Should I Start an LLC for My Home Health Medical Supply Store?

Starting a limited liability company (LLC) for your home health medical supply store can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For a home health medical supply store, lawsuits can arise from things like falsely claiming that a product is FDA-approved or from a customer getting ill after purchasing equipment that hasn’t been properly sterilized.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your home health medical supply store seem more credible

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

A lady showing a customer a health care product

Do I Need an LLC for a Home Health Medical Supply Store?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should start an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for a Home Health Medical Supply Store

By starting an LLC for your home health medical supply store, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Home health medical supply stores will benefit from liability protection because of the risk of being sued for personal injuries to customers, damage to customers’ property, and trademark infringement.

Example 1: After your home health medical supply store mistakenly charged a customer more for its ordered items than the agreed-upon price, your business received notice of a lawsuit for breach of contract. Limited liability would preclude against the possibility of your personal assets (such as your house or savings) being used to pay any damages owed to the customer.

Example 2: An employee at your home health medical supply store hastily sterilized some of your store’s equipment, which led to a client becoming seriously ill as a consequence. This prompted the customer to sue your business for negligence on the basis that it had not met the duty of care it owed him. In this instance, your personal assets would be shielded from any requirement imposed on your business to pay the plaintiff damages.

Example 3: It was claimed by an employee at your home health medical supply store that one of the medical devices it sells had been approved by the FDA, despite this being false. After the device broke and injured the customer, he realized the true nature of the product and sued your business for fraud. In the following lawsuit, you cannot be held personally responsible for any damages imposed on your business.

Example 4: A customer sues your business, claiming that you sold them defective medical equipment that caused serious injury.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for a Home Health Medical Supply Store

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if a home health medical supply store owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Home health medical supply stores rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a professional LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets. Insurance is particularly important for home health medical supply businesses due to the sheer value of the assets they own.

Common Situations Business Insurance May Cover for a Home Health Medical Supply Store

Example 1: A potential customer has stopped by to learn more about the variety of vegan health supplements you offer. When he makes his way to the restroom, he slips on a wet floor, breaking his tailbone and fracturing his wrist. He requires ambulance transport and demands that your business pays for his medical costs. General liability insurance should cover the medical expenses.

Example 2: Your business operates in a very competitive market, and a rival claims that you stole your logo design from them. Their image is copyrighted, and you know that you’ll need legal representation. Your general liability insurance will likely work to cover your legal defense costs and any damages that may be awarded in a lawsuit.

Example 3: An employee is helping a customer load some bulk items into their car using a roller cart. As they head out of the back door of your store, the employee loses control of the cart, sending it smashing into your customer’s luxury vehicle. General liability insurance will likely pay for her vehicle repairs and cover the cost of the damaged merchandise.

Other Types of Coverage Home Health Medical Supply Stores Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all home health medical supply stores should obtain.

Product Liability Insurance

Product liability insurance is designed to protect your company if a customer or client claims that one of your products caused them injury. While your team works hard to avoid mistakes, if your customer sues, product liability insurance will cover your legal fees and pay out any damages that may be awarded.

Workers’ Compensation Insurance

If you have any part-time or full-time employees, your state most likely requires that you carry workers’ compensation coverage. This essential insurance policy not only protects your business but also helps to pay for medical treatment and lost wages if your employees are injured while performing job-related duties or fall ill following a workplace accident.

Commercial Auto Insurance

If you use a company or personal vehicle to complete business duties, you will need to invest in commercial auto insurance. This comprehensive coverage will pay for damages to your car and medical costs in the event of a traffic accident. If you or an employee are found responsible for the accident, this coverage will also extend to repairs and medical costs for anyone in the other vehicle.

Commercial Umbrella Insurance

General liability insurance will protect your business from most claims against it. However, there may come a time when your primary policy limits are exhausted. For example, a big lawsuit could exceed your primary coverage and leave you responsible for the remaining damages. If this happens, commercial umbrella insurance will kick in to cover the remaining legal costs and prevent you from paying out-of-pocket.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance, product liability insurance, workers’ compensation insurance, and commercial property insurance.

Read our Business Insurance article for more info.

You can expect to require up to $70,000 in order to get your home health medical supply store started. Smaller-scale operations will cost far less than this figure, though, with the largest component of this sum being billing software, which can be outsourced for $60–$250 per month.

Visit our How to Start a Home Health Medical Supply Store guide to learn more about the costs of starting and maintaining this business.

Ongoing expenses include marketing, rent and overhead, inventory, payroll, insurance and legal costs, and accounting.

Learn more about running a home health medical supply store.

A home health medical supply store makes money by selling durable medical equipment.

Learn more about starting a home health medical supply store.

A home health medical supply store, also known as a durable medical equipment business, sells and distributes health care equipment for use in people’s homes. These businesses can sell items online, in a brick-and-mortar store, or both.

This market offers significant potential for growth and profit, depending on the store’s reach and provided products.

Learn more about starting a home health medical supply store.