Should I Start an LLC for My Business Plan Writing Service?

Starting a limited liability company (LLC) for your business plan writing service can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For a business plan writing service, lawsuits can arise from things like withholding employee wages, missing the deadline for a client’s business plan, and false promises regarding the success rate of your business plans.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your business plan writing service seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

person helping an entrepreneur write a business plan

Do I Need an LLC for a Business Plan Writing Service?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should form an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for a Business Plan Writing Service

By starting an LLC for your business plan writing service, 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.

Business plan writing services will benefit from liability protection because, in addition to general business liability, business plan writing services face the risk of professional liability for the services they provide to clients. Other risks include copyright and trademark infringement.

Example 1: An employee at your business makes a false promise to a client that the plans produced by your business plan writing service have a very high success rate in securing funding for startups. When the client is unable to do so, despite following your plan, they decide to sue your business for fraud, arguing they were intentionally misled. In this instance, any liability to pay the plaintiff damages is limited in its entirety to the assets of your business.

Example 2: Your business signs an agreement with a client to produce a business plan for them by a stipulated date. However, after failing to deliver this plan by the agreed date, the client filed a lawsuit for breach of contract. In the ensuing litigation, your personal assets are precluded from being seized by the court in order to satisfy any business requirement to pay damages.

Example 3: After you catch an employee of your business plan writing service stealing, you decide to fire him without paying the last month of his salary. This prompts him to sue your business for withholding his wages. Limited liability would protect you from being held personally liable to satisfy any business obligation to compensate the plaintiff.

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 Business Plan Writing Service

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 business plan writing service 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

Business plan writing services 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.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a professional LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets.

Insurance provides protection for the assets of your business plan writing service by offsetting the risk posed by the myriad of liabilities it faces to an insurance agency. It also offers the added benefit of making your service appear far more credible in the eyes of potential customers.

Common Situations Business Insurance May Cover for a Business Plan Writing Service

Example 1: While visiting your office, a client slips on the way to the restroom, breaks a wrist, and decides to sue your business. General liability insurance would cover your legal defense costs and any required settlement.

Example 2: During a visit to a client’s business, you trip and spill coffee on his high-end computer. He asks you to replace his damaged equipment. General liability insurance would cover the cost of purchasing a new computer for your client.

Example 3: A local competitor files a lawsuit against your company, claiming you libeled his business. While you disagree with the claim, you want to hire an attorney to defend your business. General liability insurance would pay for your legal defense.

Other Types of Coverage Business Plan Writing Services Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all business plan writing services should obtain.

Professional Liability Insurance

While you strive to write the best business plans you can for your clients, there’s always a chance someone might claim your professional services caused them harm. If a client sues your business based on a negligence claim, professional liability insurance would cover your legal fees and any required settlement.

Commercial Property Insurance

You made a major investment in the hardware and software you use to meet your clients’ needs. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property.

Workers’ Compensation Insurance

If you have any employees, most states will require you to carry workers’ compensation insurance for both part-time and full-time workers. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover, but also any disability or death benefits stemming from a work-related accident.

Commercial Umbrella Insurance

While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and damages that exceed your primary policy.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance and professional liability insurance.

Read our Business Insurance article for more info.

Only minimal expenses are associated with starting a business plan writing service. This is because the only true necessities to be able to get started are a computer, internet access, and a website.

While a place to meet clients is important, this doesn’t mean you must spend money renting an office. Instead, it is much more affordable to take advantage of coffee shops and coworking spaces.

Visit our How to Start a Business Plan Writing Service guide to learn more about the costs of starting and maintaining this business.

The ongoing expenses of a business plan writing service include rent, utilities, office supplies, internet service, marketing, and client management systems.

Learn more about running a business plan writing service.

A business plan writing service makes money by creating and selling business plans.

Learn more about starting a business plan writing service.

As the name suggests, a business plan writing service helps businesses create and implement business plans. Many business plan writing services also offer business consulting services.

The average profit margin for a business plan writing service is usually high because ongoing expenses for this type of business are low.

Learn more about starting a business plan writing service.