When starting a new dog training business, one of the first steps is deciding what form your business should take: a sole practitioner, a partnership, an LLC, a corporation, . . . ? With all the other things you need to do, this decision can seem overwhelming.
If you are starting out on your own, you don’t HAVE to form an LLC or corporation in order to start working as a dog trainer. You can do business as yourself – that would make you a sole practitioner.
Corporation or LLC
Incorporating usually is not the best form of business for dog trainers because of the way they are taxed. (But get the advice of a tax accountant here). That’s where an LLC comes in. An LLC has some of the benefits of a corporation, but not the tax drawbacks.
How to choose?
So is an LLC the best choice for your particular situation? There is no easy answer. I’ve written before about the misconceptions about LLCs (see my blog post HERE). In short, while lots of people tout the asset protection (if you are doing business as an LLC and someone sues you for some reason, the LLC may protect your personal assets, like your house or investments), as a dog trainer there is still a risk. You could be sued personally if you are negligent in performing your services, and in that case the LLC won’t protect you.
Recently, another example came up in real life for clients of mine. The clients were looking at leasing a new, bigger space for their business, and the landlord wanted a personal guarantee. That meant that if the business at some point in time couldn’t pay the rent, my clients would be personally liable for the rent payments. It is common that landlords demand a personal guarantee from small businesses in their leases, and this creates another situation in which the separate existence of an LLC does not protect the business owner from liability.
I’m not saying don’t do it
As I’ve said before, an LLC might still be right for you and your business. They are relatively easy to set up and maintain, they do provide protection from liability in some cases. In most states they don’t cost a lot to create. They do create more separation between your personal life and finances and your business, and they can make your business more professional-looking. A lawyer or your local Small Business Administration branch can help you decide whether and how to set one up.