Do I Need an LLC for My Sauna Installation Business?

Starting a limited liability company (LLC) for your sauna installation 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 sauna installation business, lawsuits can arise from things like employees injuring themselves while carrying equipment on your premises or property damage caused by an employee during a sauna installation.

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

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

Should I Start an LLC for My Sauna Installation 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 Sauna Installation Business

By starting an LLC for your sauna installation 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.

Sauna installation businesses will benefit from liability protection because of the risk of being sued for product liability, property damage, and personal injuries.

Example 1: A customer orders a sauna to be installed in their home. After the installation, the customer experiences skin irritation and then decides to sue the business for damages. If found liable, limited liability protection would ensure that the owner's personal assets are safeguarded from any compensation associated with the lawsuit.

Example 2: An employee is severely injured while handling sauna installation equipment on company property. The employee then proceeds to file a lawsuit against the business, seeking compensation. If the business is found to be liable, limited liability protection will ensure that only the business’s assets will be used to cover any compensation associated with the lawsuit.

Example 3: A customer’s home is burned down in a fire that was caused by an improperly installed sauna. Following this, the customer decides to sue the business for damages. If found liable, limited liability protection will help to protect the owner’s personal assets from any fees associated with the lawsuit.

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 Sauna Installation 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 sauna installation 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

Sauna installation 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.

A business that installs saunas can benefit from insurance by having coverage for any unexpected damages or injuries that may occur during the installation process.

Common Situations Business Insurance May Cover For a Sauna Installation Business

Example 1: Your employee is bringing some tools into a client's yard for an installation job when he runs into the client. He knocks her to the ground, and she breaks her arm. She decides to sue your company for damages. Your general liability insurance policy will pay for your legal defense costs, including hiring a lawyer.

Example 2: A competing sauna installation business has sued your company for libel. You do not believe that there is any validity to their accusations, but you also understand that you need an attorney to protect your interests. The general liability insurance policy you have will cover legal defense costs against libel accusations.

Example 3: A client is visiting your place of business to discuss sauna installation options. On his way into the restroom, he slips on wet tiling and breaks his tailbone. He asks that you pay for his medical treatment. Your general liability insurance policy will likely pay for the treatment if you file a claim.

Other Types of Coverage Sauna Installation 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 sauna installation businesses should obtain:

Professional Liability Insurance

You are serious about your installation work and strive to do a good job every time. However, even with your best effort, there is still a chance that a client could sue you for a mistake you made—or they think you made. Professional liability insurance will pay for your legal defense costs in such a situation. It will pay for your attorney and for a settlement if you need to settle the lawsuit.

Workers’ Compensation Insurance

You need your employees in good health to help you install saunas for your clients. If they get injured, you want to know that they can get the medical care they need for a fast recovery. Workers’ compensation insurance will pay for the treatment of work-related injuries. It will also help cover lost wages for employees who cannot work while injured. Your state likely requires you to have workers’ comp coverage if you have employees.

Commercial Auto Insurance

You should cover the vehicle you use for your installation work with a commercial auto policy. Your policy will pay for repairs or replacement of your vehicle if you are in an accident. It will also pay for medical treatment for the occupants of the vehicle who get injured. If you or your employees are responsible for the accident, the policy will also pay for repairs for the other vehicle and medical care for its occupants.

Commercial Umbrella Insurance

You have a general liability insurance policy to protect your business from most general liabilities. You can also get an umbrella policy to add another layer of protection. If you exceed the limits of your general liability insurance policy—like if you lose a big lawsuit—the umbrella policy will kick in and start paying the remaining damages.

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, commercial auto insurance, and workers' compensation insurance.

Read our Business Insurance article for more info.

Starting a sauna company may cost up to $250,000. This cost includes initial franchise fees, costs for sauna kits, lighting, accessories, and potentially additional costs for a storefront or display in a big-box store. Marketing and transportation expenses should also be considered.

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

Ongoing expenses of running a sauna installation business include the cost of inventory, maintenance, overhead, marketing, and insurance.

Learn more about running a sauna installation business.

Sauna installation businesses make money by installing saunas and selling sauna equipment.

Learn more about starting a sauna installation business.

The sauna market has shown strong and consistent growth in the past ten years. This market is valued at $427 million and is expected to reach $495 million by 2026.

The average profit margin for a sauna installation business needs to be at least 20% to 25% to be sustainable.

Learn more about starting a sauna installation business.