{"id":105237,"date":"2025-02-23T13:05:44","date_gmt":"2025-02-23T13:05:44","guid":{"rendered":"https:\/\/peraltafinancing.com\/agriculture\/choosing-the-best-business-model-for-todays-farmers-market\/"},"modified":"2025-02-23T13:05:44","modified_gmt":"2025-02-23T13:05:44","slug":"choosing-the-best-business-model-for-todays-farmers-market","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=105237","title":{"rendered":"Choosing the Best Business Model for Today\u2019s Farmers Market"},"content":{"rendered":"\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span><span style=\"font-family: Calibri\">By<br \/>\n<\/span><\/span><a href=\"http:\/\/extension.psu.edu\/directory\/jse15\"><span style=\"color: blue\"><span style=\"font-family: Calibri\">Juliette Enfield<\/span><\/span><\/a><span><span style=\"font-family: Calibri\">, Penn State<br \/>\nExtension Educator, <\/span><\/span><a href=\"http:\/\/www.extension.psu.edu\/warren\"><span style=\"color: blue\"><span style=\"font-family: Calibri\">Warren Co<\/span><\/span><\/a><span><\/span><\/div>\n<p><\/p>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span style=\"font-family: Calibri\">Many markets have rules and regulations for internal<br \/>\noperations. While rules and regulations are important for setting guidelines<br \/>\nfor vendors at the market, they cannot be used when dealing with external<br \/>\nbusiness partners such as municipalities, businesses, or even customers. <\/span><\/div>\n<p><\/p>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span style=\"font-family: Calibri\">According to the <\/span><a href=\"https:\/\/pennstatelaw.psu.edu\/academics\/research-centers\/center-agricultural-and-shale-law\"><span style=\"color: blue;font-family: Calibri\">Penn<br \/>\nState Center for Agricultural and Shale Law<\/span><\/a><span style=\"font-family: Calibri\">, more and more farmers markets<br \/>\nare becoming legally incorporated in order to function in today\u2019s business<br \/>\nenvironment. Markets have had to become incorporated to comply with municipal<br \/>\nordinances, such as the requirement that all special events provide a<br \/>\ncertificate of insurance should someone get injured. Markets have also had to<br \/>\nbecome incorporated in order to accept Electronic Benefits Transfer (EBT) cards<br \/>\nat the market.<\/span><\/div>\n<table align=\"center\" cellpadding=\"0\" cellspacing=\"0\" class=\"tr-caption-container\" style=\"margin-left: auto;margin-right: auto;text-align: center\">\n<tbody>\n<tr>\n<td style=\"text-align: center\"><a href=\"https:\/\/blogger.googleusercontent.com\/img\/b\/R29vZ2xl\/AVvXsEjW-tCu7Wrmx6U6_AOdBugphumxBINg21NNgRnxy6oQG96MGUwkFjdhBD7eSiU9xOInBVz-2k2OFnFC4hqcCLkclRQd7ilSskXeRJ_FrFjFlNj7NbstAcwwTgcZKW6qIs43JiQpGFnfKSA\/s1600\/11888648_1016701768374286_2610617692789348997_o.jpg\" style=\"margin-left: auto;margin-right: auto\"><img loading=\"lazy\" decoding=\"async\" border=\"0\" height=\"281\" src=\"https:\/\/blogger.googleusercontent.com\/img\/b\/R29vZ2xl\/AVvXsEjW-tCu7Wrmx6U6_AOdBugphumxBINg21NNgRnxy6oQG96MGUwkFjdhBD7eSiU9xOInBVz-2k2OFnFC4hqcCLkclRQd7ilSskXeRJ_FrFjFlNj7NbstAcwwTgcZKW6qIs43JiQpGFnfKSA\/s400\/11888648_1016701768374286_2610617692789348997_o.jpg\" width=\"400\" \/><\/a><\/td>\n<\/tr>\n<tr>\n<td class=\"tr-caption\" style=\"text-align: center\"><span style=\"font-size: small\">More and more farmers markets are becoming incorporated in order to function in today&#8217;s business environment.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span style=\"font-family: Calibri\">The days of informal farmers markets are no more. We are<br \/>\nentering into an age, whether we like it or not, where liability protection is<br \/>\nessential. Many farmers markets in Pennsylvania are not recognized as entities<br \/>\nby the Department of State or the IRS, and therefore all liability rests on the<br \/>\nfarmers or small business owners themselves. There are two options for farmers<br \/>\nmarkets seeking liability protection:<\/span><\/div>\n<p><\/p>\n<div class=\"MsoListParagraphCxSpFirst\" style=\"margin: 0in 0in 0pt 0.5in;text-indent: -0.25in\">\n<!--[if !supportLists]--><span><span><span style=\"font-family: Calibri\">1.<\/span><span>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br \/>\n<\/span><\/span><\/span><!