Insights and tips on how to protect your inn or bed & breakfast, giving you and your guests peace of mind.

Ward, Hayden
/ Categories: BLOG Articles

Should Your Bed & Breakfast Become an LLC?

Should my Inn become an LLC

The information contained herein is for general information purposes only. CBIZ Insurance Services, Inc. (“CBIZ”) does not provide legal, tax or accounting advice and does not make any warranties of any kind about the completeness or accuracy of this information.  Any action you take upon the information contained herein is strictly at your own risk.  It will be your responsibility to direct any specific questions you have regarding the formation of your business entity to your legal counsel and/or accountant. 

Selecting the right business structure for your Bed & Breakfast is important. As a small business, you may be trying to determine the right business framework for you — likely either a sole proprietorship or limited liability company (LLC). For many owners, minimizing risk is top of mind, and an LLC is a way to gain added protection in addition to innkeepers insurance. The ability to have extra safeguards for personal risks exposure is without a doubt a major highlight of becoming one.

There are many different factors that play a role in deciding whether or not to make your Bed & Breakfast an LLC. To help you determine the best structure for your small business, we will walk you through what an LLC is, who it benefits, and how to become one. Keep in mind that it is best to evaluate your financial situation and to speak with an advisor before moving forward with a decision.

What is an LLC?

According to Investopedia, “A Limited Liability Company (LLC) is a corporate structure in the United States whereby owners are not personally liable for the company’s debts or liabilities.” And LegalZoom simply states “Unlike a sole proprietor, where the owner remains responsible for the debts and liabilities of the business, in an LLC it’s the LLC that’s responsible for the business’s debts and liabilities. This means, in most cases, LLC members are protected from the creditors of the LLC and also from any lawsuits which may arise against the LLC.”

Note that LLCs are regulated by individual states rather than the country as a whole, so the process and rules will differ. Therefore, you will need to research the specifics of your state. 

Why is an LLC Beneficial to Bed & Breakfast Owners?

  • An LLC limits your personal liability and protects your assets. If you were to ever have a lawsuit filed against you, the only assets at stake would be those owned by the LLC; not your personal assets. Although innkeepers insurance would help you in the event that a claim is made by someone who was injured while staying at your property, LLCs provide assurance that only the LLC’s assets would be considered. If your business is not filed as an LLC, then your personal assets would be fair game. 
  • It enables you to easily separate your personal expenses from your business expenses. You can open bank accounts, enter contracts, hire employees, and obtain business licenses and permits under your LLC. By creating a separate bank account for your LLC, your personal expenses are not affected. This will also make it easier to claim your business expenses when taxes are due. 
  • It allows pass-through taxation and the ability to potentially reduce your taxes if you pay self-employment tax. By becoming an LLC, you acquire the benefit of having the income made from your inn “passed-through” to your individual income tax return. This can minimize the amount taken out of taxes. However, if you set up your LLC as a “C” or “S” corporation, you may be able to reduce your taxes if you pay self-employment. You will pay yourself as if you are an employee of your own company. 

Who Should Become an LLC?

Any Bed & Breakfast owner can benefit from becoming an LLC. Regardless if you own just one property or several inns throughout the U.S., there are several advantages to creating one. Keep in mind that there are costs to set up the LLC and possible ongoing costs once you establish an LLC. These will depend on the states in which you register. Overall, it’s best to ask for guidance from a financial planner and evaluate your financial situation to decide whether or not an LLC is the best decision for you. 

What Are the Steps to Become an LLC?

We’ve outlined the major steps that most companies take to become an LLC. As with any major decision about your business, you will want to work with your business advisor, such as an attorney, before you start the process. 

1. If you have an existing loan on your property, contact your lender to find out if they allow a title transfer. Look out for any additional requirements for allowing the transfer such as an increase in interest or an assumption fee charge.

2. Pick an available business nameUltimately you can choose whatever name you would like as long as it has not already been registered in your state and is appropriate. A good way to check the availability of a name for your business is to search on your Secretary of State’s webpage. 

3. Fill out the Articles of Organization which can be found on the Secretary of State website. This document will outline the basic details of your company. Think of it as a birth certificate for your LLC.

If you are struggling with filling out a portion of it, do a quick Google search of “How do I fill out the Articles of Organization for ‘insert state name’?”

4. Create an LLC Operating AgreementThis document outlines routine business processes, how company disputes are resolved, member duties, and more. Think of this as an action plan for your business. 

5. Obtain state-required permits and licenses and register your LLC with your state. Depending on the state in which you are filing, there may be a filing fee. 

6. Transfer your title to the LLC so you can ensure that the LLC has full ownership rather than relying solely on you. In order to do this, you must create a Quit Claim Deed. This will permit you to become the “Grantor” and the LLC as the “Grantee.”  Your County Clerk’s website will have instructions on how to file a Quit Claim Deed.

7. Create a separate bank account for your LLC and update your rental leases. Moving forward, everything should be deposited in your LLC’s bank account and state the LLC as the owner. 

Becoming an LLC doesn’t need to be overwhelming or take an inordinate amount of time, in fact, many owners turn to online sources like LegalZoom.

In What State Should I Register My LLC?

LLCs should be filed in the state where it is legally transacting business. If you are conducting business for your Bed & Breakfast in your home state, that’s where you would file. If you have properties in multiple states, you would need to form an LLC in your home state and then register the other properties (that are in other states) as foreign LLCs. 

Protect Your Assets and Property with Innkeepers Insurance

Creating an LLC for your Bed & Breakfast can be extremely beneficial to you as the owner. However, don’t forget to include innkeepers insurance to the mixture. Insuring your Bed & Breakfast through CBIZ Innkeepers Insurance can give you extra peace of mind. Rest easy at night by protecting your assets and your business. Speak with one of our CBIZ Innkeepers Insurance experts today!

This blog may contain scenarios that are provided as examples only. Coverage is subject to the terms, conditions and exclusions of the policy issued. The information provided is general in nature and may be affected by changes in law or the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information.

1469 Rate this article:
No rating

Leave a comment

This form collects your name, email, IP address and content so that we can keep track of the comments placed on the website. For more info check our Privacy Policy and Terms Of Use where you will get more info on where, how and why we store your data.
Add comment

Theme picker



885.945.5221 | innkeepers@cbiz.com 

700 W 47th Street, Suite 1100 |
Kansas City, MO 64112 

Monday - Friday | 8:30 a.m. - 5 p.m. (CST)


CBIZ Innkeepers Insurance, a division of CBIZ Insurance Services, Inc., is the largest insurer of innkeeper businesses in the United States. As part of an $850 million New York Stock Exchange traded company (CBZ), we developed a specific policy coverage to meet the needs for inns and bed & breakfasts, and the amenities offered by these businesses. Our policy is underwritten by an A.M. Best Rated A++ (Superior) company.

The CBIZ Innkeepers Insurance team knows insurance, specifically the risks and exposures related to beds & breakfasts. We won't confuse you with technical "insurance speak"  our representatives will explain your coverage in simple terms. With hands-on, personal customer service, we guarantee swift communication. As specialist in the industry, we leverage our knowledge and passion to ensure you and your inn are protected.





Association of Lodging Professionals Logo.


Select Registry Endorsement logo.