Do I Need an LLC for My Animal Husbandry Business?

Starting a limited liability company (LLC) for your animal husbandry business 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 an animal husbandry business, lawsuits can arise from things like CWA violations or a visitor getting injured within your business’s premises.

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

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

Should I Start an LLC for My Animal Husbandry Business?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should form 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 an Animal Husbandry Business

By starting an LLC for your animal husbandry business, 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.

Animal husbandry businesses will benefit from liability protection because of the risk of being sued for personal injuries, product liability, trademark infringement, and even libel.

Example 1: Your animal husbandry business has begun building a concentrated animal-feeding operation on your land. However, an environmental organization argued that since your land is composed of farmed wetlands, these activities violate the Clean Water Act (CWA) and thus brought a lawsuit against you on this basis. Limited liability would ensure that your responsibility to meet any damages is restricted to your business’s assets alone.

Example 2: While showing a visitor around your animal husbandry business, they slip on a pathway that has been poorly looked after, suffering a broken leg as a result. This leads them to sue your business for the bodily harm they suffered on your premises. In this instance, you would be protected from liability to satisfy these damages extending to your personal assets.

Example 3: Your business fails to list an ingredient on the label of one of your agricultural products. A customer is severely allergic to this ingredient but eats your product because they believe it is absent. Consequently, he suffers an acute allergic reaction and dies. If his family sued your business for its negligence, limited liability protection would ensure that only your business’s assets could be used to satisfy their compensation.

Example 4: A client sues your business, claiming that some livestock you sold them was carrying a disease that infected many of their other animals.

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 an Animal Husbandry Business

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 an animal husbandry business 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

Animal husbandry businesses 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?

Your LLC will need insurance, just like every other. Business insurance is a necessity because of the protection it provides to the assets your business owns. Animal husbandry businesses have unique needs that other businesses do not, so different types of insurance may be required.

This is completely separate from the protection that limited liability provides for the personal assets of an LLC’s owners.

Common Situations Business Insurance May Cover for an Animal Husbandry Business

Example 1: While visiting your place of business, a potential client slips and hits his head while walking through the feedlot. If he decides to sue, general liability insurance would cover your legal costs and any required settlement.

Example 2: A competitor claims your business libeled his company and files a lawsuit. General liability insurance would pay for your legal defense and any required settlement.

Example 3: As an employee transports feed on a cart, he loses control and the cart hits a customer’s car. Your general liability policy would cover the customer’s vehicle repair costs.

Other Types of Coverage Animal Husbandry Businesses 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 animal husbandry businesses should obtain.

Commercial Property Insurance

You made a major investment in your livestock. If you own the building(s) in which you operate, commercial property insurance would cover the cost of repairing or replacing your business-related property in the event of a fire, theft, or natural disaster. This includes structural damage to your building(s) or grounds as well as your livestock and other business supplies.

Commercial Auto Insurance

Any vehicle you use primarily for business — such as to transport livestock — requires commercial auto insurance to protect the vehicle, driver, and others on the road in the event of an accident. Be sure to select a policy that covers not only accident-related vehicle repair costs and medical treatment for anyone injured, but also sufficient protection for the animals and other supplies you carry in your vehicle.

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover, but also any disability or death benefits stemming from a work-related accident.

Commercial Umbrella Insurance

While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.

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, workers’ compensation insurance, commercial auto insurance, and commercial property insurance.

Read our Business Insurance article for more info.

Startup costs in this industry vary greatly depending on the size and location of the land you purchase for this business. Labour and land costs will form the greatest portion of your expenses.

In addition to this, there are numerous items and pieces of equipment that you need to buy, including tractors, animal feed, fertilizer, and heavy-duty mowers.

Visit our How to Start an Animal Husbandry Business guide to learn more about the costs of starting and maintaining this business.

Ongoing expenses may include maintenance, livestock supplies, veterinary expenses, insurance, payroll, and utilities.

Learn more about running an animal husbandry business.

Animal husbandry businesses make a profit by selling their farm-raised livestock and/or the resources produced by the livestock.

Learn more about starting an animal husbandry business.

Animal husbandry businesses breed and raise livestock, primarily for the consumption of animal byproducts. For example, they might raise chickens for their eggs or cows for their milk.

Profits can be significant for an animal husbandry business and will primarily depend on location, type of livestock (and products), and the size of the farm.

Learn more about starting an animal husbandry business.