Should I Start an LLC for My Pumpkin Farm?

Starting a limited liability company (LLC) for your pumpkin farm can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For a pumpkin farm, lawsuits can arise from things like customers sustaining injuries while on your premises or property damage caused by your farm’s delivery vehicles.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your pumpkin farm seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Do I Need an LLC for a Pumpkin Farm?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should start an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for a Pumpkin Farm

By starting an LLC for your pumpkin farm, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Pumpkin farms will benefit from liability protection because agriculture and produce businesses, including pumpkin farms, face a number of risks associated with guests visiting the farm location. Additional risks include the safety of guests using and eating produce that your farm sells to them.

Example 1: While an employee at your business was showing a customer around your pumpkin farm, he crashed the vehicle he was driving into one of your plots, which resulted in the customer suffering a broken arm. This prompted the injured customer to bring a claim against your business for this bodily harm. In the ensuing litigation, you are protected against being held personally liable for any compensation your business must pay the plaintiff.

Example 2: One of the employees working at your pumpkin farm is attempting to park a tractor close to the parking lot when he loses control of the vehicle and crashes into a nearby customer’s car. Due to the severity of the damage done to the car, the customer decides to sue your business for the property damage. In this situation, your personal assets are precluded from being held responsible to satisfy any requirement imposed on your business to pay compensation.

Example 3: You decided to take out a business loan to help with the high startup cost of your pumpkin farm, but after months of underperformance, it is becoming clear your business will not be able to repay this loan. Consequently, the bank that lent your business this money sued for defaulting on this debt. The LLC structure limits any liability to pay compensation to the assets belonging to your business alone.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for a Pumpkin Farm

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if a pumpkin farm owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Pumpkin farms rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a professional LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets.

Obtaining a business insurance policy (or policies) is particularly important in the case of pumpkin farms due to the amount of capital typically tied up in its land.

Common Situations Business Insurance May Cover for a Pumpkin Farm

Example 1: In addition to pumpkin picking, your farm features a corn maze each fall. One of your visitors becomes lost in the maze and tries to escape through the cornfield, only to fall into a hole and break their leg. General liability insurance will likely cover the costs of their medical bills and any other damages in a lawsuit.

Example 2: A young child is running through the pumpkin patch and trips over a large vine that hasn’t been cleared from the pathway. They fall and sustain a serious head injury, leading to a lawsuit where you are found liable. General liability insurance will likely cover any damages in the event that you are sued by their family.

Example 3: Your pumpkin farm also sells smaller gourds for cooking during the fall harvest. Customers complain of flu-like symptoms after eating your gourds, and it is later determined that the crops tested positive for E. coli. General liability coverage will likely pay for any damages in a resulting lawsuit.

Other Types of Coverage Pumpkin Farms Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all pumpkin farms should obtain.

Commercial Auto Insurance

Any vehicles that are used for business-related purposes on your pumpkin farm must be covered under a commercial auto insurance policy. Personal car insurance will not protect your drivers, your company cars, or a third party in the event of an accident.

Workers’ Compensation Insurance

If your business employs any part-time or full-time employees, you may be required to carry workers’ compensation coverage by state law. This important insurance policy works to help pay for medical bills in the event that an employee is injured on the job.

Commercial Property Insurance

Operating a pumpkin farm requires expensive equipment and buildings to store your equipment when it’s not in use. Commercial property insurance helps to protect your business-related buildings and the items inside in the event of a natural disaster, fire, or burglary.

Commercial Umbrella Liability Insurance

If your business is sued, there is a chance that the damages associated with the lawsuit may exhaust the coverage provided by your primary insurance policies. In these cases, commercial umbrella liability insurance works to go above and beyond those limits to protect your business and keep it running.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance, commercial auto insurance, workers’ compensation insurance, and commercial property insurance.

Read our Business Insurance for Pumpkin Farms article for more info.

Expect to require $3,000 per acre of your pumpkin farm in starting capital in order to cover the growth, maintenance, and harvesting of the product. Note that if the size of your land is smaller, the rent is likely to be far lower.

Visit our How to Start a Pumpkin Farm guide to learn more about the costs of starting and maintaining this business.

Other than the cost of pumpkin seeds, ongoing costs are essentially limited to farm equipment maintenance, insurance costs, and employee wages.

Learn more about running a pumpkin farm.

Pumpkin farms sell pumpkins to customers, with prices depending on the size of pumpkin or products purchased. Some farms will have set prices for their goods, while others will sell pumpkins by weight.

Learn more about starting a pumpkin farm.

Pumpkin farms provide pumpkins for customers, particularly during the fall season. While some pumpkin farms only offer produce selections, others offer entertainment options such as corn mazes and hayrides.

A pumpkin farm’s profit differs with the size of the product offerings, and farms typically average about $30,000 in profit per season.

Learn more about starting a pumpkin farm.