How big is the risk?
Dog professions are often referred to as high risk. Simply put, dogs are animals and animals bite.
It’s enough to keep any dog pro awake at night, but here’s the good news: a few simple steps now and you’ll have the peace of mind to fully enjoy your work with dogs. And yes, if you’ve been in business for a while—even years—you can make the changes now and be protected. Protecting yourself is easy and there is just no good reason not to.
Your 3 Safety Nets
Think of the three things you can do to protect your liability as three layers of safety nets you rig between yourself and any legal trouble. You’ll want your nets arranged in descending order of strength: contracts, insurance, and limited liability company status.
Contracts
A good contract with every client is your first safety net. A strong contract includes two things: Space for any key information about the dog and the care you are to provide, and effective waiver language that clearly spells out what you are and are not responsible for.
The key information might include things like medical issues, behavioral issues, and the specific services you will perform. Have yourself and the client sign off on anything that could be a potential issue in the future. For example food allergies, behavioral problems, or service details. It would be a shame to find out too late that a dog in your care was allergic to chicken or was fearful of and likely to snap at children, or that a client was expecting you to take their dog for two walks a day when you thought you were to provide one. Worse yet would be a client that claimed he’d told you about the allergy or behavior problem or the two-walk expectation when you know different. A good contract, then, is a legal record of what you did and did not know.
The waiver portion of the contract is language that spells out the areas of responsibility held by you and by your client. Typically this section has specific legal language that protects you in the event of accidental damage to the dog or any persons.
To obtain a good contract with legal waiver language, you can ask friendly colleagues if they are willing to share theirs, draft one yourself, or purchase a contract from a professional organization that works specifically with dog pros.
However you obtain one, it is always a good idea to have a local lawyer go through the contract to make sure it is as tight and effective as possible for your specific use. And this approach is far less expensive than having a lawyer draft the paperwork from scratch.
A few tips:
• Use a contract with every client.
• Use a fresh contract when old clients come back for additional services.
• Make sure both you and the client sign and date the contract.
• Keep your contracts filed in a safe place where you can easily locate them.
Insurance
Sometimes we make mistakes despite our best intentions. Even without mistakes we live in a litigious society and people don’t always behave reasonably. So in addition to contracts all dog pros should have a strong insurance policy. Insurance is your second safety net, should the first one fail. Luckily, and perhaps surprisingly, dog pro insurance is easy to obtain and remarkably low-cost.
To access a group liability insurance policy you need only belong to a professional organization such as the APDT. A million dollars in liability coverage costs roughly $250-$500 per year depending on the services you provide and whether you have a training facility. These are stunningly low numbers considering the perception of our industry as high risk, especially given the protection and peace of mind afforded.
A note of caution on insurance: Not all policies are created equal. A key point of difference is whether the policy covers you after contract—whether you are protected from lawsuits after you are no longer working actively with a client. Many don’t, so make a point of asking before you settle on a company.
Limited Liability Companies
Becoming a limited liability company is your third safety net. The most common way to be in business—and the default mode, too—is to be a sole proprietor or partnership, which means the business is owned by one person. If you don’t actively decide to be something else, you’re automatically a sole proprietor. A partnership is the same thing, but with more than one person.
The chief advantage of being a sole proprietor or partnership is simplicity. As with any business you’ll need a business license and a fictitious business name, and should carry insurance. You’ll have to keep track of your financial records and pay taxes, but that’s it. There’s no other paperwork and it is the simplest form of business for taxes: what the business makes, you make, what the business loses, you report lost. Pretty simple.
But the simplicity of doing business as a sole proprietor or partnership has its downsides, too. The law and the IRS see a sole proprietor and her business as the same legal entity. That’s why tax and other paperwork are so minimal. But being the same legal entity also means that when the business is in trouble, you are, too. If there’s a lawsuit it’s not just your business assets at risk—it’s anything you own personally—property, trust fund, bank account, etc. When selling widgets this risk is minimal. Working with animals with teeth is a little dicier.
To avoid this risk many businesses organize themselves as corporations. Unlike sole proprietorships or partnerships, corporations are considered separate legal entities from their owners. If the business encounters trouble it stays with the business. A protective brick wall, if you will, has been raised between owners and their corporations. This wall affords liability protection and potential tax breaks. Unfortunately corporations come with a major disadvantage for most dog businesses: they are complicated to run, required, as they are, to have a board of directors that meets and files minutes at least once per year, and to issue stock to stock holders. This is a lot more work and hassle than most dog trainers are interested in. And the catch is that if you don’t follow through on these matters properly your protective brick wall crumbles. You can’t just file a corporation application—you have to act like a corporation to be treated like one.
Fortunately, ___ years ago the limited liability company, or LLC, was designed to help small and medium-sized businesses enjoy the advantages of sole proprietorships and corporations without the disadvantages of either. An LLC delivers the simplicity and the liability protection in one package.
LLCs are simple to form and can be comprised of just one person or of many. Each state has its own application form and fees. The application form is typically one to two pages. Fees vary widely from state to state—from $40-$500. Some states have yearly renewal fees, some do not. Most yearly renewal fees are low. (California residents have the added burden of an $800 per year state tax.) By default, LLCs are taxed the same way as a sole proprietorship, but you can opt to be taxed as a corporation. Consult a tax accountant to find the right taxation scheme for you. Speaking to a tax accountant is best done before becoming an LLC, as part of determining whether it’s the best option for you and to make sure you have the information you need to act properly as an LLC. LLCs have far fewer requirements than a corporation, but they must be followed for the safety net to work.
Given the fees involved in your state (or the tax in CA), should you become an LLC? Only you can answer that, but here are some things to consider:
• What is your risk level? Are you pet sitting cats in their home or teaching puppy classes or walking dogs off leash or working with aggressive dogs?
• What do you stand to lose? Are you just out of college with little to your name, ready to launch your first career? Or are you married with a home and retirement investments, pursuing your dream job?
• What is your risk comfort level? Are you the trainer who believes the lawsuit will never find you, of all people? Or are you the dog walker who worries each night before falling into a fretful sleep that tomorrow will be the day?
Put your answers to each of these questions in one hand, and the fees involved in your state in the other, and judge which feels heaviest. If you decide to pursue LLC status, search for your state’s secretary of state website—you’ll almost certainly find a downloadable application there.
What to do if you’ve been operating without safety nets
Don’t agonize—you can remedy the situation now. But don’t delay. Setting aside the time is a bother, the fees are irksome, and facing the paperwork can be stressful. But the greater professionalism and peace of mind are well worth it.
