Should I Start an LLC for My Pet Supply Store?

Starting a limited liability company (LLC) for your pet 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 pet supply store, lawsuits can arise from things like selling a customer expired dog food that causes their pet to contract an illness, or employees damaging a client’s furniture while delivering an animal.

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

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

Do I Need an LLC for a Pet 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 Pet Supply Store

By starting an LLC for your pet 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.

Pet supply stores will benefit from liability protection because of the risk of injuries to customers (and their pets), trademark infringement, and libel of other pet stores.

Example 1: You provide pet food and supplies to customers, but one of your products is found to be contaminated. As a result, many customers file lawsuits against your store for medical expenses and damages related to their pets’ illnesses. With limited liability protection, the financial burden of these lawsuits will be borne by your business instead of your personal savings or assets.

Example 2: You provide pet grooming services at your store, and one of your employees accidentally damages a customer’s furniture while delivering a cat to her home. The customer files a compensation lawsuit against you, claiming negligence or financial losses due to the damage. With liability protection in place, your business will be responsible for resolving this lawsuit and any resulting damages, protecting your personal assets from exposure.

Example 3: You store digital records of customer transactions and financial data on your computer. In the event that this information is leaked or hacked, you can rely on limited liability protection to limit any legal or financial losses to your business’s assets rather than your personal finances.

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 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 pet 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

Pet 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.

Pet supply stores require insurance to protect their businesses against the potential losses that could occur as a result of unforeseen accidents or incidents. Not only do pet supply stores need protection from fire, theft and vandalism, but they also need to be insured in case they are sued for liability or negligence.

Common Situations Business Insurance May Cover for a Pet Supply Store

Example 1: Ignoring the sign warning people not to pet the dogs behind your counter, a customer reaches over and receives a dog bite. If she decides to sue, general liability insurance would cover your legal fees and any damages awarded in a settlement.

Example 2: When a customer steps on a low shelf to reach dog food higher up, the shelf collapses, and she breaks an arm. She asks you to pay for her medical treatment. General liability insurance would cover the customer’s medical bills.

Example 3: When an employee forgets to deice your front entryway, a customer slips and decides to sue. General liability insurance would pay for your legal fees and any damages awarded in a settlement.

Other Types of Coverage Pet 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 pet supply stores should obtain:

Product Liability Insurance

While the products you sell generally help people and their pets, there’s always a chance a customer may file a lawsuit if they believe one of your products injured them. Product liability insurance would protect your business by covering your legal fees and any damages awarded in a settlement.

Commercial Property Insurance

You’ve made major investments in your inventory of pet supplies. If you own the building in which you operate, you’re responsible for all business-related property housed there in the event of a fire or natural disaster. Commercial property insurance would cover the cost of replacing your inventory after an accident so you can recover quickly.

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability benefits stemming from a work-related accident.

Commercial Umbrella Insurance

While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.

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, product liability insurance, and commercial property insurance.

Read our Business Insurance article for more info.

Opening a pet supply store can be costly due to the already existing competitors. You'll need capital to stock up on food, toys, and care products for all pets. You'll also need to budget for rent and utilities, which can easily cost about $2,700 upwards for a 2,000-square-foot shop.

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

Pet supply stores need to purchase food, toys, beds, and other items that pets need. In addition, they need to rent space and pay employees.

Learn more about running a pet supply store.

Pet supply stores make money by selling pet supplies and related services, such as grooming and medical care. Customers must make regular purchases to keep their pets in good health.

Learn more about starting a pet supply store.

Pet supply stores sell everything people need to care for their pets. These can include everything from dog toys to hamster wheels. Some pet stores offer other services as well, such as pet clinics, grooming services, and others.

The amount of profit a pet store can make depends heavily on the volume of goods and services it sells compared to its operating expenses.

Learn more about starting a pet supply store.