Should I Start an LLC for My Cemetery?

Starting a limited liability company (LLC) for your cemetery 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 cemetery, lawsuits can arise from things like property damage to coffins or caskets as well as from making mistakes while transferring and selling cemetery plots.

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

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

Do I Need an LLC for a Cemetery?

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 a Cemetery

By starting an LLC for your cemetery, 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.

Cemeteries will benefit from liability protection because there are a number of safety risks associated with visitors coming to the business location. There is also risk of damage to the cemetery from vandalism or natural disasters like flooding.

Example 1: An employee damages a gravesite while tending to garden maintenance. The family finds out later and sues your business for damages due to employee negligence. Limited liability protection can limit the lawsuit damages to only your business assets.

Example 2: You borrowed money to expand your cemetery but ran out of funds before the loan's due date. If your business ends up going bankrupt or you fail to repay the loan, limited liability will protect your personal assets from seizure, provided you didn't guarantee the loan personally.

Example 3: Suppose you were involved in an accident while transporting a corpse to the cemetery. The bereaved family has taken legal action against you on multiple counts. Limited liability protection can limit the lawsuit damages to only your business assets.

Example 4: As they are performing grounds maintenance, an employee runs into several headstones with the equipment, cracking them. The families of the affected plots ask you to cover the replacement costs.

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 Cemetery

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 cemetery 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

Cemeteries 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 trusted 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?

Yes, LLCs need insurance to protect the assets of the business. The limited liability protection offered by the LLC’s structure only covers your personal assets as an owner. Therefore, business insurance is critical.

Cemeteries need insurance to protect their assets against unforeseen circumstances like transportation accidents, fire outbreaks, and other risks associated with the business.

Common Situations Business Insurance May Cover for a Cemetery

Example 1: While exploring your grounds, a visitor falls into a hole, breaks a leg, and decides to sue your business for not marking the hole. General liability insurance would pay for your legal defense fees and any required settlement.

Example 2: As you take a potential customer on a tour of your cemetery, you turn around to tell him something and he runs directly into you, falls down, and sustains a concussion. He asks you to pay for his medical treatment. General liability insurance would cover his medical bills.

Example 3: As an employee brings equipment out to a grave using an all-terrain vehicle, he accidentally runs over a visitor’s bag and crushes the expensive camera equipment inside. General liability insurance would pay to replace the visitor’s damaged property.

Other Types of Coverage Cemeteries 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 cemeteries should obtain:

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 Auto Insurance

Any vehicle you use primarily for business 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 any business equipment and supplies you carry in your vehicle.

Professional Liability Insurance

While you strive to provide clients with guidance that will make a hard time in their lives go as smoothly as possible, there’s always a chance someone might claim you made a mistake that caused them injury. If a client sues your business based on your professional services, professional liability insurance would cover your legal fees and any required settlement.

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.

Recommended: Hire an LLC service for as little as $29. Learn more in our Best LLC Services review.

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 Business Insurance for Cemeteries article for more info.

Expenses will range depending on the location of the cemetery. You will need a significant amount of capital to get the business started. The funds raised will go towards land, equipment, supplies, and employee wages.

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

In addition to employee salaries, ongoing expenses include the costs associated with offering burial activities. Cemeteries also require licensing costs as well as any specific advertising that is done on behalf of the cemetery.

Learn more about running a cemetery.

Costs are incurred by customers for the sale of a portion of land, headstone, casket, and required transportation.

Learn more about starting a cemetery.

The average profits for cemetery businesses can range significantly, especially given that many families do not wish to price-shop.

While it’s difficult to ascertain the margins of profit owners, especially considering it can take so long to recoup the initial costs, there can be money to be made from cemetery ownership. Offering additional services, such as funeral arrangements, transportation, and cremation, can help increase profits.

Learn more about starting a cemetery.