Why does the market's business structure matter?
Not all farmers markets exist as independent legal entities. Some farmers markets are part of a larger nonprofit or other umbrella organization. In those cases, the umbrella organization's business structure is what matters.More About Umbrella Organizations
First and foremost, the farmers market’s business structure is important because it affects, among other things:
- The extent of your personal liability (as market leader/worker) for market operations
- The way the market’s management is structured
- The method by which market business decisions get made
- The market’s eligibility for grant funding and charitable donations
- Rules on the market’s use of volunteers
- How the market is taxed
Second, if your farmers market doesn’t proactively adopt a specific business structure, state laws kick in and pick one for you.
For example, if you run a farmers market by yourself and your market doesn’t have a formalized business structure (limited liability company (LLC), corporation, etc.), you’ll likely be considered a sole proprietor under state law (or an unincorporated nonprofit association in some cases). For many people, the risks of running a sole proprietorship outweigh the costs of forming an LLC or other more formal business structure.