How to Start a Funeral Home

Start a funeral home by following these 10 steps:

1. Plan your Funeral Home
2. Form your Funeral Home into a Legal Entity
3. Register your Funeral Home for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Funeral Home
6. Get the Necessary Permits & Licenses for your Funeral Home
7. Get Funeral Home Insurance
8. Define your Funeral Home Brand
9. Create your Funeral Home Website
10. Set up your Business Phone System

We have put together this simple guide to starting your funeral home. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

• What will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Funeral Home Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

What are the costs involved in opening a funeral home?

A funeral home business requires equipment for embalming and cremation. A cremation table, cremation system, hydraulic lifts, refrigerated storage, computer, printer and filing system are necessary. Caskets must be purchased along with clothing and additional convenience items. The business requires laborers, insurance, operating space and a parking lot. The viewing area will require tables and couches. A hearse is also necessary.

What are the ongoing expenses for a funeral home?

A funeral home must pay for its operating space, labor, utilities, marketing, caskets and equipment for embalming and cremation. Embalming machines do not last forever. A single embalming machine costs around $3,000 or more. Add in the costs of hydraulic lifts, refrigerated storage, an embalming table, embalming fluid, caskets, makeup, clothing and urns and you should budget in at least $5,000 to $10,000 per year for equipment.

Consider contacting a real estate agent to find an affordable building to rent where you can operate your funeral home business. Rent will likely run between $700 and a couple thousand dollars per month depending on the building's size and location. Budget at least a couple hundred dollars per month for marketing. Utilities including high-speed Internet will cost between $100 and $200 per month.

Your funeral home business manager will command a salary between $35,000 and $65,000 per year. A marketing guru will require an annual salary of $35,000 to $55,000. An accountant will command an annual salary in the range of $35,000 to $75,000.   A funeral home receptionist will earn around $10 to $12 per hour.  Additional support staff will likely earn $10 to $15 per hour.

Who is the target market?

The ideal customer is willing to spend top-dollar on funeral services.

How does a funeral home make money?

A funeral service makes money by selling caskets, cremation services, funeral services, flowers, urns and other items/services related to death.

How much can you charge customers?

The typical funeral costs around $6,000 to $7,000. This cost includes embalming, cosmetics, viewings, transportation expenses and professional charges.  However, it is possible to charge more if your funeral home business offers extra services.

How much profit can a funeral home make?

A funeral home business located in the right area with plenty of senior citizens has the potential to make hundreds of thousands of dollars per year. However, it will likely take several years for the funeral home business to reach this point of profitability.

How can you make your business more profitable?

Additional charges can be applied for cremation services, obituary announcements, graveside funerals and online memorial programs. It is also possible to charge for providing assistance in the procurement of paperwork like burial permits and death certificates.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your funeral home is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money later on.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a funeral home. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

For information about local licenses and permits:

• Check with your town, city or county clerk’s office
• Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.

Service Agreement

Funeral home businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.

Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your funeral home business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.

Certificate of Occupancy

A funeral home is generally run out of a storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

• If you plan to lease a location:
• It is generally the landlord’s responsibility to obtain a CO.
• Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a funeral home.
• After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.

• If you plan to purchase or build a location:
• You will be responsible for obtaining a valid CO from a local government authority.
• Review all building codes and zoning requirements for your business’ location to ensure your funeral home will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

Is this Business Right For You?

If you are interested in helping people cope with the death of loved ones, friends and colleagues, the funeral home business is for you.

What happens during a typical day at a funeral home?

The average funeral home business owner meets with prospective clients, handles the demands of existing clients, performs research on funeral-related equipment such as caskets, steers marketing efforts and delegates work to employees.

What are some skills and experiences that will help you build a successful funeral home?

A funeral home business owner who has solid people skills, an aptitude for marketing and the ability to console those who are grieving will succeed in this industry. The key is to get to know the community. Develop a rapport with locals and market your funeral home business in a tasteful manner, and you will gradually acquire new clients.

What is the growth potential for a funeral home?

This business is poised to grow quite rapidly as the baby boomer age cohort passes through their golden years. A considerable portion of the population is reaching its 60s and 70s, and a funeral home business owner will benefit from this demographic trend.