Small
Farm &
Direct Marketing
Updated 05/25/06
Government Regulations
For more information, e-mail us at smallfarms@agr.wa.gov, or call (360) 902-2057.
Every business is surrounded by a myriad of regulations, and there is no simple way to identify them. The challenge is that each government entity has slightly different regulations and requirements. One approach for a business is to start by identifying what city, county or other jurisdiction they fall under. This is really a geographic question. So when in doubt call your city/county planning department for boundary identification. A great start for learning all you can is by going to the web site for Washington State Licensing information that follows and working through the checklist for starting a business.
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The safety of the food your business produces is a number one concern for the public and government agencies. The following links outline the government regulations that have been put in place that you need to be aware of.
Food Processing in Washington State
State regulations for food processing are outlined in the Washington
Food Processing Act (Chapter 69.07 RCW). Food Processing
is defined as, “the handling or processing of any food in any
manner of preparation for sale for human consumption.” All
businesses selling processed foods direct to the consumer at farmers
markets, on-farm, or any other location must obtain a Food Processors
license from the WSDA Food Safety Program.
WSDA Food Processors License:
Farms/processors will need to obtain a Food Processors License from
WSDA Food Safety if:
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Your business is processing and selling packaged foods,
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Your farm business processes low-acid canned foods (i.e. canned fish, vegetables, retorted pouches of fish, vegetables, etc.)
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You are producing a processed food and your farm business is not licensed by the county health department as a food service establishment.
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You are selling your processed food outside your county.
Food Processors License Handbook
http://www.agr.wa.gov/FoodAnimal/FoodProcessors/LicenseHandbook.htm
Commercial Kitchen
If you wish to process your farm produce but do not have the
facilities or capital to invest in infrastructure, you may find a
kitchen that you can use. Some restaurants, community centers, and
Grange halls, for instance, allow the use of their facilities for
food processing. “Commercial” or “community”
kitchens may be available in your area.
Commercial Kitchen required to be Licensed for
In County Use
If you are selling your products within the county, direct to the
consumer on farm or at farmers markets, the commercial kitchen may
be licensed by your county health department. Call your local county
health department for locations of existing commercial kitchens.
Outside of County Sales Requires WSDA Approval
If you are selling your processed food products outside the county
via any commerce channels (e.g., farmers markets, Internet, hotels,
restaurants) or are processing a cheese product or low-acid canned
foods, the commercial kitchen must meet WSDA requirements for
food processing.
Businesses Require WSDA Food Processor License
Each business that processes food in that commercial kitchen must
have a WSDA Food Processor License. Businesses selling processed
foods should also have adequate insurance.
Washington State University Small Farms Connection
http://smallfarms.wsu.edu/
Food Safety - FDA Publication “ Good Agricultural
Practices"
http://vm.cfsan.fda.gov/~dms/prodguid.html
Food Labeling Guide
http://www.cfsan.fda.gov/~dms/flg-5-1.html
Matrix of rules & regulations for Food Processing
www.agr.wa.gov/foodanimal/foodprocessors/default.htm
Good Agricultural Practices Program
http://www.gaps.cornell.edu/
Unprocessed fruits and vegetables can be at risk for microbiological
contamination during production and harvest. The USDA, FDA and CDC
developed the Good Agricultural Practices. These guidelines
are the standard for safe harvesting and handling procedures.
Direct Marketing Regulations
http://smallfarms.wsu.edu/marketing/generalInfo.html#general
Safe Handling of Farm Produce
http://smallfarms.wsu.edu/food_and_you_foodsafety.php
"The Green Book" Handbook of Regulations for Direct
Farm Marketing
http://agr.wa.gov/Marketing/SmallFarm/greenbook.htm
This publication contains information about the regulatory landscape
governing the sales of farm products in Washington State. It
is a comprehensive guide to direct marketing strategies and contains
an extensive resource section of organizations and relevant publications.
Food Safety Resource
http://smallfarms.wsu.edu/marketing/onfarmprocessing.html#Safety
Hazard Analysis and Critical Control Points Program Guidelines
http://smallfarms.wsu.edu/marketing/onfarmprocessing.html#H
Disaster Preparedness for Livestock
http://king.wsu.edu/livestock/documents/DistPrepLivestock.pdf
This webpage is a simple PDF file that provides a list of supplies,
a Dietary Chart, and on the second page a very good outline
for developing a your own Farm Disaster Preparedness plan.
