Do I Need an LLC for My Home Health Care Business? | TRUiC

Summary

LLC Benefits for a Home Health Care Business

By starting an LLC for your home health care business, you can:

LLC Benefits for a Home Health Care Business

By starting an LLC for your home health care business, 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.

Home health care businesses will benefit from liability protection because of the risk of bodily injury, property damage, medical payments, and legal defense and judgment, to name a few.

Example: A caregiver leaves their bag at the top of the stairs, and a client trips over it while trying to go downstairs. The client sustains multiple injuries that require medical attention.

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 Home Health Care Business

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 home health care business 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

Home health care businesses 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.

Do I Need an LLC for My Home Health Care Business? | TRUiC
Photo Credit: howtostartanllc.com

Is Running an HOA Home Business Allowed? | Clark Simson Miller

Are you allowed to run a business from your home in an HOA? Click here to learn what you need to know about an HOA home business! …

Read more here
Is Running an HOA Home Business Allowed? | Clark Simson Miller

Government advice on home moving during the coronavirus (COVID ...

This guidance applies to people moving into homes in England, whether as owner-occupiers, private or social renters. …

Read more here
Government advice on home moving during the coronavirus (COVID ...

5 Reasons to Open a Home Baking Business | BakeCalc

If you’re not sure whether starting a home baking business is the right thing for you, it’s important to think about just why you should consider doing it. …

Read more here
5 Reasons to Open a Home Baking Business | BakeCalc

25 Ideas for How to Start a Small Business at Home - Shopify

Take advantage of remote working and the power of technology to learn how to start a small business at home! Read out step-by-step complete guide. …

Read more here
25 Ideas for How to Start a Small Business at Home - Shopify

Does Your Home-Based Business Need Business Insurance?

If you're one of the growing number of entrepreneurs with a home-based business, you may have pondered getting business insurance. But it's not just a case of whether or not to get …

Read more here
Does Your Home-Based Business Need Business Insurance?