Creating an equine LLC

Every horse owner knows that horses are more than a passion. They require constant feeding, attention, and grooming that can become very expensive. It can be much more than a labor of love, too, with activities such as shows, riding lessons, and breeding.

Every horse is indeed a business, and many of them are owned by more than one person. It may seem strange to incorporate your equine business, but it can be an good way to resolve disputes, settle taxes, and shield liabilities for everyone involved.

Why an LLC?

A limited liability corporation, or LLC, is a distinct legal entity from any of the partners who have shares in it. As its name implies, it shields all the partners from liability in the case of lawsuits or debts. This is one of the key advantages of an LLC.

Every LLC is created by filing with the Secretary of State of Georgia and the drafting of an operating agreement. This spells out the rights and responsibilities of all the partners in as much detail as is necessary. That process alone can be a great help for the business part of owning a horse.

When is an LLC right for horse owners?

Many horses are owned by more than one person in partnership. Every horse has expenses related to stabling, feeding, and general care. Many generate some income in the form of show purses, fees for rising lessons, or stud fees.

If your arrangement with your horse meets most or all of these items, you already have a business. The LLC, as a structure, is simply a way of making sure that all partners know their roles and how disputes will be managed. The liability protections are also very important, especially for any horse which is lent out for riding to the general public.

What are the potential problems?

The one significant cause for concern with an equine LLC is that it will be required to show a profit every seven years. That may not be possible, depending on how your partnership is arranged and what you and your partners do with your horse.

It is also very important to maintain careful records like any business related to all expenses and income for annual filings required under Georgia law. Making sure this is done can be a significant issue among people who are not used to running a business.

Consult with an expert

If you are considering forming an LLC around your horse, it is vital that you consult with an attorney who has experience in equine business formation. This is a very specialized area, and it is important that you have good representation.

An LLC might well be the right choice for you and your horse. It is worth considering for a lot of different reasons.

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