--[endif]--><span style=\"font-family: Calibri\">Find an organization that is willing to umbrella<br \/>\nthe market <\/span><\/div>\n<p><\/p>\n<div class=\"MsoListParagraphCxSpLast\" style=\"margin: 0in 0in 10pt 0.5in;text-indent: -0.25in\">\n<!--[if !supportLists]--><span><span><span style=\"font-family: Calibri\">2.<\/span><span>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br \/>\n<\/span><\/span><\/span><!--[endif]--><span style=\"font-family: Calibri\">Create a legal entity for the market<\/span><\/div>\n<p><\/p>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<b><span style=\"font-family: Calibri\">Designing a Business<br \/>\nModel that Works for Your Market<\/span><\/b><\/div>\n<p><\/p>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span style=\"font-family: Calibri\">Step 1: Register the organization with the Department of<br \/>\nState<\/span><\/div>\n<p><\/p>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span style=\"font-family: Calibri\">As with any business, farmers markets can have variety of<br \/>\ndifferent business structures. Some markets are owned by a single individual. In<br \/>\na sole proprietorship structure, the vendors pay their dues to the market owner<br \/>\nin order to participate in the market. The market owner is responsible for all market<br \/>\nactivities and is personally invested in the market\u2019s success. If there is no<br \/>\nsole proprietor for a market, an existing business may be willing to umbrella<br \/>\nthe market, which means they assume full ownership and responsibility for the<br \/>\nmarket. In this case, the market operates under the umbrella business\u2019 name.<br \/>\nThis is a successful model if the existing business\u2019 mission is in line with<br \/>\nthe farmers\u2019 market mission, such as promoting healthy eating or supporting<br \/>\nlocal farmers. If there is no sole proprietor, and no organization that would<br \/>\nlike to own the market, incorporation is the only other option. If a market<br \/>\nchooses to incorporate, they must choose a board of directors (a minimum of<br \/>\nthree people) to manage the market. Incorporation also requires bylaws and<br \/>\narticles of incorporation to be filed with the Department of State. A lawyer<br \/>\nshould be consulted for this process. <\/span><\/div>\n<p><\/p>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span style=\"font-family: Calibri\">Step 2: Decide your tax status with the IRS<\/span><\/div>\n<p><\/p>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span style=\"font-family: Calibri\">Depending on the structure that the farmers market chooses,<br \/>\na market may be a for-profit business or a non-profit business. Non-profit<br \/>\nbusinesses have the option to file for tax exempt status with the IRS, which<br \/>\nmeans that state and federal tax will not have to be paid on income or<br \/>\nexpenses. There are two types of tax exempt codes most commonly used by incorporated<br \/>\nfarmers\u2019 markets- 501c3 and 501c4. A 501c3 organization must provide a benefit<br \/>\nto the community such as providing education or benefiting a charitable cause. A<br \/>\n501c4 is an organization that is created for \u201csocial welfare\u201d, meaning that the<br \/>\norganization has come together for the benefit of its members. If a farmers<br \/>\nmarket exists solely for the benefit of the individual vendors, and is not<br \/>\nproviding any education to the community or supporting a charitable cause,<br \/>\ntheir activities reflect the activities of a 501c4. While both 501c3 and<br \/>\n501c4\u2019s can accept donations to the organization, only the 501c3\u2019s donations<br \/>\nare tax deductible to the donor. Once the tax status has been obtained, the organization<br \/>\nmust file a 990 form-\u201cReturn of Organization Exempt from Tax\u201d every year to<br \/>\ndeclare their earnings, and they must keep meeting minutes on file. Since tax<br \/>\nexempt organizations\u2019 records are in view of the public, operations should be well<br \/>\nrecorded and transparent. The cost to file as a 501c3 or 501c4 is $400 if the<br \/>\ngross receipts do not exceed $10,000 per year during the first four years of<br \/>\noperations. If the market is a non-profit and is not generating much income (only<br \/>\ngenerates a small amount of revenue from vendor dues), requesting 501c3 or<br \/>\n501c4 status may not be necessary.