Guide to Minimize
Microbial Food Safety Hazards for Fresh Fruits and Vegetables
http://vm.cfsan.fda.gov/~dms/prodguid.html
A Washington State master license is required for all companies who gross over $12,000 dollars annually. You can obtain a Master License on line at (same listing as above Licensing permits. Cities cannot prohibit, nor require an additional vendor’s license to sell farm produce direct to consumers. The sale of these products is subject to B&O taxes, and you will need to be registered through the Master License process to be able to properly file the B&O taxes retail and wholesale activities generate even if you generate less than $12,000 annually.
The fee for the Master Application is $15. Specialty licenses may require additional fees.
Master License Ensures a Unique Name for Your Business
Your Master License from the State of Washington, serves to register
you as a legal entity. Your company name can be your complete
name, or a different name. Licensing calls anything but
your own name a
“Fictitious” name. It allows you to register your trade name and
be certain no one else is using the same company name. It serves
as the registration point to identify you to the Departments of Labor
and Industry, Department of Revenue, and Secretary of States office
by assigning you a Uniform Business Identification number.
Naming Options on Master License
You can apply for a Master License under your own name, (i.e. “Jane
Doe”) or register a business or trade name, (i.e. “Jane Doe’s Apple
Orchards”,) on the Master License application.
Name
Search is Available Through Department of Licensing
You can find out if a trade name you want to use is already registered to another
business by requesting a search from the Master License Service at
the Department of Licensing. Fees for searches vary for phone or
mail requests and depend on the number of names searched.
Farmers Markets May Require
You to Have a Master License
A farmers market may be covered by one Master License that allows
the market to operate a consignment booth among other activities.
Many farmers markets, however, require farmer vendors as well as
craft vendors and other vendors of non-agricultural products to have
their own Master Licenses.
Comply with Local Building Codes
Lastly, you will need to comply
with local building codes for any building improvements or new construction. Contact
your local building department to get a copy of their building code.
The Washington Licensing Information
http://www.dol.wa.gov
The WALI website provides contact information for proper licensing
with state and local governments based on your business activity.
State Business Licensing
http://www.dol.wa.gov/businesses.htm
you
must possess a valid State business license prior to issuance of
a City business license. The
State of Washington makes obtaining a business license simple with
the “one stop” registration process. The Unified Business Identifier
(UBI) Program allows prospective business owners to register the
business by filling out the Master Application. After completing
the application, they receive the UBI number that is used by several
state agencies.
Washington State Business License Fee Sheet
http://www.dol.wa.gov/forms/700031.pdf
Application For A Food Processing Plant License
http://agr.wa.gov/FoodAnimal/FoodProcessors/LicenseHandbook.htm
Licensing, Facilities, and Labeling
http://smallfarms.wsu.edu/marketing/onfarmprocessing.html#L
The following sites explain the specific rules and regulations that govern operations. You will also find links for applications and further detail in each site.
Laws and Rules
http://www.access.wa.gov/business/laws.aspx
This website provides access
to Washington State laws, WACS, RCWS, and regulations in all areas
pertaining to business.
Doing Business With the State
http://www.access.wa.gov/business/state.aspx
Washington State Laws & Regulations
http://agr.wa.gov/LawsRules/default.htm
Food Processors License Handbook
http://www.agr.wa.gov/FoodAnimal/FoodProcessors/LicenseHandbook.htm
Matrix of rules & regulations for Food Processing
www.agr.wa.gov/foodanimal/foodprocessors/default.htm
Businesses that sell their products at retail, such as at farmers markets or roadside stands, must obtain a tax number (Unified Business Identifier, or UBI) from the Washington State Department of Revenue. Farms must file their tax returns, according to requirements, even if the total amount of gross sales does not necessitate a tax. The UBI number is assigned to your business when you apply for a Master Business License. You are not required to register with the Department of Revenue, or collect sales tax, or pay any other tax or fee, if your gross annual income is less than $12,000.
Two types of taxes are applicable to direct sales vendors: Retail Sales Tax and Business & Occupation (B&O) Tax. Both of these are handled on the same form once a UBI is obtained.
B & O Tax
http://dor.wa.gov/content/taxes/busoccupation/default.aspx
Farms
conducting retail sales are subject to B&O taxes. For sales
to restaurants, groceries, or other wholesale venues, B&O taxes
do not apply. The basic B&O tax rate for retail sales is
.00471 of gross sales. Smaller farm businesses
may find that the state provides a tax credit for sales under a certain
amount. These amounts are dependent on when and how often you
file (monthly, quarterly, etc.).
Retail Sales Tax
http://dor.wa.gov/content/taxes/sales/default.aspx
Generally, produce, groceries, and other unprepared food products
are retail sales tax exempt. Taxes are applied to sales of meals
and prepared food by the seller regardless of where it is served
or delivered to the buyer, with some specific exemptions. Pet
food and supplies, seeds, and live plants including edible plants,
are considered non-food products and subject to retail sales tax.
