Business and farm entities – 2025 Farm Legal Series

Picture your farm in the early morning light: rows of crops stretching toward the horizon, livestock stirring in their pens, and your to-do list suggesting possibilities of growth and innovation. Behind every decision—what seed to plant, which market to target, how to protect your bottom line—lies a fundamental choice: the type of business entity you’ll operate under.

Choosing the proper legal structure isn’t just paperwork. It sets the stage for everything from tax obligations and liability protection to how you raise capital or bring on partners.

The University of Minnesota Extension Farm Legal Series helps producers and agricultural industry professionals stay informed about relevant legal topics, enabling them to make informed decisions that impact their farms, families, and overall profits.

The business and farm entities articles discuss factors to consider when choosing your business entity type and how other decisions may depend on your choice.

Choosing the right business entity

This article explores the four most common entities for farmers to help you decide the best entity for your farming operation.

• Sole proprietorship
• Partnerships
• Limited liability company (LLC)
• Corporations

Restrictions on farm entities

Learn about the limitations and exemptions applicable to business entity types used in agricultural production.

• Liability protection of partners or business owners
• The nature and extent of taxes and how they are paid
• Authority and business formalities
  • Some entities have specific rules or are more formal than others.
• Transfer of ownership
  • Some entities make it easier or more complicated to bring new owners into the business.

Using trusts: legal issues and options

This article includes information about the Minnesota corporate farming law and restrictions on the business entities for farms, as well as what to be aware of when agricultural property is transferred from you to a trust to maintain tax benefits.

• Different types of trusts and the effect of the Corporate Farm Act
• Agricultural homestead issues
• The qualified farm property deduction on trust assets