Do I Need an LLC for My Massage Therapy Business?

Starting a limited liability company (LLC) for your massage 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 a massage therapy business, lawsuits can arise from things like using massaging oil that inflicts serious skin rashes on a client or harming a customer whose injury is only aggravated by your massage session.

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

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

Should I Start an LLC for a Massage 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 a Massage Therapy Business

By starting an LLC for your massage 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.

Massage therapy businesses will benefit from liability protection because of the risk of trademark infringement, workplace accidents, and financial data breaches. Additionally, given the physical contact involved in massages, the business could face the risk of harassment claims against its owner or employees.

Example 1: A client with a preexisting injury comes into your business premises for a massage. During the course of the session, your masseuse unintentionally aggravates his injury, and he proceeds to sue your business for medical damages. With an LLC structure in place, your personal assets will remain safe from fines imposed by the court.

Example 2: A client claims that on her way to the bathroom after receiving a massage, she slipped and fell. She sues your company for medical compensation, having sustained a hipbone fracture due to a slippery floor. In this scenario, your personal assets will be protected from any damages for which the business is found to be responsible.

Example 3: The latest batch of massage lotion you ordered for your business has resulted in multiple burn cases for several clients. You've reported this to the product company, but your injured clients still file a lawsuit against you, citing negligence. Should the court find the business guilty, only the business’s assets will be used in providing compensation. Your personal assets will not be affected.

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 Massage 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 a massage 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

Massage 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 professional 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.

Massage therapy businesses need insurance to protect themselves from potential liabilities that can arise during the course of their work. Massage therapists are at risk of being sued if they injure a client while providing services or fail to properly disclose information to their clients.

Common Situations Business Insurance May Cover for a Massage Therapy Business

Example 1: Over multiple sessions, one of your masseuses fails to properly apply a lower back rubbing technique to her elderly male client. This actually worsens the back pain, a condition for which her client must seek recurring medical attention. The client sues your business for his ongoing medical payments and hospital bills. General liability insurance could probably help to cover medical expenses owed or any settlement reached.

Example 2: A female client claims her male masseuse was inappropriate and unprofessional during their session. She reports that his conduct has led to significant mental anguish that has affected her work and hurt her family. If found liable, your business would probably be covered by general liability insurance for anything the court ordered you to pay or any settlement reached.

Example 3: A client suffers from a severe allergic reaction to one of your massage oils and has difficulty breathing. An ambulance arrives in time to help, but the client brings your massage business to court. If liable, your company would probably be covered by general liability insurance for a settlement or court estimations of damage incurred.

Other Types of Coverage Massage 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 massage therapists should obtain:

Commercial Property Insurance

This policy is a must-have for the vast majority of businesses, particularly those that rely on either inventory, equipment, or owned real estate to function. Disasters can strike rapidly, leaving shocked businesses to improvise a recovery process particular to the nature of the destruction.

Commercial property insurance is part of a plan businesses can put in place for disaster recovery scenarios. Damage from fires and violent weather are examples of what this policy can cover, saving your company huge amounts when it suffers serious losses. Don’t leave your business vulnerable to the loss of its owned offices, tables, office computer equipment, and other vital commercial property.

Professional Liability Insurance

Massage therapy businesses provide a service that clientele depend on for improved health, comfort, and even professional performance. If clients come out of sessions with no relief, or with exacerbated bodily discomfort, your offices could be taken to court for a return of its service fees. The failure to perform over time may leave your business vulnerable to frustrated customers who have invested their time and money in what they ultimately feel has been a waste. Keep your massage therapy business covered in the event that it is found liable for a failure to provide services as promised. Read more about Professional Liability Insurance here.

Workers' Compensation Insurance

The bigger your therapy practice, the more help you will probably need. If your business intends to hire part-time or full-time employees, it is a legal necessity to provide employees with workers’ compensation insurance. This policy keeps your workers covered in the event that workplace accidents cause injury or death.

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 Massage Therapy Business Insurance article for more info.

You can start a massage therapy business with the sum of $5,000. This would go towards renting a workspace and purchasing massage tables, bolsters, lotions, bedding, towels, and business insurance. Of course, you can cut down costs by sharing a workspace with similar practitioners.

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

Some of the main ongoing expenses for a massage therapy business are rent, insurance, and continuing education.

Learn more about running a massage therapy business.

Massage therapist businesses make money primarily by charging customers for massages.

Learn more about starting a massage therapy business.

There are a lot of potential customers out there for massage therapy businesses. Getting a massage isn’t cheap, which has historically made the industry focus on wealthy clients.

The average hourly rate for a massage therapist is around $60. This can vary depending on the type of massage and the worker’s experience. However, it is becoming more common for insurance to at least partially cover the cost of massages which has increased the number of people who can afford to pay for the service.

Learn more about starting a massage therapy business.