Should I Start an LLC for My Pet Fish Store?

Starting a limited liability company (LLC) for your pet fish 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 pet fish store, lawsuits can arise from things like delays in a customer’s order due to an employee’s error or a customer purchasing an ill fish that your store claimed was healthy.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your pet fish store seem more credible.

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

Do I Need an LLC for a Pet Fish 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 Pet Fish Store

By starting an LLC for your pet fish 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.

Pet fish stores will benefit from liability protection because of the risk of lawsuits for personal injuries to customers and employees, and trademark infringement.

Example 1: You are working on a large order for a new customer, and one of your employees makes an error that results in the order being delayed. The customer becomes frustrated and files a compensation lawsuit against you, claiming negligence or poor quality services. With limited liability protection, only your business will be liable for these financial losses, leaving your personal assets intact if your business is found at fault.

Example 2: You are managing a new shipment of fish from your supplier when a container arrives damaged, killing some of your pets. The supplier claims negligence on behalf of your store and files a lawsuit against you for damages. With liability protection in place, only your business will be liable for these financial losses, leaving your personal assets untouched.

Example 3: An employee who accesses confidential financial information from a client’s account shares it with a competitor. The client sues your business for damages related to the data breach, putting your company’s finances at risk. With limited liability protection in place, you can rest assured that your personal savings and other assets will be protected from any legal action.

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 Pet Fish 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 pet fish 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

Pet fish 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?

Pet fish stores need insurance to protect themselves from any potential risks or losses. Insurance can help them recover from financial losses due to theft, vandalism, property damage, and other things that are beyond their control.

Common Situations Business Insurance May Cover for a Pet Fish Store

Example 1: An employee is helping a customer find a few plants for their fish tank when they accidentally spill some water on the floor. As the customer heads to the cashier, they slip and fall, breaking their wrist and sustaining a concussion. Your general liability insurance policy will likely cover their medical costs and your legal fees in any potential lawsuit.

Example 2: You’re setting up a new display when one of the delivery drivers accidentally trips over an extension cord and crashes into it. The accident leaves the driver with a very serious head injury. General liability insurance will likely pay for the driver’s medical bills and replace the damaged merchandise as well.

Example 3: After opening a second retail location, you’ve decided to revamp your logo and start running new advertisements in the local papers and on TV. A few weeks after the campaign launches, you receive a call from your lawyer stating that a competitor is threatening to sue your business because your logo infringes on their copyright. General liability insurance will likely cover your legal fees and any subsequent settlement payouts.

Other Types of Coverage Pet Fish 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 pet fish stores should obtain:

Workers’ Compensation Insurance

Workers’ compensation coverage is designed to help pay for medical expenses, disability benefits, and even death benefits if your employees are injured in a work-related accident. Most states require businesses with employees to carry this coverage.

Commercial Property Insurance

Commercial property insurance will help cover the cost of replacing or repairing owned real estate, equipment, or inventory that is damaged in a covered event such as a fire, storm, or act of vandalism.

Business Interruption Insurance

If you ever have to shut down regular business operations following a fire or other incident, you may find it difficult to keep your business afloat due to the loss of income. Business interruption insurance will help make up for some of this loss. This coverage is typically available as part of a business owner’s policy.

Data Breach Insurance

It’s a common practice nowadays for many retail businesses to offer a rewards program for their loyal customers. When your customers sign up, they often provide sensitive private information like phone numbers, personal addresses, and even credit card information. If your business falls victim to a cyberattack, data breach insurance can help to cover any related costs from a lawsuit.

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, workers’ compensation insurance, and commercial property insurance.

Read our Pet Fish Store Insurance article for more info.

The cost of starting this business varies on the type of fish you stock. For a small storefront, you will need between $50,000 to $100,000. This cost can easily increase if you intend to stock up on exotic and saltwater species. You will also need to set aside two years of capital while you build your customer base.

Visit our How to Start a Pet Fish Store guide to learn more about the costs of starting and maintaining this business.

Water and electricity will be your primary ongoing costs. In addition, you will have to account for shipping fees, which can be substantial if you are shipping large items like fish tanks. Inventory, rent, and salaries round out the typical ongoing costs.

Learn more about running a pet fish store.

To make the greatest profit, pet fish stores will sell fish and related equipment and services to commercial establishments. These services can include tank cleaning, water testing, and water treatment.

Learn more about starting a pet fish store.

Pet fish store owners sell fish both to individual customers and commercial customers that have large aquariums in various business establishments, such as a doctor’s or dentist’s office. In addition, pet fish store owners sell lots of accessories such as decorations and tank cleaners.

While profits will depend on location and target audience, a successful pet fish store has the potential to make a six-figure profit.

Learn more about starting a pet fish store.