Should I Start an LLC for My Art Lessons Business?

Starting a limited liability company (LLC) for your art lessons 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 art lessons business, lawsuits can arise from things like misrepresentation allegations, employee disputes, and debt.

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

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

Do I Need an LLC for an Art Lessons 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 Art Lessons Business

By starting an LLC for your art lessons 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.

Art lessons businesses will benefit from liability protection because of general business risks like workplace accidents, libel, and trademark infringement claims.

Example 1: An employee of your art lessons business mistakenly leaves a work laptop on the train that contained the personal and financial details of your customers. As a result of a leak of their personal information, one customer files a lawsuit against your business. With the protection of your LLC’s limited liability, your personal assets cannot be chased for compensation.

Example 2: A student of the classes of your art lessons business feels that he has been purposely misled by your advertising, arguing that he wouldn’t have enrolled in the course if the marketing had been more transparent. If this customer was to file a lawsuit for misrepresentation against your business, you could not be held personally responsible for any compensation.

Example 3: After an employee negligently stacked large tubs of paint in preparation for a class, a customer suffered a broken arm when these toppled. In the event that this customer brings a claim against your business for the bodily injury he suffered, any compensation he may be entitled to could only be sourced from your business’s assets, and not you personally.

Example 4: One of your students sues you, claiming that you sold one of their paintings without their consent.

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 Art Lessons 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 art lessons 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

Art lessons 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?

Every LLC requires insurance. Business insurance is a necessity because, without it, your business’s assets would be completely exposed and vulnerable.

Even though LLCs provide protection for your personal assets as a result of the limited liability characteristic of this business structure, the assets belonging to your business will be unprotected without insurance.

Common Situations Business Insurance May Cover for an Art Lessons business

Example 1: One of your students fails to see a wet floor sign where you have just mopped. She slips, falls, and breaks her arm. She sues your company, claiming that you are responsible for her injuries. The general liability policy you carry will pay for your legal defense, including the cost of a settlement if you settle out of court.

Example 2: A visitor comes to your studio to see the pieces produced by your students. When walking up a short flight of stairs he slips, breaking his wrist. He asks that your business pay for his medical treatment. Your general liability policy would likely cover this expense.

Example 3: One of your competitors claims that you have libeled them in your latest marketing campaign, and you must defend yourself legally. Your general liability policy will pay for your legal costs, including any settlement.

Other Types of Coverage Art Lessons 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 art lessons businesses should obtain.

Commercial Property Insurance

You have spent a lot on art supplies and equipment. They would be costly to replace if they were damaged in a fire, storm, or another unexpected event. With a commercial property insurance policy, you will have the financial help you need to replace your supplies and equipment so you can get back to doing business.

Professional Liability Insurance

The lessons you give to students to meet your high standards, but that is no guarantee that one of your students will not determine that you have caused harm through your instruction. Professional liability insurance can be tailored to instructors to protect against negligence claims due to mistakes or failure to perform. Were you to be sued, your policy would pay for your legal defense.

Workers’ Compensation Insurance

If you have employees, your state likely requires you to carry workers’ compensation insurance. With this insurance, your employees will have coverage to pay their medical bills to treat work-related injuries. It will also help pay for lost wages while they recover.

Commercial Auto Insurance

If you use a vehicle primarily for business, such as for picking up art supplies, teaching in student homes, and other work-related tasks, you need commercial auto insurance. If you are responsible for an accident, it will pay for damages resulting from that accident as well as a medical treatment for anyone injured.

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.

Read our Art Lessons Business Insurance article for more info.

The cost to get up and running largely varies according to whether you decide to teach out of your own home or not. If you don’t have the space, renting a small apartment is a good option as it is much cheaper than commercial property.

Beyond this, the only other large expense you can expect is the cost of materials.

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

Ongoing expenses may include supplies, marketing, insurance, gas (if you provide at-home lessons), and rent (if you operate out of a commercial space).

Learn more about running an art lessons business.

Art lessons businesses make money by providing art lessons for a fee.

Learn more about starting an art lessons business.

An art lessons business offers group and occasionally individual instruction in art. While many art lessons businesses offer classes for a variety of techniques, some choose to focus on a medium or art style.

Profits will depend on the number of lessons you provide as well as your location.

Learn more about starting an art lessons business.