Should I Start an LLC for My Petting Zoo?

Starting a limited liability company (LLC) for your petting zoo 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 petting zoo, lawsuits can arise from things like animals escaping their enclosures to injure customers and damage the property of buildings surrounding your zoo.

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

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

Do I Need an LLC for a Petting Zoo?

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 Petting Zoo

By starting an LLC for your petting zoo, 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.

Petting zoos will benefit from liability protection because of the risks associated with guests petting and interacting with zoo animals.

Example 1: A visitor to your petting zoo is bitten by one of the animals. Following this, the visitor sues the business for medical expenses and damages. In this scenario, limited liability protection would help to shield the owner's personal assets from any costs incurred as a result of the lawsuit.

Example 2: A visitor's personal property is damaged while on the property, and the visitor sues the business for damages. Limited liability protection would help to protect the owner's personal assets from any costs associated with the lawsuit.

Example 3: An animal escapes and causes damage to a neighboring property. Following this, the property owner sues the business for damages. In this scenario, limited liability protection would help to protect the owner's personal assets, and only the business’s assets will be affected if found liable.

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 Petting Zoo

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 petting zoo 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

Petting zoos 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.

For a business such as a petting zoo, insurance can help to cover potential risks such as injuries to employees or visitors, damage to animals or equipment, and liability for any accidents or incidents that may occur on the property.

Common Situations Business Insurance May Cover for a Petting Zoo

Example 1: An animal bites a customer, breaking the skin and fracturing several fingers. General liability insurance would cover the customer’s medical bills.

Example 2: A child sustains several injuries when they fall during a horse ride. General liability insurance would cover the child’s medical bills and your legal fees in the event of a lawsuit.

Example 3: A large animal escapes and damages a customer’s car. General liability insurance would cover the customer’s vehicle repair costs.

Other Types of Coverage Petting Zoos 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 petting zoos should obtain:

Commercial Property Insurance

If you own the buildings 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 replacing your equipment, supplies, and secondary structures 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 benefits stemming from a work-related accident.

When purchasing a policy, you must classify each employee according to their responsibilities to ensure the proper level of coverage (e.g., employees who work directly with animals and those who run your ticket office fall into different classifications).

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.

Business Interruption Insurance

If a fire, tornado, or other major disaster forces you to temporarily close, business interruption insurance would help cover your bills and financial losses until you can reopen. You can usually purchase business interruption insurance as part of a business owner’s policy or BOP.

Commercial Auto Insurance

If your petting zoo operates any vehicles on public roads, you need commercial auto insurance to protect those vehicles, your drivers, 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 special equipment your vehicles may contain.

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, and commercial property insurance.

Read our Business Insurance for Petting Zoos article for more info.

To open a petting zoo, you will need to consider the cost of the land and facilities, as well as the cost of animals and staff salaries. A Class "C" license from the government is also required. The total cost can range from tens of thousands to over a million dollars.

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

Some of the largest expenses will be costs associated with animal food, supplies, and insurance.

Learn more about running a petting zoo.

Fees are charged to guests upon entrance to the zoo. Additional fees may be charged for petting zoos hired to attend specific events.

Learn more about starting a petting zoo.

Largely a point of attraction for young children, petting zoos offer a place for individuals to pet and sometimes feed small animals like goats, llamas, and sheep. Petting zoos either have physical zoo locations that guests come to visit or traveling zoos that can be hired to attend parties or events.

Animal petting zoos in the US bring in a total profit of $2.6 billion each year.

Learn more about starting a petting zoo.