Should I Start an LLC for My Greenhouse?

Starting a limited liability company (LLC) for your greenhouse 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 greenhouse, lawsuits can arise from things like medical damages claims (e.g., a farmworker suffering from nosebleeds and rashes as a result of being exposed to a high number of pesticides, etc.).

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

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

Do I Need an LLC for a Greenhouse?

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 Greenhouse

By starting an LLC for your greenhouse, 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.

Greenhouses will benefit from liability protection because, in addition to general business risks like workplace accidents, greenhouse businesses face the risk of causing nuisances on other property as a result of their farming practices.

Example 1: A customer to whom your greenhouse business has sold plants has a respiratory allergy to a pesticide you use on some of your crops. Before the sale, one of your employees failed to mention you used this pesticide, leading the customer to suffer a serious allergic reaction after consuming the plant. As a consequence, the customer sues your business for this bodily harm she suffered. Limited liability would protect your personal assets from any responsibility to pay damages to the plaintiff.

Example 2: While delivering some plants from your greenhouse business to a customer, one of your employees accidentally knocks over a priceless antique vase, irreparably breaking it. As such, the customer brought a property damage lawsuit against your business. Limited liability would ensure that if your business is found liable to pay damages to this customer, this could not extend to your personal assets.

Example 3: After an employee at your greenhouse business left their phone at a restaurant, your business experienced a devastating data breach that leaked the financial information of a number of your customers. This encouraged one of these customers to sue your business for this data breach. If the court finds your business liable to pay compensation, your personal assets will be protected from this business liability.

Example 4: A customer gets an allergic reaction to a plant that was improperly labeled. They sue your greenhouse 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 a Greenhouse

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 greenhouse 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

Greenhouses 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?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets.

This is particularly appropriate for greenhouse businesses, which need to invest a sizeable amount of capital in assets (such as land and the greenhouse itself) in order to get started in the first place.

Common Situations Business Insurance May Cover for a Greenhouse Business

Example 1: As an employee loads bags of soil into a customer’s car, they accidentally drop a bag. The bag knocks the customer to the ground, where she hits her head and then needs medical attention for a possible concussion. General liability insurance would cover her medical bills.

Example 2: Right after you water the plants, a customer’s child runs through the greenhouse, slips in a puddle, and suffers an injury. His mother decides to sue your greenhouse. General liability insurance would pay for your legal fees and any settlement, if necessary.

Example 3: You lose control of a cart while moving heavy pots filled with plants, and the cart hits a customer’s car. General liability insurance would cover the customer’s vehicle repair costs.

Other Types of Coverage Greenhouse 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 greenhouse businesses should obtain.

Commercial Property Insurance

Setting up your greenhouse required a major investment in plants, soil, amendments, pots, tools, and other supplies. If you own the building(s) in which you operate, you’re responsible for all business-related property housed there in the event of a fire, burglary, or natural disaster. Commercial property insurance would cover the cost of repairing or replacing your business building(s) and supplies after an accident so you can recover quickly.

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.

Commercial Auto Insurance

Any vehicle you or your employees 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 or supplies you carry in your vehicles.

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, commercial property insurance, and workers’ compensation insurance if you have employees.

Read our Business Insurance for Greenhouses article for more info.

The startup costs of a greenhouse business are reasonably significant. You should prepare to spend at least a couple hundred thousand dollars in total.

This should cover the cost of buying an appropriately-sized patch of land to construct your greenhouse on. In addition to this, a sizeable portion of the total sum should be dedicated to purchasing flowers, plants, and other landscaping and gardening tools.

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

The ongoing expenses of running a greenhouse business include property maintenance, utilities, produce seeds, labor, and administration.

Learn more about running a greenhouse.

Greenhouses make money by selling their produce to customers. Greenhouses can sell wholesale to distribution outlets like grocery chains, or they can sell retail to customers.

Learn more about starting a greenhouse.

Greenhouse farming allows farmers to grow produce and meet market demand all year round. The top four categories in the greenhouse market are vegetables, fruits, nursery crops, and flowers.

Established greenhouse businesses can generate revenues from $50,000 to upwards of $100,000 a year.

Learn more about starting a greenhouse.