Should I Start an LLC for My Doula Service?

Starting a limited liability company (LLC) for your doula service 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 doula service, lawsuits can arise from things like birth injury claims of negligence, as well as from other cases of medical or professional malpractice.

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

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

Do I Need an LLC for a Doula Service?

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 Doula

By starting an LLC for your doula service, 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.

Doulas will benefit from liability protection because pregnancy and childcare businesses, including doula services, face a variety of risks associated with visiting clients’ homes, in addition to having clients visit your business’s physical location.

Example 1: A client of your doula service sadly suffered a miscarriage after the assistance of one of your employees throughout her pregnancy. The client alleges that the guidance of a doula from your business led to this miscarriage and sues your business for compensation. In this instance, your personal assets would be protected from any liability that could be levied against your business in this case.

Example 2: While a doula working for your business was completing a house call for a client, she accidentally spilled coffee on a laptop. Since it contained irreplaceable memories and important files, the client sues your business for this property damage. In the ensuing case, any liability the court imposes upon your business to pay damages is limited to the assets belonging to your business.

Example 3: An employee of your doula service shows a client around your offices when the client tripped over some exposed wiring and broke her collarbone. This led the client to sue for this bodily injury she claims is the result of your business’s negligence. Limited liability would ensure you are not held personally accountable for any business liability to pay damages.

Example 4: While visiting a client at her home, you accidentally trip and fall into the client’s TV, causing it to fall over and crack. The client asks you to cover the cost of a new TV.

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 Doula

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 doula 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

Doulas 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 dependable 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?

As is true with all business entities, LLCs also need insurance to protect their assets.

It is easy to confuse the protection afforded by insurance with that afforded by limited liability. However, the difference is very straightforward: limited liability protects an owner’s personal assets, while insurance protects a business’s assets.

Common Situations Business Insurance May Cover for a Doula Service

Example 1: During a consultation in a client’s home, you walk through her living room, trip over a child’s toy, and fall into her large television. The client asks you to pay for a replacement. General liability insurance would cover the cost of replacing the client’s damaged property.

Example 2: A local competitor sues you for slander. While you’re unsure why she believes you slandered her business, you know you need an attorney. General liability insurance would pay for your legal defense costs.

Example 3: While visiting your place of business, a potential client trips on a staircase, breaks an arm in the resulting fall, and decides to sue. General liability insurance would cover your legal defense costs.

Other Types of Coverage Doula Services 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 doula service businesses should obtain.

Professional Liability Insurance

While you strive to ensure your services benefit your clients, there’s always a chance someone might claim your professional services caused them harm. If a customer sues your business, claiming you made a mistake or failed to perform, professional liability insurance would cover your legal fees and any required settlement.

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 materials you carry in your vehicle.

Home-Based Business Insurance

If you run your business from your home, you may need home-based business insurance to safeguard your equipment and space in your home devoted to your business. A typical homeowners insurance policy may not cover business-related items or client injuries in your home if you don’t disclose you use your home for business purposes.

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 and commercial auto insurance.

Read our Business Insurance for Doula Services article for more info.

Very little capital is required to get your doula service off the ground, though the certification classes are rather costly. Expect to pay between $150 to $170 per course.

While not all certifications need to be acquired, it is highly recommended to complete the basic courses before you get started and continue with them as you gain experience.

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

You’ll incur a variety of ongoing expenses, including marketing, website maintenance, insurance, taxes, and costs associated with education.

Learn more about running a doula service.

Doula services typically charge a fee in the form of a flat rate that covers the time spent with the client through the process of pregnancy and delivery.

Learn more about starting a doula service.

Pregnancy is a life-changing event for many women. To help women navigate this process, doulas work to guide their clients through pregnancy, labor, and motherhood.

Doulas are involved in the process of assisting and educating women through their pregnancy experience by providing emotional and physical support.

Determining the profitability of your doula service will largely depend on the number of clients you have and the amount you charge for each client session.

Learn more about starting a doula service.