What are the costs to start and maintain a kennel?

The largest costs of starting a kennel are finding a facility for business as well as finding insurance. You will need to find a facility that has: Room for crates Several runs for individual dogs At least one large play area At least one small indoor play area Visit our How to Start a Kennel guide to learn more about the costs of starting and maintaining this business.

Should I Start an LLC for My Kennel?

Starting a limited liability company (LLC) for your kennel 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 kennel, lawsuits can arise from things like customers’ pets getting injured while in your kennel’s custody, as well as from breach of contract and negligence disputes.

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

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

Do I Need an LLC for a Kennel?

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 Kennel

By starting an LLC for your kennel, 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.

Kennels will benefit from liability protection because of the risk associated with clients placing the care of their beloved pets in the hands of another individual. When in the company of other animals or strangers, animals can act out, leading to potential costs your business becomes liable for. There is also the risk of workplace accidents, trademark infringement claims, and more.

Example 1: You hire a marketing firm to advertise your kennel business. When you do not see a boost in customers, you refuse to compensate the marketing firm, which results in a compensation lawsuit being filed against your LLC. As a result of your business’s classification, the claiming party will not be able to sue you personally in order to get compensated if your kennel business is unable to pay them.

Example 2: After a customer leaves his dog in your kennel, he returns to find out that it’s been savagely attacked by another dog in your business’s outside play area, and you’ve had to take it to a vet as a result. Even though you’ve already paid for the dog’s medical treatment, the customer is unhappy and demands additional compensation. If a lawsuit were to arise as a result, your personal assets would remain protected as long as your kennel business is registered as an LLC.

Example 3: You decide to apply for a business loan in order to hire additional staff and hopefully expand your Kennel business. Since you didn’t personally guarantee the loan during its application, the creditor will be unable to sue you personally in order to recoup their investment if your LLC is unable to pay them in the future.

Example 4: While caring for a number of animals, one dog is accidentally fed food that it has an allergy to. The allergic reaction leads to expensive medical costs that your kennel becomes liable for.

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 Kennel

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 kennel 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

Kennels 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.

Working with animals can lead to a variety of risks in terms of property damage and injury, so kennels will find purchasing various types of business insurance a must.

Common Situations Business Insurance May Cover for a Kennel

Example 1: A dog in your care eats the wrong food and suffers an allergic reaction, and asphyxiates while employees are busy managing other pets. The dog’s owner sues your business for damages, including the loss of an expensive breed and psychological shock. If found liable, general liability insurance would likely be able to help cover these losses as ordered by a court or settled upon privately.

Example 2: While a kennel area is being cleaned, its resident dog is placed temporarily in another dog’s caged area. The dogs seem friendly at first, but suddenly begin fighting. One of the dogs comes away with significant injuries, requiring immediate medical attention. If found liable, your business could probably be covered by general liability insurance for medical damages owed or a settlement with the injured dog’s owner.

Example 3: A dog is so excited by its owner’s return that it behaves rambunctiously in the passenger seat as they drive away from your kennel. In your parking lot, the owner’s vision is blocked when the dog jumps into her lap, causing her to collide with a passing vehicle. If found liable for any vehicle damages or occupant injuries, general liability insurance would likely assist your business in covering some of the payments mandated or settlements reached.

Other Types of Coverage Kennels 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 kennels should obtain:

Commercial Property Insurance

A kennel is full of equipment for animal care, including food, animal soaps, toys, mobile kennel containers, and more. While the chief concern in cases of destructive fires or violent weather would be the safety of the animals, your business should still be protected against disastrous damages to its property. Particularly if you own the commercial real estate on which your business operates, this is a policy that will prove invaluable for businesses trying to recoup significant losses. Commercial property insurance helps cover the costs of replacing/repairing inventory, equipment, real estate, and more in the event of unexpected damage.

Commercial Umbrella Insurance

For a business that operates on commercial property and cares for the beloved furry friends of its trusting clientele, commercial umbrella insurance is an important policy to take out. A kennel stands to lose quite a bit when disaster strikes. Between replacement costs and damage compensation for injured/deceased animals in their care, a kennel could find itself in serious trouble when the cost of the coverage is simply too high for normal insurance policies.

Commercial umbrella insurance exists to cover those gaps beyond existing policies, ensuring that your kennel business doesn’t find itself crippled by an extreme and unpredictable loss.

Commercial Auto Insurance

Some kennels are more involved, taking pets for little trips or events to keep them happy and exercised. If your kennel business wants to include dog walking or park play in its offered services, you’ll need commercial vehicles. A commercial auto insurance policy will cover automotive damages incurred when your pet van or similar automobile is damaged on the road.

Home-Based Business Insurance

If your kennel business is run from home, it’s a great way to save on the costs of renting/acquiring a place of business, especially for a business like this one with such specific needs for its operating grounds. However, when running a business from home, your normal home insurance policies may not cover accident damages related to your business. Home-based business insurance is designed with this in mind, and it is often available through a business owner’s policy or as a rider extension for existing homeowner insurance.

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 and commercial property insurance.

Read our Business Insurance for Kennels article for more info.

The largest costs of starting a kennel are finding a facility for business as well as finding insurance. You will need to find a facility that has:

Room for crates
Several runs for individual dogs
At least one large play area
At least one small indoor play area

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

Some recurring expenses kennels may face include insurance costs, potential license fees, and occasional maintenance on facility components.

Learn more about running a kennel.

Money is made by charging customers a flat rate to house their pets for a fixed period of time. Length of stay may vary from a few days through as long as a month.

Learn more about starting a kennel.

When pet owners go on vacation or visit family and friends, it is not always possible to bring their pets along with them on their travels. Pet kennels offer a safe space for pets to be left temporarily where they’ll receive the food and exercise they require.

The average kennel can profit as much as $70,000 in a year.

Learn more about starting a kennel.