LLC for Dog Walking Businesses

Why Starting an LLC for a Dog Walking Business Is Important

Personal Asset Protection

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.

Taxation

The LLC’s options for taxation are another major advantage, but not all of them are applicable for pet sitting businesses. The LLC actually provides its owners with several choices regarding how they want the business to be taxed, which can save you a considerable amount of money compared to simply operating as an informal business entity.

Sole Proprietorship/General Partnership

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.

C Corporation

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.

S Corporation

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.

Enhanced Credibility and Name Uniqueness

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).

In this scenario, you could register a DBA (doing business as) name to give your business the ability to operate under an assumed business name, but DBAs have no exclusivity regarding their naming rights in many states. This means that if another dog walker wants to use your DBA name as their own, they’re not only allowed to do so, but they can actually register a formal business entity with that name, preventing you from continuing to use your own assumed name.

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.

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.

Read here for a more complete definition of “what is an llc?“.

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:

1) Choose an LLC name

Coming up with the perfect name for your new LLC is an important step. You’ll need to choose a name that represents your company and describes what you do, and you’ll also have to make sure it isn’t already in use by checking your state’s business database.

2) Designate a registered agent

Your LLC’s registered agent (which can be an individual or a professional service) is responsible for receiving important document deliveries from the state — like service of process, annual report reminders, etc. — and forwarding them to you. The registered agent ensures that the state always has a reliable point of contact for your business.

3) File your formation documents with the state

The form used to create an LLC is usually called the Articles of Organization, although the name can vary (some states call it the Certificate of Formation or something similar). You’ll need to provide the state with some basic information about your business and its owners. In exchange, the state will formally create your LLC.

4) Acquire an EIN

The Employer Identification Number (EIN) is a federal tax ID number that essentially functions as a Social Security number for a business. The EIN allows your business to hire employees, pay taxes, apply for bank loans, and more. You can easily obtain an EIN from the Internal Revenue Service free of charge.

5) Create an LLC operating agreement

Most states don’t require operating agreements but every LLC should have one regardless. This is an internal document that outlines several key operational aspects of your LLC. The value of the operating agreement is how it can help prevent ownership disputes down the line by clearly explaining how the LLC will be run.

6) Create a financial infrastructure

You will need a business bank account for your LLC, and you’ll probably want a business credit card for work-related expenses as well. It’s also a good idea to use accounting software like QuickBooks or even hire an accountant to handle your bookkeeping for you.

7) Handle taxes, licenses, and permits

Depending on your state, you may need a general business license to operate your LLC in compliance with state requirements. There are no federal license requirements for dog walking, and we’re not aware of any industry-specific state licenses either. However, some big cities do require dog walkers and pet sitters to obtain licenses. Don’t forget to check with your state to see if there are franchise or privilege taxes assessed on LLCs, and also see if your municipal and/or county government entities have any further licensing requirements.

8) Understand maintenance requirements (annual reports, franchise taxes, etc.)

Again, these requirements can vary by state, but most states require some sort of regular report to ensure that your LLC’s info is up-to-date in the state’s business database. Some states require reports each year, while others only require them biannually or not at all. No matter what your state requires, you’ll need to stay on top of it to keep your LLC in good standing.

Additional Resources for Starting a Pet Sitting Business

1) 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.

2) 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.

3) 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.

4) 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.

5) 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.