Seeds and edible plants, however, are considered exempt from retail
sales tax if purchased with food stamps.
Employer's
Identification Number
http://www.irs.gov/businesses/small/article/0,,id=98350,00.html
Any business that hires employees must obtain a federal identification
number, called an Employer’s Identification Number (EIN), by filing
Form SS-4 with the Internal Revenue Service (IRS). An EIN is a number
that the IRS uses to identify taxpayers that are required to file
various business tax returns. The federal identification number assigned
to your business will be registered with the IRS, the Social Security
Administration, and the Department of Labor.
Internal
Revenue Service
http://www.irs.gov/
Taxes
http://www.access.wa.gov/business/taxes.aspx
Business Tax Overview
http://dor.wa.gov/Docs/Pubs/ExciseTax/FilTaxReturn/BusTaxOver.pdf
Open Space Taxation Act
The Open Space Taxation Act, enacted in 1970, allows property owners
to have their open space, farm and agricultural, and timberlands
valued at their current use rather than their highest and best
use. The Act states that it is in the best interest of the State
to maintain, preserve, conserve, and otherwise continue in existence
adequate open space lands for the production of food, fiber, and
forest crops and to assure the use and enjoyment of natural resources
and scenic beauty for the economic and social well-being of the
State and its citizens.
Open Space Taxation Act Resources
http://dor.wa.gov/Docs/Pubs/Prop_Tax/OpenSpace.pdf
http://www.co.whatcom.wa.us/assessor/taxguides/openspace/openspace.jsp
http://www.co.grant.wa.us/assessor/CurrentUse.htm
Small Business Tax Basics
http://www.allbusiness.com/human-resources/compensation-payroll/465-1.html
Taxes are one of the most important issues facing small businesses.
And like a company's profits, its annual tax bill will in part reflect
the owner's skills and knowledge. Business owners need to be sure
that they are meeting all of their responsibilities to the tax authorities
-- and also seizing every legitimate opportunity to reduce their
taxes. This Website does a good job giving the big picture
of business taxes.
Washington State Department of Revenue Agriculture Tax Guide
http://dor.wa.gov/content/taxes/industry/Agriculture/default.aspx
This tax guide was written to help farmers
understand their tax liability in the state of Washington. For additional
information or answers to any questions about Washington excise taxes.
A Step-by-Step Guide to Setting Up a Payroll System
http://www.allbusiness.com/accounting-reporting/corporate-taxes/801-1.html
The key to staying on top of your
payroll is setting up a good system that complies with all the applicable
state and federal laws. To get started, use this step-by-step approach
to setting up a simple payroll system.
Additional Tax Resources
Tax
Incentives to Reduce Agricultural Burning to Change (Issued
June 29, 2005)
Pesticides
and the Hazardous Substance Tax (Issued November 13,
2002)
Dairy
Nutrient Management Sales/Use Tax Exemption (Issued
March 12, 2002)
Update
- Sales and Use Tax Exemption for Animal Pharmaceuticals sold to
Farmers or Veterinarians (Issued June 12, 2002)
The
Tax Application for Tree and/or Stump Removal from Existing Orchards (Issued
August 6, 2000)
Sales
and Use Tax Exemption to Farmers and Veterinarians for Animal Pharmaceuticals (Issued
August 1, 2001)
Farmers
- Implementation Plan for New Tax Exemptions and Assistance for Farmers (Issued
July 27, 2001)
Farmers
- Sample Letter to Revenue to Apply for Dairy Nutrient Sales and
Use Tax Exemption (Issued July 27, 2001)
Farmworker
Drinking Water Special Notice (Issued May 2, 2000)
Sales
and Use Tax Exemption for Farm Worker Housing Revision of Notice
Issued March 20, 1996 (Issued April 12, 1996)
Taxability
of Selling Harvested Mushrooms and Other Forest Products (Issued
July 1, 1994)
Fruit
and Vegetable Processors Tax Exemption (Issued June
13, 2005)
Consumer Protection Information
http://access.wa.gov/
Department of Labor and Industries'
Construction Compliance
http://www.lni.wa.gov/TradesLicensing/Contractors/default.asp
offers consumer information. Contractors must show that they
are
insured and bonded as part of the registration requirements. If you
plan on hiring a contractor, plumber or electrician, check L&Is'
on-line database first!
Department of Ecology
http://www.ecy.wa.gov/permit.html
Source of Environmental Permit Information and Assistance.
Office of Regulatory Assistance
http://www.ora.wa.gov
State office that seeks to improve citizens’ and businesses’ interactions
with agencies and to increase understanding of government purposes
and operations.