Should I Start an LLC for My Guard Dog Business?

Starting a limited liability company (LLC) for your guard dog 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 a guard dog business, lawsuits can arise from things like a guard dog failing to protect a customer or from a medical damages claim (e.g., a supposedly trained guard dog attacking a client, etc.).

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

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

Do I Need an LLC for a Guard Dog 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 a Guard Dog Business

By starting an LLC for your guard dog 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.

Guard dog businesses will benefit from liability protection because of the risk of general business liability as well as the risk of causing physical injury to people.

Example 1: A guard dog escapes from the business's property and bites a passerby, causing injury. The passerby then proceeds to sue the guard dog business for damages. Regardless of the court’s ruling, liability protection will ensure that the owner's personal assets are not affected if the business is found liable.

Example 2: A guard dog attacks and injures an employee while on duty. Following this, the employee sues the guard dog business for damages. Without liability protection, the owner's personal assets could be at risk if the business is found liable.

Example 3: A guard dog business is sued by a neighbor who claims that the guard dog caused damage to their property. In this case, since the business is registered as an LLC, the owner's personal assets will not be at risk if the business is found liable.

Example 4: When a potential customer visits your property to choose a new guard dog, a dog still in training bites them. The bite leads to a doctor visit, and they decide to sue your business.

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 Guard Dog 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 a guard dog 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

Guard dog 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?

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.

Due to the sometimes unpredictable nature of working with animals, your guard dog business will greatly benefit from insurance to protect against injury and property damage.

Common Situations Business Insurance May Cover for a Guard Dog Business

Example 1: When a potential customer visits your property to choose a new guard dog, a dog still in training bites them. The bite leads to several doctor visits and may require surgery. General liability insurance would cover the customer’s medical bills and your legal fees in the event of a lawsuit.

Example 2: While your new website helps boost business, your web designer used a copyrighted photo, and the photo’s owner sues you for copyright infringement. General liability insurance would pay for your legal fees and any resulting payout (up to the limits of your policy).

Example 3: During the night, one of your rented dogs causes damages to your client’s business, and the client holds you responsible. General liability insurance would cover the cost to repair and/or replace any damaged property.

Other Types of Coverage Guard Dog 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 guard dog businesses should obtain.

Product Liability Insurance

Your customers hire you to deliver a guard dog that meets their particular needs. If, for some reason, you don’t meet those needs and an incident occurs, they could look to you for reparations. Product liability insurance offers coverage if a customer claims the “product” you sell caused them harm.

You can purchase product liability coverage — tailored to your business’s specific needs — as part of a business owner's policy (BOP).

Commercial Property Insurance

If you own the building 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 building and its contents after an accident so you can recover quickly.

You can purchase this coverage as part of a business owner's policy (BOP).

Workers’ Compensation Insurance

Even the most highly trained employees face a risk of injury when working with dogs, making this coverage essential. 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.

While many states allow business owners to exclude themselves on their workers’ compensation policy, consider skipping this option if you plan to participate in your business’ daily operations.

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 materials you carry in your vehicles. Also consider purchasing coverage higher than the state-mandated minimum coverage to safeguard your business from the unexpected.

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 property insurance.

Read our Guard Dog Business Insurance article for more info.

Opening a guard dog business may require a well-equipped location with kennels and space for the dogs to run, transportable locked cages, and training or handling services for the dogs. The startup costs may be up to $50,000, depending on the square footage and number of dogs.

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

The ongoing expenses of running a guard dog business include food, maintenance, veterinary care, kennels, and labor costs for handlers.

Learn more about running a guard dog business.

A guard dog business makes money by renting out guard dogs, selling highly trained guard dogs, or training dogs owned by customers.

Learn more about starting a guard dog business.

A guard dog business provides trained guard dogs to businesses, celebrities, and any consumer opting for guard dogs over bodyguards.

The average profit margin for a guard dog business is in the range of 20% to 30%.

Learn more about starting a guard dog business.