Farming has become an immensely popular hobby for Australians, especially for young professionals and families. Not only does having a farm provide a getaway for those wanting to escape the hustle and bustle of the city on the weekend, but having a Hobby Farm Business can also provide a steady source of income in an increasingly expensive world. Beyond this, consumer trends towards preferences for organic food and products has meant that it’s a hobby that can be quite lucrative.
Whether you are a Hobby Farm owner who wants to turn the farm into a business, or someone who wants to purchase a farm for business, this article will provide you with some pivotal information for starting a farm business.
Table of Contents
1. Will your Farm be a Business or Hobby?
Just because you’re occasionally selling your products to your friends does not necessarily mean that you’re running a business. It is possible for you to earn profits from your farm as a hobby, just as people sell crafts or handmade jewellery as an extension of their hobby.
Below are some questions that may help you identify whether your Hobby Farm Business is a commercial business or hobby:
- Is the activity being undertaken for commercial reasons?
- Is your main intention, purpose or prospect to make a profit?
- Do you regularly and repeatedly undertake your activity?
- Is your activity planned, organised and carried out in a businesslike manner?
- Will the farm be my sole source of income, and even if not, will I rely heavily on its profits?
The benefits and obligations between operating a business or simply engaging in a hobby can be very different. If you’re unsure about the nature of your activity, you should contact a small business lawyer for further legal advice.
2. Choose your Business Structure
Once you’ve decided to start a business, the first thing to consider is what business structure you want your Hobby Farm Business to fall under. There are three types of business structure for you to consider, and each of them have their unique advantages to fit different circumstances and business goals.
The three types of business structure are:
- Sole trader
- Partnership
- Company
Choosing the right business structure may be the most important decision you make at the early stages of starting your Hobby Farm Business, and it it will determine what direction your farm goes in, both commercially and financially.
3. Register your Hobby Farm Business
Always register your business, as every business in Australia requires an ABN (Australian Business Number). Some of the common advantages of having an ABN includes claiming Goods and Services Tax (GST) credits and obtaining an Australian domain name (.com.au), if you wish to have an online presence. Depending on your business structure, you may also need to set up a company and register a ACN (Australian Company Number).
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4. Obtain the Necessary Licences and Permits
Running a commercial farm can be very different from a hobby farm. Once you have registered your business, you may need additional licences to operate it.
Some general regulations of the agriculture industry include:
- Water usage
- Clearance of vegetation
- Disposal of waste
- Fire management and safety
- The handling of livestock and animals
Specific licence information can be found on the Australian Business Licence and Information Service (ABLIS) website.
5. Insurance
It is important to protect your business from potential risks by having insurance. There are various types of insurance to cover different business requirements and preferences. In general, those who own farming businesses usually want to have insurance covering their farm property and liabilities. If you are not sure about which kind of insurance you need, you should consult an insurance lawyer for further advice.
6. Growing your Business
Now you have ticked off all of the basic requirements to start your Hobby Farm business, you can also start to consider how you will grow your business. Whilst growing your farm, you may need to prepare a lot of legal documents, such as employment agreements if you intend on hiring employees.
Having a Hobby Farm is not only a great recreational use of your time, but could provide a great second source of income, or even morph into a primary business if you grow it the right way.
