Should I Start an LLC for My Tanning Salon?

Starting a limited liability company (LLC) for your tanning salon 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 tanning salon, lawsuits can arise from things like negligently maintained sunbeds causing customer burns or claims of discrimination by clients.

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

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

Do I Need an LLC for a Tanning Salon?

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 Tanning Salon

By starting an LLC for your tanning salon, 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.

Tanning salons will benefit from liability protection because beauty and cosmetic supply businesses, including tanning salons, face a variety of risks associated with customers visiting their business location and engaging with potentially hazardous equipment or materials associated with tanning guests’ skin.

Example 1: A customer suffered serious burns after using a bed in your tanning salon. This prompted her to sue your business, alleging that its negligence in maintaining its equipment had led to her injury. In the ensuing lawsuit, your personal assets are protected from being seized by the court in order to award the plaintiff damages.

Example 2: Your tanning salon received notice that it was being sued for discrimination after a customer claimed they were unfairly denied services based on their ethnicity. In this example, limited liability prevents the court from pursuing your personal assets in order to compensate the plaintiff.

Example 3: As part of a marketing campaign, an employee for your tanning salon has been tasked with trying to increase social media engagement. In an attempt to do so, the employee makes a post that lightheartedly mocks a local competitor. However, believing this comment to be libel, the competitor sued your business for defamation. In the litigation that follows, the court is only able to levy a requirement to pay damages against your business’s assets.

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 Tanning Salon

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 tanning salon 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

Tanning salons 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.

Due to the nature of a tanning salon’s business activity, be it tanning beds or spray tans, they are exposed to a number of unpredictable financial risks that necessitate the ownership of insurance. However, it does offer a number of additional benefits, including greater credibility and compliance with local state laws.

Common Situations Business Insurance May Cover for a Tanning Salon

Example 1: A shipment of tanning oils developed an unseen leak, and a customer slips and falls. Your customer sues seeking damages, including payment of their medical bills. General liability insurance would help you cover these costs.

Example 2: You sell a customer tanning aftercare products. They develop a rash and a strong allergic reaction. With a general liability policy, you should be covered for immediate medical expenses, legal fees, and resulting settlement costs.

Example 3: After operating a successful business for many years, you are sued by another business with the same name for copyright infringement. Your general liability policy should cover any associated costs related to the case.

Other Types of Coverage Tanning Salons 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 tanning salons should obtain.

Commercial Property Insurance

If a fire or other covered event damages owned real estate or any business property kept on-site, commercial property insurance could help cover the cost of repairing or replacing this property. When choosing the policy’s coverage limits, carefully consider the replacement cost of all business property. Limits should be enough to replace all equipment and rebuild the building in the event of a loss.

Workers’ Compensation Insurance

Each state requires all businesses to carry a certain level of workers’ compensation insurance for each employee. This policy covers medical treatment and lost wages in the event of a work-related illness or injury.

Commercial Umbrella Liability Insurance

Since liability risks often exceed primary policy limits, a commercial umbrella liability policy should be considered. It adds an extra layer of protection should a large covered lawsuit occur.

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 Tanning Salons article for more info.

The cost of starting your tanning salon can be fairly significant, though it does vary based on the type of UV tanning beds you choose. Expect to spend around $15,000 to get a couple of decent tanning beds as well as all the basic items you’ll need, such as eye protection, cleaning supplies, a timer system, and marketing products.

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

Some of the largest ongoing costs of running your tanning salon will include energy costs, tanning bed cleaning and maintenance, and inventory costs if your location provides tanning spray services.

Learn more about running a tanning salon.

Revenue is generated by charging customers to use the tanning beds at the salon’s business location. Salons can also make money by selling lotions and other tanning-related products to clients.

Learn more about starting a tanning salon.

Tanning salons provide indoor tanning solutions, such as tanning beds or spray tans, to customers. Depending on its location, a tanning salon has the potential to turn a substantial profit and even expand into a chain of multiple locations.

Learn more about starting a tanning salon.