agritourism business structures
TRANSCRIPT
![Page 1: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/1.jpg)
Agri-Tourism Business Structures
Limiting Your Liability
![Page 2: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/2.jpg)
Presented by:
Linda D. PhillipsDean, Dunn & Phillips LLC650 S. Cherry St., Ste. 620Denver, CO 80246303/756-6744
![Page 3: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/3.jpg)
How Could You Be Liable?
![Page 4: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/4.jpg)
Torts Liabilitiy
Personal InjuryTrip and FallAnimal Bites (Horses, mosquitoes, …)
Property DamageBroken equipment (fishing gear, etc.)
NegligenceAccidental Death (drowning, etc.)
![Page 5: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/5.jpg)
Contracts Liability
Broken Promises (Implied Warranties)Promised fish - Didn’t catch any fishHorse kept going back to the barn
Breach of ContractDid not provide service per the specific terms of the contract
![Page 6: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/6.jpg)
Ways to Limit Liability
Waiver/ReleasesInsurance Products
General LiabilitySpecific Liability Insurance for Industry
Business Structures
![Page 7: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/7.jpg)
Why a Business?
Limits LiabilitySeparates the tourism business
From other businessesFrom the family
Ease of RecognitionLegitimizes the Operation
![Page 8: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/8.jpg)
Types of Businesses
Sole Proprietorship/PartnershipLimited Partnership/LLLPLimited Liability CompanyCorporations (C and S-Corps)
![Page 9: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/9.jpg)
Sole Proprietorship – Partnerships
AdvantagesControlEasy BookkeepingLess expensive to maintain
DisadvantagesLiability not limitedCould lose it all…
![Page 10: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/10.jpg)
LLL Partnerships
AdvantagesFamily can be limited partnersCan avoid some taxes (SS, unemployment) because they are not employeesLimited liability
DisadvantagesPartnership accounting can be cumbersome
![Page 11: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/11.jpg)
Limited Liability Company
AdvantagesLiability of members limited to their investmentsCan choose your accounting system (partnership, S-corp or C-corp accounting)Easy to form and maintainSome tax advantages (if using partnership accounting or S-corp accounting)
![Page 12: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/12.jpg)
LLC DisadvantagesTax accounting sometimes difficult
In re Albright, 291 B.R. 538 (Bankr.D.Colo. 2003)Personal Chapter 7 BankruptcySole Member LLCTrustee got authority to sell LLC assets to cover the sole member’s debts
Membership Interest AND Management Interest
Two members
![Page 13: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/13.jpg)
C-Corporations
AdvantagesShareholder liability limited to investmentsEasy to form
DisadvantagesDouble tax returns/accounting systemsLess flexibility
![Page 14: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/14.jpg)
S-Corporations
AdvantagesShareholder liability limited to investmentsEasy to form Tax advantages
DisadvantagesLimited number of investorsNot quite as flexible as an LLC
![Page 15: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/15.jpg)
Maintaining Limited Liability
![Page 16: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/16.jpg)
“Arms Length” Transactions
What – Keeping all agri-tourism business activities separate from any other businesses or family operations.Why – Again to limit liability and to avoid “piercing the corporate veil”.How
![Page 17: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/17.jpg)
Record Keeping
Records for the LLC or corporation must be devotedly maintained
Board Meetings (should meet at least quarterly to discuss the business)Minutes of major activities
Buying/selling real or personal propertyHiring management personnel
Annual Shareholder/Member MeetingsAnnual Reports to the Secretary of State
![Page 18: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/18.jpg)
Business Operations – Part I
Separate Bookkeeping – accounting records must be completely separate from other operationsBank Accounts Must Be Separate
Includes separate credit cardsSeparate bank lines of creditAvoid personal guarantees with the bank
![Page 19: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/19.jpg)
Business Operations – Part IIContract Tracking
Buying Feed – for the agri-tourism operation or for other operationsFuel purchasesVendor contracts (try to avoid personal guarantees)Administrative Services Agreement – between the “family” or owners and the new company – Spells Out:
Management of the operationsBookkeeping/administrative servicesPersonnel agreements
![Page 20: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/20.jpg)
Business Operations – Part III
Outside Personnel – Employee payrolls through the businessIndependent Contractor Agreements (with indemnification/limitations of liability clauses)Tradenames – Good Usage
![Page 21: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/21.jpg)
Conclusion
Waivers/ReleasesInsuranceSeparate Business Organizations
Through these vehicles you CAN limit your liability and successfully operate your agri-tourism business.
![Page 22: Agritourism Business Structures](https://reader034.vdocuments.site/reader034/viewer/2022051301/586b754a1a28ab6d768b811b/html5/thumbnails/22.jpg)
ThanksFor Listening