Young couple/ Farming & art

dylanpipedylanpipe subscriber Posts: 1 Member

Hey guys,


My girlfriend and I are navigating through state websites and the IRS trying to get stuff in order, so we can start showing the IRS our income and hopefully leave the renting world behind and hop into the mortgage world.


We are still in our mid 20’s. 


A. We both farm in the summer and have a farm stand and supply a few restaurants locally and are trying to expand our distribution. This will be our second year of this and last year it went very well considering, we actually made a profit and made a decent amount of connections .


So for this upcoming season, besides of a Intuit quickbooks type thing, what else do we need to have for record keeping? 


What would suit us best ? We have no employees other than ourselves, farm on the land we rent and live on. LLC, S corp etc?


B. Then besides farming we both do our own art thing, mine being digital media, generally weddings/ winter stuff( were up in Vermont) random events, Edit stuff for people etc. Which is making like 2-3 k a month on average, with sometimes being closer to 6k. 

And my girlfriend paints and does communism works for lots of people locally, making usually 1-3k a month. 


What should be both do for that to should our income monthly for our art, individually.?


How do you keep records of that and submit that sort of stuff to the IRS?





Hoping in a few years we can qualify for a mortgage, off of our farm income and our own art. 


( I currently work in the winter right now for some extra cash at the ski resort) 


We’ve paid 1600$ for rent for going on 4 years now.. would love to start a transition to owning, obviously will take a few years


Her credit score is in the low 700 I believe, mines in the low 600. 

Comments

  • gmr1960gmr1960 subscriber Posts: 2 Member

    If your goal is to prove income for a mortgage then you don’t have to incorporate. You would be considered a sole proprietorship. If you have a business name you probably would have to file that with your county. But you should get an EIN for each business because they are so different.

    Depending on the mortgage you would need at least two years of tax history. Also you should try to get your credit scores higher. Tips for that include: Pay off at least one of your credit cards, Open a bank account for each business and apply for a credit card for each.

    Banks also look at your debt to income ratio. You can look online to see what most banks require. Work on getting that within range.

    I recommend that you incorporate your businesses for liability reasons. An LLC would be best at first. The IRS looks at LLC’s as sole proprietors so nothing would change on how you report it. Later if you are making enough money to pay yourself a decent salary then you can elect to become an S corporation. There are more record keeping requirements though for that and paying salaries is an extra headache with extra expenses for the business beyond just the salary.

    As far as record keeping goes I would get Quickbooks for business. You can keep track of all your business income and expenses that way for a small monthly fee and print out reports for whoever does your taxes. In the rare event you ever get audited you will need proof of your numbers. Bank and credit card statements should work for that along with receipts for any cash purchases.

    A few tips on what business expenses you can count that some people neglect. Home office deduction and business mileage. For mileage when using your personal car record total mileage at the beginning of the year and at the end. You can use an app that keeps track of business miles, just remember to turn it on before you start the trip and off when you are done. If you are renting the farm see what the going rates are per acre for farmland rentals. You can count that much of your rent as a business expense.

    I know this is a lot but I hope it helps. If you have more questions e-mail me at [email protected]

  • likeshigh12likeshigh12 New Yorksubscriber Posts: 86 Silver Level Member
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