If you work as a dog walker and pet sitter, you may or may not have already considered forming a limited liability company (LLC) for your business. The LLC is a popular option for all sorts of businesses looking for asset protection, and it has a handful of other major advantages as well.
Of course, forming an LLC isn’t the only option for your dog walking business, so our mission is to help you decide if it’s the best choice for you. There are many different factors to consider when you’re forming a business entity for pet sitting, so let’s dive into the details of the LLC to figure out if you should form one.
What Is an LLC?
First off, let’s quickly outline what an LLC is. LLCs are formal legal entities that are typically taxed similarly to sole proprietorships and general partnerships, in that the owners include any company profits or losses into their personal returns — the LLC itself does not owe income taxes. An LLC may also elect to be taxed like a corporation, although this is not a very common option.
There are similarities to corporations too, especially when it comes to financial responsibilities. In an LLC, the owners or members are not usually personally accountable for the financial status of the business. This means that if someone sues your LLC, your personal assets are not at risk.
Why Starting an LLC for a Dog Walking Business Is Important
The top reason to form an LLC for a dog walking business is to gain access to the personal asset protection provided by this business structure. Whether you work as a full-time pet sitter or you walk dogs as a side hustle, you need the limited liability protections that an LLC can provide.
For example, let’s say a dog you are walking runs into the street and gets hit by a car. If you operate your dog walking business as a sole proprietorship, your personal assets — like your house, car, personal bank accounts, etc. — would be at risk if you are sued for negligence.
On the other hand, if you form an LLC for your dog walking business before you ever connect with your first customer, and you operate and maintain that LLC in a compliant fashion, the scope of the lawsuit will be limited to your business assets. In other words, your personal assets will be protected by the business structure you’ve chosen.
Typically, we would say that the LLC’s options for taxation are another major advantage, but that’s not as much the case with pet sitting businesses. Your dog walking LLC can be taxed as a sole proprietorship, which is the default option. With this tax structure, your business itself does not pay taxes, but rather the profits are passed through the business entity and you pay taxes on that money when you file your own personal taxes.
You can also choose for your dog walking business to be taxed as a C corporation, although this option isn’t very popular because it subjects your business to what’s known as double taxation — meaning that your profits are taxed first on the corporate level and again on the personal level when they’re distributed to you.
The other option is S corporation taxation. There are quite a few limitations to electing S corp taxation, but most dog walking businesses have no trouble meeting these requirements — your business cannot have more than 100 owners, they all must be either residents or citizens of the United States, etc.
In theory, S corp taxation can help your pet sitting business save money by reducing your self-employment tax burden. Instead of paying self-employment taxes (a 15.3% tax that includes the employer and employee portions of Medicare and Social Security) on all of your business income, you can pay yourself a reasonable salary for your role and only pay self-employment tax on that portion of your income, while you can reinvest the rest of it into your business without paying this tax.
The problem with electing S corp taxation for dog walkers is that you simply don’t have many business expenses to invest that extra money into. Therefore, the IRS might (rightfully) have some questions if it sees you leaving lots of money in your business structure.
We would usually discuss the benefits of enhanced credibility as well, but this only really affects you if you operate your business outside the realm of popular pet-sitting apps, like Rover and Wag. People who hire you to walk their dog using an app probably couldn’t care less if you’ve formed a business entity for your pet sitting business. However, this aspect could be relevant if you operate independently of these “gig economy” apps.
Informal business entities don’t have exclusive assumed business names and typically operate under the personal name(s) of their owner(s). For instance, if your name is Johnny Smith and you operate a dog walking sole proprietorship, your company’s name is also “Johnny Smith,” which obviously isn’t a great name for a pet sitting business (or any business, for that matter).
With an LLC, you not only have the rights to exclusive use of a business name, but you will also have either the phrase “limited liability company” or the letters “LLC” in that business name. This provides your business with a jolt of respectability because customers respect the professionalism displayed by an LLC. Also, they typically feel more comfortable writing checks to a business entity rather than to an individual.
How to Start a Dog Walking LLC
The formation process for LLCs varies depending on which state you’re forming one in, but in general, the process has some universal steps that need to be taken no matter what state your business is located in. If you want a comprehensive overview of all the steps required to form an LLC, check out our complete guide on the topic. The basic steps in the LLC formation process in any state are as follows:
- Choose an LLC name
- Designate a registered agent
- File your articles of organization with the state
- Acquire an EIN
- Create an LLC operating agreement
- Create a financial infrastructure
- Handle taxes, licenses, and permits
Understand maintenance requirements (annual reports, franchise taxes, etc.)
The 3 Best LLC Services
When forming an LLC for your business, you generally have three main options. You can form your own LLC using the DIY method, you can hire an attorney, or you can hire an online business formation service.
The DIY route can require quite a bit of effort, and if you’re not comfortable with the process, it can cause some undue stress. As for hiring a lawyer, many startups can’t afford to spend the thousands of dollars it can cost for an attorney to form your business entity.
This leads us to the third option, hiring an online LLC service. There are dozens of reputable companies offering this service these days, and they can all save you a tremendous amount of money compared to an attorney. In addition, while these companies may not have as much expertise as an attorney does, they still provide a considerable amount of peace of mind compared to the DIY route.
If you want to take a look at the top options for online business formation services, head on over to our guide to the seven best LLC formation services available. In addition, we’ll briefly break down our top three options on this page. These are, in our opinion, the best options for business formation service:
- ZenBusiness ($39): ZenBusiness truly has it all. They provide complete LLC formation service along with a full year of registered agent service for one incredibly low rate, and they also have stellar customer feedback. It’s hard to go wrong with an offer like this.
- Northwest Registered Agent ($79): Northwest is a bit more expensive than ZenBusiness, but their industry-best registered agent service (included at no extra charge) includes local scanning of every document they receive on your behalf. They also have the best customer support available for LLC formation services. If you’re looking for more of a premium service, Northwest is an excellent choice.
- Incfile (FREE): Incfile has a business formation package that is free of charge, as long as you pay your own state fee. That’s obviously an enticing offer, especially when you consider that they also provide a year of registered agent. Throw in their strong customer feedback, and Incfile is an excellent choice for LLC formations.
Additional Resources for Starting a Pet Sitting Business
- Time to Pet: Time to Pet provides helpful software for pet sitting and dog walking businesses. With features like service booking, a client payment portal, and interactive real-time report cards including pictures, Time to Pet is an excellent resource for anyone looking to start a pet sitting business. They also have a blog, videos, educational resources, and more.
- National Association of Professional Pet Sitters: The NAPPS is the only national nonprofit organization for professional dog walkers and pet sitters, and they have a great selection of resources for anyone operating one of these businesses. Their members enjoy a broad selection of benefits, including education, discounts on products and services, business enhancement tools, and a listing in their member registry.
- Professional United Pet Sitters: This is another excellent group for pet sitters, as the aptly named “PUPS” has more than 11,000 members. PUPS has an online forum where you can discuss aspects of your business with other dog walking professionals, and they also have an exhaustive collection of tools and resources to help you develop your business.
- Pet Sitters International: Pet Sitters International is the “leading educational organization for professional pet sitters since 1994,” and they have the resources to back up that claim. PSI provides information about pet sitting insurance and bonding, online and in-person conferences, webinars, e-books, a blog, and more.
- PetSitUSA Resources: PetSitUSA has plenty of valuable information, but our favorite part of their site is their fantastic resource section. Here, you’ll find customizable forms, social media and web design tips, business articles, pet sitter networks, and many other tools to help make your pet sitting and dog walking business as productive and profitable as possible.