<\/span><\/div>\n<p><\/p>\n<table border=\"1\" cellpadding=\"0\" cellspacing=\"0\" class=\"MsoTableGrid\" style=\"border-collapse: collapse;border: currentColor\">\n<tbody>\n<tr>\n<td style=\"background-color: transparent;border: 1pt solid windowtext;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div align=\"center\" class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt;text-align: center\">\n<b><span style=\"font-family: Calibri\">501c3<\/span><\/b><\/div>\n<\/td>\n<td style=\"background-color: transparent;border-style: solid solid solid none;border-width: 1pt 1pt 1pt 0px;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div align=\"center\" class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt;text-align: center\">\n<b><span style=\"font-family: Calibri\">501c4<\/span><\/b><\/div>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: transparent;border-style: none solid solid;border-width: 0px 1pt 1pt;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt\">\n<span style=\"font-family: Calibri\">Does not pay tax<\/span><\/div>\n<\/td>\n<td style=\"background-color: transparent;border-style: none solid solid none;border-width: 0px 1pt 1pt 0px;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt\">\n<span style=\"font-family: Calibri\">Does not pay tax<\/span><\/div>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: transparent;border-style: none solid solid;border-width: 0px 1pt 1pt;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt\">\n<span style=\"font-family: Calibri\">Cannot lobby<\/span><\/div>\n<\/td>\n<td style=\"background-color: transparent;border-style: none solid solid none;border-width: 0px 1pt 1pt 0px;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt\">\n<span style=\"font-family: Calibri\">Can lobby<\/span><\/div>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: transparent;border-style: none solid solid;border-width: 0px 1pt 1pt;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt\">\n<span style=\"font-family: Calibri\">Donations are tax deductible<\/span><\/div>\n<\/td>\n<td style=\"background-color: transparent;border-style: none solid solid none;border-width: 0px 1pt 1pt 0px;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt\">\n<span style=\"font-family: Calibri\">Donations are not tax deductible<\/span><\/div>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: transparent;border-style: none solid solid;border-width: 0px 1pt 1pt;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt\">\n<span style=\"font-family: Calibri\">Must engage in charitable or educational activities<\/span><\/div>\n<\/td>\n<td style=\"background-color: transparent;border-style: none solid solid none;border-width: 0px 1pt 1pt 0px;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt\">\n<span style=\"font-family: Calibri\">Does not have to engage in charitable or educational activities<\/span><\/div>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"background-color: transparent;border-style: none solid solid;border-width: 0px 1pt 1pt;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt\">\n<span style=\"font-family: Calibri\">Cost to obtain is $400 (if gross receipts do not exceed $10,000)<\/span><\/div>\n<\/td>\n<td style=\"background-color: transparent;border-style: none solid solid none;border-width: 0px 1pt 1pt 0px;padding: 0in 5.4pt;width: 239.4pt\" valign=\"top\" width=\"319\">\n<div class=\"MsoNormal\" style=\"line-height: normal;margin: 0in 0in 0pt\">\n<span style=\"font-family: Calibri\">Cost to obtain is $400 (if gross receipts do not exceed $10,000)<\/span><\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><\/p>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span style=\"font-family: Calibri\">&nbsp;<\/span><br \/>\n<b><span style=\"font-family: Calibri\">Advantages of<br \/>\nStructuring the Market<\/span><\/b><\/div>\n<p><\/p>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span style=\"font-family: Calibri\">Structuring the market is becoming an obligation; however,<br \/>\nit is not without its advantages. If the market becomes a non-profit, they are<br \/>\nable to apply for a wide variety of grants. If the market is able to process<br \/>\nEBT transactions, sales will increase, as will accessibility of the market<br \/>\ngoods to a larger percentage of the population. Forming a board or having a<br \/>\nmarket owner could reinvigorate a market, bring in new ideas, and expand<br \/>\nbusiness connections in the community, all of which should lead to greater<br \/>\nprofitability for the market.