Should I Start an LLC for My Pet Shelter?

Starting a limited liability company (LLC) for your pet shelter 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 pet shelter, lawsuits can arise from things like employees injuring a customer’s pet while attempting to administer medical attention or allegations of animal welfare violations committed by your business.

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

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

Do I Need an LLC for a Pet Shelter?

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 Pet Shelter

By starting an LLC for your pet shelter, 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.

Pet shelters will benefit from liability protection because of the risk of being sued for customer injuries, trademark infringement, and workplace accidents.

Example 1: You are responsible for the daily operations of a busy pet shelter, overseeing staff and volunteers who work with hundreds of dogs and cats each day. In the event that an accident occurs at your facility or if a pet is injured while under your care, liability protection will limit any financial damages to only your business assets, protecting your personal savings from any losses.

Example 2: Due to unexpected flooding, several pets at your shelter are displaced and require temporary housing. As a result of the damage to your facility, you face significant repair costs that may put your business in financial jeopardy. With liability protection in place, these losses will be limited to only your business assets, protecting your personal savings from any associated financial damages.

Example 3: You have an employee who accidentally injures a customer’s pet while treating it for a medical condition. The customer files a lawsuit against your business, claiming that the damages were due to negligence on behalf of your company. With liability protection in place, your personal assets will be protected from any legal action taken by this client.

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 Pet Shelter

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 pet shelter 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

Pet shelters 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.

Pet shelters are responsible for the health and care of many animals through their facilities. Accidents or disasters can cause significant damage and loss to these facilities, so having insurance is an important part of protecting not just their finances but also the welfare of the animals in their care.

Common Situations Business Insurance May Cover for a Pet Shelter

Example 1: While walking through the aisles in your shelter, a visitor slips on some wet flooring, breaks an arm in the fall, and decides to sue because you failed to mark the wet floor. General liability insurance would pay for your legal defense and any required settlement.

Example 2: As an employee moves supplies to the back of the shelter, he accidentally drops a box of food on a visitor’s bag and breaks the camera equipment within. The visitor asks you to replace her broken equipment. General liability insurance would cover the cost of replacing the visitor’s damaged property.

Example 3: Another local pet shelter sues your business for libel. While you disagree with the accusation, you know you need an attorney to protect your interests. General liability insurance would pay for your legal defense and any required settlement.

Other Types of Coverage Pet Shelters 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 pet shelters should obtain:

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their 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 workplace accident.

Commercial Property Insurance

You made a major investment to establish your pet shelter. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes structural damage to your building as well as the equipment, pet food, and medical supplies stored there.

Commercial Auto Insurance

Any vehicle you use primarily for your pet shelter 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 vehicle.

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, worker’s compensation insurance, and commercial property insurance.

Read our Pet Shelter Business Insurance article for more info.

To open a pet shelter, owners need a space to house pets, food and water, and access to veterinary care. Nonprofit shelters may be able to get free or low-cost vet care, while for-profit businesses may have to pay for or negotiate a lower cost. Pet shelter owners may also be able to secure discounted food from local pet stores.

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

Operating expenses for a pet shelter include rent, vet costs, food, labor, and insurance.

Learn more about running a pet shelter.

Pet shelters make money by charging people to drop off and adopt pets. They can also branch out into other services like pet grooming.

Learn more about starting a pet shelter.

Pet shelters take in stray pets, unwanted pets, or pets that owners cannot take care of anymore. While they are often operated as nonprofits, they can also be run as for-profit businesses.

Millions of cats and dogs are adopted each year, which means there are a lot of potential customers. Pet shelters can also expand with a veterinarian office or grooming services to potentially bring in more revenue.

Learn more about starting a pet shelter.