Should I Start an LLC for My Reiki Business?

Starting a limited liability company (LLC) for your reiki 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 reiki business, lawsuits can arise from things like claims that your treatment was ineffective in helping a customer or injuries a customer sustains while on your business’s premises.

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

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

A person participating in a reiki session

Do I Need an LLC for a Reiki 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 Reiki Business

By starting an LLC for your reiki 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.

Reiki businesses will benefit from liability protection because alternative medicine businesses, including reiki services, face the risk of malpractice liability and general business risks.

Example 1: A woman shows up at your business, seeking treatment from you. During the course of your initial discussion and assessment, you point out some techniques to help some underlying causal issues for her stress. Later, she claims that your treatment and advice were ineffective. If she goes on to sue, the lawsuit will only affect your LLC’s assets.

Example 2: A client is injured while navigating an icy path to your business entranceway and breaks his hipbone. He has to undergo hip replacement surgery. If he sues your business for neglecting to properly maintain your environs, limited liability protection ensures that you are not personally liable for any liabilities should the case be settled in court.

Example 3: You take out a loan to grow your reiki business even further; however, you end up falling on hard times and cannot make some of the required payments. If the lenders come after your business for compensation, it will only be levied against your business’s assets (provided you didn’t personally guarantee the loan).

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 Reiki 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 reiki 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

Reiki 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.

Reiki businesses especially need insurance because it is a complementary therapy practice that can be subject to lawsuits arising from personal injury and unsatisfied clients. These losses can be covered by business insurance so that you can focus on running your business without any hitches.

Common Situations Business Insurance May Cover for a Reiki Business

Example 1: A reiki client breaks her wrists when an employee accidentally knocks her over after a session. She demands repayment for her medical treatment. General liability insurance would cover the client’s medical bills.

Example 2: Before you can clean your front steps after a surprise winter storm, a new client slips, breaks an ankle, and decides to sue. General liability insurance would pay for your legal fees and any damages awarded in a settlement.

Example 3: A competitor files a defamation lawsuit, claiming your marketing campaign includes false messages about his business. General liability insurance would cover your legal fees and any damages awarded in a settlement.

Other Types of Coverage Reiki 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 reiki businesses should obtain:

Professional Liability Insurance

If a client decides your advice or services ultimately injured them and files a lawsuit, professional liability insurance would cover your legal fees as well as any damages awarded in a settlement.

Commercial Property Insurance

You’ve made major investments in the equipment, furniture, and other materials needed to run your business. 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 other natural disaster. Commercial property insurance would cover the cost of replacing your equipment and other business supplies 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.

Product Liability Insurance

If you sell products in addition to your healing services, there’s always a chance a client may file a lawsuit if they believe one of your products harmed them. Product liability insurance would protect your business by covering your legal fees and any damages awarded in the event of a lawsuit.

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 possibly malpractice insurance.

Read our Business Insurance article for more info.

It takes time to set up a successful reiki business. To cut down on the cost of rent, you can start the business from your home. You'll need a reiki table, pillows, linens, fabric, music, business management software, insurance, and a website to showcase your business.

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

The ongoing expenses of running a reiki business include equipment maintenance, supplies, utilities, marketing, and insurance.

Learn more about running a reiki business.

Reiki businesses make money by charging a fee for their services. Some also make money by teaching courses and selling books about the reiki practice.

Learn more about starting a reiki business.

The aim of a reiki practice is to provide spiritual benefits to the patient as well as the healer. Although an alternative medicine practice, some medical institutions have embraced the practice and offer it as a service to their patients.

The size of the global complementary and alternative medicine market, which includes Reiki, is expected to reach $296 billion by 2027. With increasing interest in health and wellness, there is a growing opportunity for Reiki practitioners to enter this market.

A small-scale reiki business with consistent work can generate over $100,000 in annual revenue.

Learn more about starting a reiki business.