve as examples of the ways a farm operation may want to handle certain situations should they arise. The annotations provide even more ideas.

Rather than simply adopting someone else’s operating agreement, including any of the sample agreements in this section, it’s best to take the time to think through the various issues and craft an agreement that is best for your particular farm operation. The Checklist: Preparing Your Farm’s LLC Operating Agreement will guide you through that process. It’s filled with questions to illicit the best result that is specific to your situation. You can either take your answers to an attorney, who will then be able to efficiently draft your operating agreement, or you can take a crack at drafting it yourself using the sample agreements as a guide. Either way, Farm Commons advises that you have an attorney familiar with the laws in your state look it over before it is finalized. This will ensure that it complies with your state’s corporation statute and that there are no conflicting provisions within the bylaws, which would only lead to confusion down the road.

Finally, while LLCs are generally not required to hold annual meetings, it is a good practice to do so anyway. Annual member meetings offer an opportunity for the members to get together and review the financials and strategize for the upcoming year. They help foster open communication and engagement from the membership. If you do hold annual member meetings, it’s best to keep minutes to evidence what happened should a dispute or issue arise. In addition, if your LLC chooses to elect S corporation tax status, the IRS will require you to hold annual member meetings and take minutes. The sample Annual Member Meeting Minutes with Annotations included in this section illustrate how straightforward it is to take minutes. You can use these to guide you through the process should you decide or be required to hold annual member meetings.