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Should You Start an LLC for Your Wedding Business?

LLCs protect your business and your peace of mind. But what is an LLC, exactly—and how do you know if it’s right for your wedding business? We’re breaking down the pros, cons, and step-by-step setup so you can make the smart call for your future.

What is an LLC? 

A Limited Liability Company or an LLC is a business structure that combines elements of a sole proprietorship, a partnership and a corporation. It’s a go-to for many small businesses because it’s relatively simple to establish and offers flexibility in both management and taxation. Some of the key features of an LLC include: 

1. Limited liability protection: An LLC helps keep your personal and business finances separate, meaning your personal assets are often protected. For example, if your business runs into debt or gets sued, your personal stuff—like your car, house, or savings—is usually safe.
2. Flexible taxation: You can choose how you want to be taxed. Most LLCs “pass through” profits to the owners, which means you report earnings on your personal tax return instead of paying separate business taxes. But you can also pick other options if it helps you save.
3. Operational flexibility: LLCs don’t need a bunch of paperwork or a formal setup like a big corporation. You don’t need a board or annual shareholder meetings—you can run it your way, whether you’re solo or have a team.
4. Ease of formation: LLCs are relatively easy and inexpensive to form. It mostly involves filing some paperwork with your state and paying a fee, but the rules can vary depending on where you live.
5. Legal separation: Your LLC is its own “person” in the eyes of the law. That means your business can have its own bank account, sign contracts, and be held responsible—without tying everything back to you personally.

How LLCs compare to sole proprietorships and corporations

Not sure if an LLC is the best option for your biz? We partnered up with Leah Weinberg, attorney and founder of Weinberg Legal, to cover the main differences between each business type. 

Sole proprietorships

Now that you know what an LLC is, let’s dive into the world of sole proprietorships. According to Leah, “with a sole proprietorship, there is no separate entity that is legally the owner of the business.” It is essentially you as an individual, while an LLC separates you from your business. This is the typical model for freelancers who choose not to create an LLC. 

Corporations

Corporations are often better suited to larger businesses and involve a lot more structure than LLCs. They’re particularly ideal for businesses that are seeking external investment or hoping to elect a board of directors. You can choose to set up a C corporation or an S corporation, with the main difference being in how they are taxed. 

• C corporations are often subject to double taxation. This is because the corporation pays taxes on its profits at a flat rate of 21%, while shareholders also pay taxes on the profits they make from the corporation. 
• S corporations are similar to LLCS in that they are a pass-through entity. They generally don’t pay federal income taxes because their income, losses, credits and deductions are essentially “passed through” to the owners of the business.

Some people might feel a little conflicted about which route they should take. If you start out as an LLC and want to convert to another business structure, the rules differ slightly depending on what state you are registered in. 

While it’s possible to change structures, Leah says she “can’t think of many situations where an LLC would need to be converted into a different entity type.” So, if you’re considering an LLC, know that it can grow with your business without needing a restructure. 

The pros and cons of an LLC

There’s gonna be cons to every situation, right? Setting up an LLC is great for small businesses, but we aren’t about to sell you a dream that isn’t realistic. Let’s look into the pros and cons of setting up an LLC to help you make an informed decision. 

Pros

There are a lot of pros to operating as an LLC. According to Leah, the biggest benefit is “the protection it offers to your personal assets.” But that’s not all! Other pros include: 

• You’re not personally liable for the business’s debts or obligations.
• It’s quick and relatively easy to set up.
• You have flexibility in managing the business.
• It adds credibility and builds trust with clients, suppliers, and investors.
• No ownership limits—you can add members freely, including individuals, corporations, or other LLCs. You are also welcome to hire employees and independent contractors, as well as bring in partners and investors to the business.

Pro Tip: While you have lots of freedom to hire employees and contractors, Leah reminds us to always document these relationships with a contract. 

Cons

Let’s dive a little deeper. Is there any reason why you shouldn’t operate as an LLC? Consider these points: 

• LLC members often pay self-employment taxes on the business’s net income.
• There are upfront costs (formation fees) and ongoing expenses (annual renewal fees).
• If you hope to eventually sell your business, LLCs might have limited appeal for large-scale investors compared to corporations.
• If your business operates in multiple states, you’ll need to register as a foreign LLC in each one, which adds fees and compliance requirements.
• There’s a bit of paperwork involved, such as drafting an operating agreement and filing annual reports.

Pro Tip: Be sure to check what requirements there are in your state. Leah says, “In some states, it’s not as simple as just paying a fee and setting up an entity.” In New York, for example, there’s a publication requirement where you have to announce the formation of your LLC. 

The costs associated with starting and operating an LLC 

There are a few costs involved in setting up and maintaining an LLC. But, hey, if it offers you some protection, it might be worth it in the long run. 

Starting an LLC

The first thing you should do when forming an LLC, according to Leah, is to chat with an accountant and attorney to make sure it’s the right choice for you. As well as offering some tips, they can also guide you through the process. If you are considering starting an LLC, be prepared to pay for: 

• Registration fees: $50–$500.
• Registered agent services (optional): $50–$300 per year (or free if you do it yourself).
• Operating agreement: Free if self-prepared; $50–$500 if you hire help.
• EIN: Free from the IRS, but some services charge $50–$500 to assist.
• Publication requirements (in some states): $50–$2,000.
• Some states, like New York, have some publication requirements. This means you have to send a notice of your LLC formation to local newspapers. This can cost from $50 to $2,000, depending on publication rates. 

Operating an LLC 

Some states require LLCs to pay an annual fee or franchise tax to maintain good standing. As we mentioned, this mostly depends on where in the US you are located. Once you have set up your LLC, be mindful that you will also have to pay these fees: 

• Annual fees or franchise taxes: Up to $800 annually.
• Annual report fees: $20–$200 per filing.
• Licenses and permits: Up to $500 depending on location and industry.
• Self-employment taxes, state taxes, and federal taxes.
• Business insurance: $500–$2,000 annually, depending on coverage.

How to set up an LLC for your wedding business

Ready to take the plunge? Here’s how to get started:

1. Pick a name: Your LLC’s name must include “LLC” and avoid restricted terms like insurance, bank or corporation.
2. Designate a registered agent: This person or service receives official documents for your business. You can be your own agent or hire a professional.
3. File a certificate of organization: This registers your LLC with the state. Fees vary from $50 to $500 depending on where you’re located.
4. Create an operating agreement: Outline member responsibilities, profit-sharing, and other key details.
5. Get an EIN (Employer Identification Number): You’ll need this for hiring employees or opening a business bank account.
6. Stay compliant: Follow your state’s requirements, like annual reports and permits.
7. Open a business bank account: Keeping personal and business finances separate is crucial for liability protection.

Making the final call on setting up an LLC

Creating an LLC is a big step, but it can protect your business and set you up for success. By understanding the ins and outs, you can decide whether it’s the right choice for your business, budget and peace of mind. 

For more information about setting up your business, make sure to check out our guide: How to Make Your Wedding Business Legit.