Should I Start an LLC for My Silent Retreat Center?

Starting a limited liability company (LLC) for your silent retreat center 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 silent retreat center, lawsuits can arise from things like guests being served food they are allergic to or complaints that the center is too noisy to be in.

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

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

Three people performing yoga in a retreat

Do I Need an LLC for a Silent Retreat Center?

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 Silent Retreat Center

By starting an LLC for your silent retreat center, 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.

Silent retreat centers will benefit from liability protection because of the risk of being sued for employee or customer injuries, trademark infringement, and more.

Example 1: Some of your guests complain that a particular guest has been noisy and nosy and has not allowed them to concentrate on their silent retreat. They claim that their time was not worth it and demand a refund. If they sue for it, your business may be affected, but your personal assets will be protected.

Example 2: A guest falls ill after eating a meal served at the silent retreat. She reminds you that she had mentioned her allergies, but you had mistakenly added the ingredients to her food. She has a life threatening emergency and sues for medical expenses, pain and suffering, and lost wages. Your personal assets will be protected in the lawsuit.

Example 3: While your staff drops reading and writing materials with the guests, she flings her hand carelessly, and a pen injures a guest. The guest then demands that you cover the cost of her treatment and loss of wages. Your business may be required to pay compensation, but your personal assets will not be affected.

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 Silent Retreat Center

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 silent retreat center 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

Silent retreat centers 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.

A silent retreat center should have insurance to cover risks or incidents that result in personal injury or property damage. The insurance policy will also cover legal fees and payment of damages to claimants.

Common Situations Business Insurance May Cover for a Silent Retreat Center

Example 1: Your employee is bringing in supplies from a delivery vehicle when he knocks a visitor to the ground. She breaks her wrist and sues your business. The general liability insurance policy you have will pay your legal defense costs, including the cost of hiring an attorney.

Example 2: Another retreat center has sued your business for libel. You do not believe the accusations are valid, but you know you need an attorney regardless. Your general liability insurance policy will pay for your legal fees if someone sues you for libel.

Example 3: A visitor to your center slips and falls on wet flooring in the restroom. He breaks his arm and asks that your business pay for his injuries. Your general liability insurance policy will likely cover the cost of his treatment if you file a claim.

Other Types of Coverage Silent Retreat Centers 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 silent retreat centers should obtain:

Commercial Property Insurance

Your retreat center has invested a lot of money in the furnishings, equipment, supplies, real estate, and other items you need to operate. Commercial property insurance ensures that you can replace that property if it gets damaged in a covered event like a fire. You can file a claim and get the money you need for replacements.

Workers’ Compensation Insurance

The employees at your silent retreat center need the coverage provided by workers’ compensation insurance. If they get injured performing their job duties, the policy will pay for them to get medical treatment. If they lose wages while they are healing, the policy will help to make up for those lost wages.

Business Interruption Insurance

If something happens that causes your business to close for a time, such as a fire or tornado, business interruption insurance can help make up for some of the lost revenue. It is coverage offered in many business owners policies.

Commercial Umbrella Insurance

The general liability insurance policy you have will cover most general liability situations. However, it is possible for you to exceed your general liability insurance policy limits—such as if you were to lose a big lawsuit. If you exceed your limits, the commercial umbrella policy will help to pay the remaining damages.

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 article for more info.

You can start this business with little capital if you turn your home into a silent retreat center. But If you choose to use a more standard peaceful location, such as the woods or mountains, you will need to budget for the space. Other costs include furnishings, staff salaries, and commercial insurance.

Visit our How to Start a Silent Retreat Center guide to learn more about the costs of starting and maintaining this business.

The ongoing expenses of running a silent retreat center include marketing, insurance, and maintenance if you rent or own the location.

Learn more about running a silent retreat center.

Silent retreat centers make money by charging people a fee to attend their retreats.

Learn more about starting a silent retreat center.

The meditation market, which includes silent retreat centers, is a strong growth niche market. The US meditation market is projected to reach $2.08 billion by 2024.

People are increasingly spending more on wellness activities such as silent retreats. Silent retreat centers can attract customers from schools and other businesses to raise productivity and morale.

Learn more about starting a silent retreat center.