Do I Need an LLC for My Equine Therapy Business?

Starting a limited liability company (LLC) for your equine therapy 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 equine therapy business, lawsuits can arise from things like horses accidentally injuring customers, as well as professional malpractice and animal abuse allegations.

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

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

Should I Start an LLC for an Equine Therapy Business?

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 an Equine Therapy Business

By starting an LLC for your equine therapy 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.

Equine therapy businesses will benefit from liability protection because of the risk of being sued for libel, personal injuries, and more.

Example 1: One of your clients spooks a horse, leading the horse to kick the client and cause injury. The client sues your business for the medical damages. Since your business is an LLC, your assets as the owner could not be taken to pay for the bill due to limited liability.

Example 2: A client falls off a horse and breaks a leg. They are suing your business, claiming it was due to a faulty saddle. Your personal assets could not be taken in the settlement since limited liability as an LLC protects them.

Example 3: While moving a horse into a stable, the animal kicks, hitting a client’s car and causing significant damage. They ask your business to pay for the damage. Being an LLC, limited liability protects your personal assets as the owner from being used for the bill.

Example 4: One of your clients spooks a horse, leading the horse to kick the client and cause injury. The client sues your business for the medical damages.

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 Equine Therapy 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 equine therapy 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

Equine therapy 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 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?

LLCs need insurance because their business assets are not protected without it. In other words, LLCs protect the owner’s personal assets, and business insurance protects business assets.

Equine therapy businesses need insurance because of the risks involved with working with animals. If an animal or customer gets injured, insurance can help cover the cost of medical bills.

Common Situations Business Insurance May Cover for an Equine Therapy Business

Example 1: While visiting a client’s home for a consultation, you trip in the hallway and knock over a large, expensive vase. The client demands you pay to replace her shattered vase. General liability insurance would cover the cost of replacing the client’s damaged property.

Example 2: A competing therapy company sues your business for slander. While you disagree with the accusation, you know you need a lawyer to protect your interests. General liability insurance would pay for your legal defense.

Example 3: During a visit to your place of business, a client slips on some wet tiling in your restroom, breaks a wrist in the resulting fall, and decides to sue your business. General liability insurance would cover your legal defense costs.

Other Types of Coverage Equine Therapy 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 equine therapy businesses should obtain.

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.

Professional Liability Insurance

While you care deeply about the work you do to help horses and their owners, there’s always a chance someone might claim your advice or therapy work caused them harm. If a client sues your business, claiming you made a mistake, professional liability insurance would cover your legal fees and any required settlement.

Workers' Compensation Insurance

If you have any employees, most states require you to carry workers’ compensation insurance for both part-time and full-time workers. 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, professional liability insurance, and commercial property insurance.

Read our Equine Therapy Business Insurance article for more info.

Opening costs can be substantial, especially if opening anywhere near a major city. Owners will need to purchase or lease the land, pay for staff, and board the horses. Equine therapy camps will need to maintain their grounds, care for the horses, and keep up website and marketing materials.

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

Regular costs for an equine therapy business can be substantial due to the upkeep of the horses. Additional expenses can include payroll, rent, marketing, permits, and insurance.

Learn more about running an equine therapy business.

Equine therapy businesses charge people to attend their programs. This can be done in an individual or group setting.

Learn more about starting an equine therapy business.

An equine therapy business allows individuals to work with horses to try to overcome physical or emotional problems. Most equine therapy camps are aimed at children; however, adults can benefit from them as well.

A for-profit equine therapy center has the potential to earn good profits if it has the right client base.

Learn more about starting an equine therapy business.