Advantages of private farming as a form of entrepreneurial activity

Advantages of private farming as a form of entrepreneurial activity

What is the private farms (LPX) and what nuances should be considered in the conduct of such business? This article will help you understand the basic principles of the organization of part-time farms. Private farming is a form of activity, in which individuals are engaged in processing and production of agricultural products at a certain plot of land, located either in the city, or in the countryside, and purchase or rent for subsidiary farming. According to the current legislation, LPH does not apply to business activities.


Activities farms is carried out in accordance with federal law №112 from 7 July 2003 of the year. Article 2 reads said statute, that the citizen and his family members can conduct private agriculture, and products, resulting from its activities, use at their own discretion or to sell. Subsistence farming is considered to be based from the time, how to allocate land for the conduct of LPH.

In this way, income, resulting from the sale of manufactured or processed agricultural products in smallholdings, It is not considered a profit from business activities in accordance with subparagraph 4 articles 2 Federal Law №112 from 7 July 2003 of the year.

What are the requirements to land for smallholders

Requirements for land plots for smallholders

As stated in the law, concerning LPH, under the objectives of the part-time farm you can buy or rent land, whose area does not exceed 0,5 ha, in that case, unless otherwise provided for by the legislation of the Russian Federation, which is bought or leased territory. A specific subject of the Russian Federation has the right to increase this limit only five times, in accordance with paragraph 5 articles 4 Federal Law №112. There are two types of land for private farming: field and gardens.

By the garden plots are those, which are located within the boundaries of the village, as well as the legislation may include residential building.

Field site is located outside the village and may consist of agricultural land. The law prohibits the construction of any buildings on the territory of the field plots. Any citizen can own like any of these types of sites, and have the property of both portions, Field and garden.

Issuing and processing of agricultural products at the farm for sale

Production time farm for sale

In that case, If a citizen decides to produce or process agricultural products for sale, he has the right to buy or rent a plot of land for smallholders without registration of an individual entrepreneur or legal entity.

For the sale of food to the farmer's own agricultural production need to get help in local government for registration of veterinary documents for its products.

The most important advantage is conducting LPH, that the revenue from sales is not subject to taxation, because, under the laws, activity is not business.

Besides, in point 13 articles 217 Russian Tax Code Unknown, that with the income of private farming is not paid as income tax and in the case, if two conditions are met:

  1. plot size, which is being part-time farm, less than 0,5 ha, or other statutory maximum size.
  2. In the process of manufacture and processing of products only family members participate in their personal economy, and employees are not involved.

Important to remember, that is exempt from taxation products only, if the private farms, to produce and sell its, recorded in the credentials of local governments. Therefore, farmers need to take care of, to get help in local territorial governance, LPH leading accounting and marking registration and further activity of the farm. The certificate indicates details of each individual part-time farm, including the size of land and type of processing and production of agricultural products.


Generally, this option of conducting personal business and generate revenue from it, is not subject to taxation in compliance with legal requirements, It has a number of advantages for entrepreneurs.

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