Should I Start an LLC for My Hiking Tour Business?

Starting a limited liability company (LLC) for your hiking tour business 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 hiking tour business, lawsuits can arise from things like a tour guide getting injured or from a customer demanding compensation after getting lost on your tour or suffering a bodily injury.

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

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

Do I Need an LLC for a Hiking Tour Business?

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

You should start 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 Hiking Tour Business

By starting an LLC for your hiking tour 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.

Hiking tour businesses will benefit from liability protection because of the risk of injury and bodily harm to clients as well as general business risks.

Example 1: A customer was injured on a hiking tour run by your business after an incompetent guide suggested taking a route that was far too difficult. This prompted the injured customer to sue your business for negligence, arguing that your instructors had not satisfied the duty of care they owed him. In the ensuing litigation, your personal assets are protected from being used to pay the plaintiff any damages they are awarded.

Example 2: Your business receives notice that it is being sued for misrepresentation after it made false statements about one of the hiking tours that induced a customer to purchase it. In the following lawsuit, the requirement to pay damages can only be imposed on your business’s assets.

Example 3: Your hiking tour business is sued for discrimination by a customer who alleges a member of staff refused them the opportunity to take part in a tour due to their religion. Limited liability would protect you from being held personally responsible for satisfying any damages the court awards the plaintiff.

Example 4: A client experiences a snake bite while on a hike. They decide to sue your business, claiming the company failed to adequately communicate the dangers in the area.

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 Hiking Tour 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 hiking tour 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

Hiking tour 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.

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.

Hiking tours, though a fun activity, can prove to be dangerous to participants and guides alike. Because of risks like injury and even property damage, purchasing business insurance is essential.

Common Situations Business Insurance May Cover for a Hiking Tour Business

Example 1: A client experiences a snake bite while on a hike after an instructor fails to adequately communicate the dangers in an area. General liability insurance will likely cover the cost of their medical bills.

Example 2: All of your professional equipment is ruined after a major storm occurs during a hike. General liability insurance will likely help you recover the costs of your equipment.

Example 3: When transporting guests to the trail, your commercial vehicle damages a welcome center structure. General liability insurance will likely help pay to restore the facility to its original condition.

Other Types of Coverage Hiking Tour Businesses 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 hiking tour businesses should obtain.

Commercial Property Insurance

If you use commercial space to receive hikers before they leave and welcome them when they return, you’ll need commercial property insurance to cover the structure in case of damage. This insurance also covers any equipment or merchandise in the building against natural disasters or theft.

Business Interruption Insurance

If you mainly conduct tours in an area that’s prone to flooding, earthquakes, erosion, or other natural phenomena that may result in canceled tours, business interruption insurance can help you cover your loss while you are unable to operate your business.

Workers' Compensation Insurance

No matter how experienced your trail guides are, they may injure themselves when they’re out for a hike. Whether it’s a sprained ankle or a broken leg, workers’ compensation will cover the cost of medical expenses for an on-the-job injury.

Professional Liability Insurance

Professional liability insurance protects your business and employees in the event that someone makes a mistake on the job. For example, if a trail guide misinforms a client regarding which plants are safe to touch, and this results in someone getting poison oak, professional liability insurance may cover any expenses that stem from negligence or employee error.

Commercial Umbrella Liability Insurance

Commercial umbrella insurance covers the costs of major liability claims. If a hiker has a fatal accident under your care, this insurance will take care of any legal costs that stem from the death. If the business has to take drastic measures to restore its reputation, commercial umbrella insurance will also cover the costs associated with positive PR for the company.

Commercial Auto Insurance

If you use a commercial vehicle to transport hikers to and from different trails, you’ll need commercial auto insurance to cover both the vehicle and any resulting injuries your clients may sustain.

Data Breach Insurance

If your clients book their hiking tours online, data breach insurance can help cover costs in case your website is hacked. This insurance is highly recommended for businesses that mainly serve tourists, as tourists are more likely to set up their tours prior to arriving in the general area.

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.

Read our Hiking Tour Insurance article for more info.

In order to launch your hiking tour business, you will need a minimum of $2,000. This price will cover the costs of designing your business’s website and marketing materials. That being said, this price assumes you intend to run your hiking tour business from home, if you intend to rent an office for your business, this will naturally require additional capital.

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

The ongoing expenses of running a hiking tour business include marketing, insurance, and maintenance of hiking equipment.

Learn more about running a hiking tour business.

Hiking tour businesses earn money by charging fees for guided hikes.

Learn more about starting a hiking tour business.

Hiking tours offer guided hikes, typically for groups. The outdoor adventure market, which includes hiking tour businesses, is growing in popularity and driving growth. Profits will depend on location, clientele (e.g., tourists, corporate retreats, etc.), and season.

Learn more about starting a hiking tour business.