<\/span><\/div>\n<p>\n\ufeff<\/p>\n<table align=\"center\" cellpadding=\"0\" cellspacing=\"0\" class=\"tr-caption-container\" style=\"margin-left: auto;margin-right: auto;text-align: center\">\n<tbody>\n<tr>\n<td style=\"text-align: center\"><a href=\"https:\/\/blogger.googleusercontent.com\/img\/b\/R29vZ2xl\/AVvXsEhLolUYqMATJC70ZanBGaKQps5kOz5NJ11iUvegCGaVVG0iXTwfJcElqIohI5DF7TkTvUEsOFtdsxed3reKD8_IXErO93WRp80M4RsJ102-fZFEPTOZ8sHC1I7zrhKtKGvrr36gTWmNvfM\/s1600\/RobAndersen.jpg\" style=\"margin-left: auto;margin-right: auto\"><img loading=\"lazy\" decoding=\"async\" border=\"0\" height=\"232\" src=\"https:\/\/blogger.googleusercontent.com\/img\/b\/R29vZ2xl\/AVvXsEhLolUYqMATJC70ZanBGaKQps5kOz5NJ11iUvegCGaVVG0iXTwfJcElqIohI5DF7TkTvUEsOFtdsxed3reKD8_IXErO93WRp80M4RsJ102-fZFEPTOZ8sHC1I7zrhKtKGvrr36gTWmNvfM\/s400\/RobAndersen.jpg\" width=\"400\" \/><\/a><\/td>\n<\/tr>\n<tr>\n<td class=\"tr-caption\" style=\"text-align: center\"><span style=\"font-size: small\">The new board of directors for the Warren County Farmers Market, Inc. <\/span><br \/>\n<span style=\"font-size: small\">Photo courtesy Rob Andersen, Warren Times Observer<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span style=\"font-family: Calibri\">There is no one size fits all structure for Farmers Markets.<br \/>\nThe circumstances affecting each market in each community are varied. For<br \/>\nfurther assistance or expertise when creating your legal structure, contact the<br \/>\n<\/span><a href=\"https:\/\/pennstatelaw.psu.edu\/academics\/research-centers\/center-agricultural-and-shale-law\"><span style=\"color: blue;font-family: Calibri\">Penn<br \/>\nState Center for Agricultural and Shale Law<\/span><\/a><span style=\"font-family: Calibri\">. It is the lawyer\u2019s job to<br \/>\nthink of all the potential problems that might arise in your new business<br \/>\nstructure, which will relieve the legal burden from you and allow you to focus<br \/>\non sales. <\/span><\/div>\n<p><\/p>\n<div class=\"MsoNormal\" style=\"margin: 0in 0in 10pt\">\n<span style=\"font-family: Calibri\">For more general information on non-profits, see my previous<br \/>\nblog post <\/span><a href=\"http:\/\/farmbusiness.blogspot.com\/2015\/01\/an-agricultural-nonprofit-still-has-to.html\"><span style=\"color: blue;font-family: Calibri\">An<br \/>\nAgricultural Nonprofit Still Has to Make a Profit<\/span><\/a><span style=\"font-family: Calibri\">. <\/span><\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>By Juliette Enfield, Penn State Extension Educator, Warren Co Many markets have rules and regulations for internal operations. While rules and regulations are important for setting guidelines for vendors at the market, they cannot be used when dealing with external business partners such as municipalities, businesses, or even customers. According to the Penn State Center [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":105240,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12026],"tags":[907,12563,15919,11209,1168,14364],"dealstore":[],"offerexpiration":[],"class_list":["post-105237","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-agriculture","tag-business","tag-choosing","tag-farmers","tag-market","tag-model","tag-todays"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Choosing the Best Business Model for Today\u2019s Farmers Market - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=105237\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Choosing the Best Business Model for Today\u2019s Farmers Market - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"By Juliette Enfield, Penn State Extension Educator, Warren Co Many markets have rules and regulations for internal operations. 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