Last Updated: May 10, 2024, 8:34 am by TRUiC Team

Should I Start an LLC for My Plant Nursery?

Starting a limited liability company (LLC) for your plant nursery 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 plant nursery, lawsuits can arise from things like damaging the plants in a neighbor’s garden when fumigating a client’s greenhouse or disagreements over what services are included in the contract with your vendor.

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

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

Do I Need an LLC for a Plant Nursery?

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 Plant Nursery

By starting an LLC for your Plant Nursery, 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.

Plant nurseries will benefit from liability protection because of the risk of workplace accidents, property damage, and financial data breaches. 

Example 1: After you fumigate your greenhouse to ward off pests, a neighbor complains the chemicals you sprayed affected the vegetables in her garden next to yours. She claims it has caused them to die off and demands compensation. Your business may be affected if she sues you, but you will remain safe. 

Example 2: A vendor provides plant pots for your nursery, but while your employee visits the vendor to pick up the pots, they accidentally trip back into a shelf, causing several pieces to fall and break. If the vendor decides to sue for damages, your business may be required to pay compensation, but LLC will protect your personal assets.

Example 3: A customer preorders a rare plant from your nursery. When it’s ready, the customer claims that the plant is sickly and demands a refund, which you refuse. Your business may be affected if she sues for it, but your own assets will stay safe.

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 Plant Nursery

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 plant nursery 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

Plant nurseries 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 loansgrants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

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.

Plant nurseries need insurance to protect them from damages to greenhouses, theft of planting equipment, delivery vehicles, and lawsuits from clients and customers.

Common Situations Business Insurance May Cover for a Plant Nursery

Example 1: As an employee uses a mini front loader to dump mulch into a customer’s truck, he loses control of the machine and gouges the side of the truck. General liability insurance would cover the customer’s vehicle repair costs.

Example 2: A customer accidentally hits her head on an overhanging plant shelf, causing a concussion and a deep wound. General liability insurance would cover the customer’s medical bills.

Example 3: When an employee accidentally knocks a customer over, the customer breaks a wrist and sues. General liability insurance would pay your legal fees and any damages awarded in a settlement.

Other Types of Coverage Plant Nurseries 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 plant nurseries should obtain:

Commercial Property Insurance

You’ve made major investments in your inventory of plants and gardening supplies. 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 or natural disaster. Commercial property insurance would cover the cost of replacing your lost inventory after an accident so you can recover quickly.

Product Liability Insurance

When you sell products to the public, there’s always a chance a customer may file a lawsuit if they believe one of your products injured them. Product liability insurance would protect your business by covering your legal fees and any damages awarded in the event of a lawsuit.

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.

Commercial Auto Insurance

Any vehicle you use primarily for business requires commercial auto coverage. Your policy will protect your vehicle, the driver, and others on the road in the event of an accident by covering any related vehicle repair costs as well as the medical treatment for anyone injured.

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.

Opening a plant nursery will require you to get land, which can cost between $30,000 to $100,000, depending on size and location. You will also need a retail storefront which will require a minimum of $50,000 investment. Additionally, you will need to budget for an initial supply of plants, soil, and supplies.

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

Some common operating costs for plant nurseries include payroll, water, inventory, and insurance.

Learn more about running a plant nursery.

Plant nurseries make money by growing plants from seeds or saplings and then selling them to customers.

Learn more about starting a plant nursery business.

Plant nurseries sell plants to individual customers as well as larger commercial buyers. Whether you decide to focus on selling a high quantity of common plants or fewer expensive, more exotic plants, there are always many potential customers for a plant nursery.

If you already own sufficient land, the business could be especially profitable. Depending on their size, successful nurseries can see an annual cash flow anywhere from $40,000 to $625,000. 

Learn more about starting a plant nursery business.

Related Articles

Article Sources

IRS: Limited Liability Company

IRS: S Corporations


SBA: Small Business Guide

SBA: Choose a Business Structure Guide

US Census Bureau: Small Business Statistics

SBA Office of Advocacy: Data on Small Business

FRED: SBA Data for Small Business