How to Start Your Horse Business the Right Way

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 By Kristina Vaughn (Legit Ledgers, LLC.)

When you finally decide to take the plunge and start your very own horse-based business, figuring out the first steps to take can be daunting. The good news is that it doesn’t have to be! Here’s a cheat sheet with our top suggestions to help get your business started the right way. 

Step One: Start Your Brand New LLC!

You may be wondering why you need an LLC at all. The goal here is to provide legal separation between your personal life and business life in order to provide a layer of protection. Having an LLC in place to “take ownership” of your business activities is one of the best ways to protect your personal assets from any unpleasant legal situations concerning your business. 

Step Two: Obtain an EIN for tax reporting.

If you have a single-member LLC, obtaining an EIN (simply put – a tax ID number for your business) isn’t always required, but it is highly recommended. This enables you to add another layer of separation between personal and business activities and allows you to start business accounts such as checking, savings, credit cards, and loans in the name and tax ID number of your business. 

Step Three: Start a Business Checking account under your LLC name and EIN

Keeping your personal and business monetary transactions completely separate is critical to ensuring your LLC protection will hold up in court if there is ever any litigation brought against your business. Simply having an LLC will not protect you if you cannot show monetary separation between your personal life and your business activities. 

Step Four: Start Keeping Bookkeeping Records

I’ve listed this as step four, but even if you have started business activities and do not have an LLC, EIN, or dedicated bank account started yet, this is something you need to start IMMEDIATELY! 

If you can’t afford to hire a bookkeeper at first, that’s ok! In addition to following the guidelines above, you can get started keeping great records to make tax time for you and your tax pro a breeze in several ways. 

If you don’t have a business checking account yet, start an Excel Sheet, Google Sheet, Numbers Sheet, or a good old fashioned notebook to keep track of all your business expenses, income, assets, and loans. Be sure to include the date of each transaction, a detailed description, and the relevant vendor/client.

Be sure to ALWAYS ALWAYS ALWAYS keep your receipts and backup documentation describing all of these transactions. This will be extremely important to have if you ever get audited by the IRS. Bank and Credit Card statements are NOT a valid form of backup documentation. 

Make sure to list out all of your assets. This includes horses that generate profit for your business. Some hard and fast rules are that if the horse generates profit through income producing activities such as lease, lessons, trail rides, breeding, etc. then chances are good that it should be categorized as a fixed asset and depreciated. If they are horses intended for sale, then they are more than likely classified as inventory. Always be sure to consult your tax professional on this topic. 

If you have too many bookkeeping items/transactions to keep track of in some type of sheet, and you can afford to buy some accounting software then I highly recommend doing so. 

I use QuickBooks Online for many of my own clients and highly recommend using this or something similar. Follow this link for 30% off your first 6 months of QuickBooks Online if you decide this is the right option for you. 

Step Four: Hire a Bookkeeping Professional or Learn How to DIY Bookkeeping

If you choose to start using an accounting software to keep track of your business’s bookkeeping, you should either learn how to use this system properly or hire an expert. 

Legit Ledgers now offers a DIY Beginner Bookkeeping for Horse Businesses membership. This course and membership provides basic QuickBooks Online account setup instructions and beginner-level transaction entry. Members can also write in and join the monthly webinars for a chance to have their bookkeeping questions answered. 

If you have a service-based horse business and you’d like to join this program and learn how to use QBO for your horse business, just follow the link here to learn more!

If you’re like many horse business owners and can’t find the time to do any of these bookkeeping tasks yourself, schedule a consultation with me and we can determine if Legit Ledgers is the right fit for you! Or visit our Website to learn more!

Happy Trails!
Kristina Vaughn

About the Author
Kristina Vaughn is the owner of Legit Ledgers LLC (bookkeeping for the equine professional) and proud horse mom of five! From experience, she knows just how busy horse businesses keep their owners and does everything in her power to make the bookkeeping a breeze for her clients.
You can visit Legit Ledgers’ website or book a consultation via the links provided in the article. Kristina can also be reached via email at kristina.vaughn@legitledgersllc.com.