Securing financing is one of the first steps to starting your funeral home. And while important, it’s what happens after you’ve been approved for a loan that makes the difference. 

Here’s what you need to do.


Perform a Break-Even Analysis

Once you’re approved for a loan, conduct a break-even analysis. As the name implies, a break-even analysis weighs the costs of your business––including loan repayments––and measures how much revenue and time it will take to pay off your loan. If you’re working with an SBA loan, this will most likely take 5-25 years of monthly payments.


Create a Budget

Based on your loan amount, you’ll need to create a budget. This will help to ensure that you don’t overextend your finances during the initial stages of your business when revenue is difficult to predict. 

As you budget you’ll want to consider each of your fixed costs, that is regularly recurring expenses that won’t change from month to month. This might be things like rent, supplies, loan payments, payroll, depreciation of assets, taxes, and insurance.


Determine Your Business Structure

The business structure you choose will ultimately determine how you operate, how your taxes work, and how much of your personal assets are at risk. In most cases, you’ll have four options to choose from

  • Sole-Proprietorship: Easy to form, a sole-proprietorship does not produce a separate business entity. However, this option leaves you personally liable for the debts and obligations of your funeral home. 
  • Partnership: Made for two or more people owning a business together, a partnership can come in two forms. A limited partnership (LP) has one partner with unlimited liability while the others have limited liability. With LPs, the partner with unlimited liability will generally have more control over the business. With a limited liability partnership (LLP), all partners have limited liability.
  • Corporation: While corporations come in several forms, all of them become entities that are entirely separate from their owners. Offering the strongest protection from legal liability, corporations make profits, are taxed, and held legally liable separate from their owners.
  • LLC: In most cases, an LLC is an ideal structure for a funeral home. Marrying the benefits of corporation and partnership structures, an LLC protects your personal assets in the event of lawsuits or bankruptcy, and it allows profits and losses to get passed through to your income without corporate taxes. 

Register with the Government

For small funeral businesses, you most likely won’t need to register with the federal government apart from obtaining a federal tax ID, that is, your EIN. The bulk of your registration will be with your state agency. Depending on your state, you might be able to conduct this process online. You’ll need

  • Your business name
  • Your business location
  • Your ownership or management structure
  • Your registered agent information

For LLCs, you’ll also need to submit your articles of organization and LLC operating agreement.


Add to Your Team

As you’re building your team and your business model, you might consider having the help of death care financial experts on your side. 

At Johnson Consulting Group, our accounting team is comprised of financial experts that help funeral homes through every stage of their business lifecycle. For new businesses, our accountants can help you both secure funding and develop a financial strategy that helps you use these monies to optimal effect. 

Additionally, our team of death care consultants can help guide you through all other aspects of your business. Beyond financials, the JCG team has the death care-specific experience needed to help new funeral homes thrive.