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Our goal is to educate and empower pet business owners to build their brand and make a bigger impact.

Shelley Beyer

Legal Formalities Starting a Pet Sitting Business
Posted on: January 26, 2021
Legal Formalities Starting a Pet Sitting Business

Ready to start a pet sitting business? Like every journey, you shouldn’t leave without a road map. When it comes to the business industry, this is doubly true. Legal formalities are too critical to risk missing. You can get in major trouble with the law if you don’t observe each one of these steps. 

So, before you start taking on clients, make sure you’ve checked off all of these boxes!

Administrative Legal Formalities

The tedious backend things that have to be done. Thankfully, they don’t take up too much time. It mostly covers describing your company in terms the government understands legally.

Choose Your Business Name

Naming your business is the best part! Have you got a name in mind already? If you do, great! If you don’t, then you should start brainstorming now. A great business name should be snappy, easy to remember, not too personal, with the right level of specificity. You don’t want to be too vague or too pointed, or you run the risk of excluding some clients.  Have a lot of fun with this part, and be sure that you love the final choice.  Once you have chosen a name, don’t forget to Google search the name to make sure no one else is using it. Then check your state registry to be sure nobody else has claimed the name. If you need ideas, try a business name generator

Register Your Business Name

You are required to register your business with your state. You may need to register with the federal government if you plan on using trademarks or filing as tax-exempt.  Remember, you need to register with all states you’re doing business in. Filing fees vary from state to state, ranging from $100-$200.  

Choose Your Business Structure

Only four structure choices exist and are divided into two categories. You have informal (Sole Proprietorship and Partnership) and formal (Limited Liability Company (LLC), and Corporation). The first style will not provide you with protection. For example, if something goes wrong, they directly sue you instead of your business. They could take your house, your car, and all your assets. We don’t recommend this, but it is the cheaper option. If it’s just you, then it’s a Sole Proprietorship. If there are two or more business owners, it would be a General Partnership. 

As for the formal category, they provide more protection of your personal assets. LLC and Corporations cost more to maintain annually, but they are worth the investment. When you establish an LLC or a Corporation, the business is its own entity, with separate assets. You don’t risk your personal belongings this way. However, a corporate structure will not apply to your business if you do not have shareholders, so it’s no surprise an LLC is the most popular choice for pet sitting businesses!

 

Operating Legal Formalities

The nuts and bolts of your business. It would be best if you had all of these in place to open your doors safely. Do your research and make the choices that work the best for your business. This step may take the longest, but it’s also the most meaningful. 

Apply for City Licenses

Applying for city licenses is an important step you don’t want to skip. When you get a city license, that is the city permitting you to do business. The fees will vary depending on where you live.  Check the requirements for each city you provide services in. Not every city will need a license, but many cities require it and penalize your business if you aren’t in compliance.

Create an Operating Agreement

Even if you’re a sole proprietor, it doesn’t hurt to have an operating agreement. It states the expectations of operations. You’ll need one before you can open a business bank account. Most of the time, this is a straightforward process. If you have partners, you’ll need to add some additional provisions regarding dividing profits and losses, how voting works, and what happens when someone wants to buy out, sell out, or passes away. An operating agreement is necessary if you have an LLC, or else your protections may not be entirely legal. 

Set up Insurance

Ah. Insurance. Getting your business insured is a very critical step.  Several insurance companies specialize in pet businesses, such as Pet Sitter Associates or Kennel Pro. Be sure you get insurance through one of them. Pet sitting is an unpredictable business, and accidents happen. Having coverage like this will keep everyone protected, whether you, your employee, or your clients. Research several options and make sure you get the coverage you need. If you work with larger animals, ensure that the plan you get is applicable. Pay close attention to the additions of Vet Expenses and Care/Custody and Control. Some will cover Workman’s Comp and offer to bond too.

Financial Legal Formalities

These are the easiest of the steps, but get them done early. These financial steps really keep things simple and easy for you in the complicated world of taxes. 

 

Get Federal and State Tax ID Numbers

Guess what! Getting the State and Federal ID’s is the easiest step! You can apply online for a Federal Tax ID Number, though it is also known as the Employer Identification Number (EIN), and the IRS will issue it for free. One will be required for you to open a business bank account. If you have chosen a sole proprietorship, you could file under your personal taxes, but that is risky, and we do not recommend it. Once you hire employees, you will need an EIN, so it is better to get one now. 

Your state may or may not require a Business Identification Number (BIN) until you hire employees, but it is a great idea to double-check, so you know. 

Legal formalities starting a pet sitting business

Open a Business Bank Account

While this step is not mandatory, we highly recommend it. It’s a lot easier to manage business expenses in a separate account. If the IRS ever questions if you have a real business or a hobby business, then the presence of a business account can help prove that. If you get sued, you can’t protect your funds in the bank accounts if they aren’t separate. Don’t commingle your funds- it gets messy. Research banks until you find one that has a good business bank account. Some banks have extra fees for cash handling, excess transactions, or minimum balances. You don’t want to get blindsided by any of those. 

These Legal Formalities Set You up for Success

Nobody enjoys legal formalities. It’s one big headache trying to dot the i’s and cross the t’s. It’s less than fun but essential for a successful business. However, do note that we are not legal experts here at PetBrainy. So, when it comes to legal matters, you will need to consult with a lawyer. You can hire a company, like LegalZoom, to help you deal with all the delicate things.

The PetBrainy Circle goes deep into this topic. We walk you through every step. In particular, we have done a lot of research regarding pet sitting insurance! Join us today! We are a community of pet sitting business members dedicated to helping each other succeed through our shared experience. Sign up below! 

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