Should I Start an LLC for My Pool Cleaning Business?

Starting a limited liability company (LLC) for your pool cleaning 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 pool cleaning business, lawsuits can arise from things like damage caused by one of your employees to a customer’s pool while attempting to clean it, and failing to repay a business loan.

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

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

Do I Need an LLC for a Pool Cleaning 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 Pool Cleaning Business

By starting an LLC for your pool cleaning 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.

Pool cleaning businesses will benefit from liability protection because pool cleaning services involve employees traveling onto and maintaining other’s property, and there are multiple financial risks associated with potential property damage or injuries.

Example 1: While performing regular maintenance on a client’s pool, one of your employees accidentally causes damage to the property. The client files a lawsuit against you, claiming negligence or poor service quality. With limited liability protection in place, only your business assets will be liable for any legal damages awarded by the court, protecting your personal finances from any losses.

Example 2: Due to a software error, your employee inadvertently overcharges one of your clients for pool maintenance services. The client files a lawsuit against you, claiming financial damages as a result of the billing error. Since you’re an LLC, only your business assets will be liable for these losses, protecting your personal finances from any financial penalties.

Example 3: You experience a data breach that exposes your clients’ personal information. As a result, your business is sued, and you are held liable for the damages. Because of the limited liability protection your business has, your personal assets will be protected from any legal costs or fines associated with this incident.

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 Pool Cleaning 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 pool cleaning 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

Pool cleaning 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.

Pool cleaning businesses need insurance to protect themselves from risks and minimize financial losses. Pool maintenance tasks come with the potential for injury, property damage, and other liabilities, so having the right coverage is important.

Common Situations Business Insurance May Cover for a Pool Cleaning Business

Example 1: An employee is smoking during work and accidentally lights a client’s pool shed on fire, destroying a large amount of pool equipment and machinery. If found liable, your business could probably rely on general liability insurance to help cover damages owed as mandated by the court or any settlement reached with the client.

Example 2: A new employee is alone on a maintenance job and encounters a pool pump that he doesn't fully understand. He fiddles with it and causes a leak, which later results in the client slipping and falling. If the client were seriously injured, general liability insurance could probably help your business cover the resulting damages, assuming you were found liable.

Example 3: Your employees accidentally cause a pool to overflow, leading to a sizeable flood that leaks into the neighbor’s yard and ruins his extensive garden and backyard with oversaturation and chlorine content. If found liable, your company could probably expect coverage through a general liability insurance policy for damages owed to the neighbor.

Other Types of Coverage Pool Cleaning 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 pool cleaning businesses should obtain:

Commercial Auto Insurance

This is a business that will, without a doubt, require vehicles to transport its equipment and personnel to client locations. All vehicles intended for use on public roads must be insured, either personally or commercially. Get your vehicles covered with commercial auto insurance to help cover damages sustained in the event of a car accident. Depending on the success of your business, your vehicles may see quite a bit of use, making this a policy you simply should not leave home without.

Professional Liability Insurance

This policy helps to cover businesses that provide professional services with potentially significant consequences. It also covers businesses that give advice or otherwise inform clients in a professional capacity. If your pool service company fails to perform to the client’s standards or provides pool maintenance advice that is ultimately damaging to the pool in a serious way, professional liability insurance can cover your losses and minimize the damage of lawsuits.

Workers' Compensation Insurance

Unless you prefer to service client pools solo, your company will employ workers, which will legally require you to have workers’ compensation insurance. So unless you’re working exclusively with independent contractors, this policy is a must-have. Compensation policies cover your employees in the event that they are injured on the job. Medical expenses, as well as disability and death benefits, are provided through this insurance.

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 auto insurance.

Read our Business Insurance for Pool Service Companies article for more info.

A pool cleaning business typically requires a startup cost of around $2,000. This money is used to purchase necessary supplies and equipment such as water test kits, cleaning chemicals, skimmers, brushes, leaf rakes, and more. Additionally, a vehicle sufficient to transport these items is required — often an SUV or truck.

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

Ongoing costs will include supply and fuel costs, as well as vehicle repairs, maintenance, and depreciation costs.

Learn more about running a pool cleaning business.

Money is made by visiting clients’ pools to clean and make minor repairs to relevant components.

Learn more about starting a pool cleaning business.

New pools are continually installed and with so many owners of pools, cleaning services are a lucrative business type that is sure to have continued and steady demand in the future.

If working full time, pool cleaning businesses stand to profit as much as $2,400 each week.

Learn more about starting a pool cleaning business.