Entity Formation for Your Food Business

How you form your food, beverage or value-added agriculture business has huge implications for your particular business development and growth path, as well as regulatory and tax considerations. This includes what kinds of money you are able to raise.

There are different types of legal forms that these businesses can take:

  • Sole-proprietorship
  • Partnership (pass through taxation)
  • LLC (pass through taxation unless “check-the-box”)
    • Single-Member (including married couples) LLCs = “Disregarded Entity”
    • Manager-Managed v. Member-Managed
    • Capital Accounts
    • Operating Agreement
  • Corporation
    • S-Corp Election (no non-citizens, no corporate shareholders, no more than 100 shareholders)
    • The myth of “double-taxation”
    • Formalities
  • Employee issues related to Corporate Form
    • Separation of Management from Ownership
    • Board of Directors (yes, even in an LLC)