Should I Start an LLC for My Art Supply Store?

Starting a limited liability company (LLC) for your art 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 an art supply store, lawsuits can arise from things like unknowingly selling inadequate art supplies or clients getting injured within your store.

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

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

Do I Need an LLC for an Art Supply Store?

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

You should form 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 an Art Supply Store

By starting an LLC for your art 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.

Art supply stores will benefit from liability protection because of the risk of being sued for personal injuries to customers, libel, trademark infringement, data breaches, and workplace accidents.

Example 1: A local competitor of your art supply store has interpreted one of your recent marketing materials as libel and thus brought a lawsuit against you for the damage to their reputation. Due to the limited liability of LLCs, the plaintiff cannot pursue your personal assets in compensation for the damages they have suffered, only your business assets.

Example 2: Due to the fault of an employee in your art supply store, a customer is not warned that your bathroom is out of use, and thus slips on the wet floor and suffers a severe concussion. If this customer were to sue your business for the bodily injury they suffered, only your business’s assets could be to compensate the plaintiff, your personal assets would be safe.

Example 3: During the course of a painting masterclass run by your art supply store, a customer who has bought an expensive bundle of art supplies in order to take part, blames subpar instruction in this class for ruining their tools. Your LLC’s limited liability would ensure that any claims by this customer could only pursue your business’s assets for compensation.

Example 4: A competitor sues your business, claiming that you made defamatory statements against them in your recent advertising campaign.

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 an Art 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 an art 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

Art 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?

Yes, all LLCs are required to own business insurance. While the personal assets of LLC owners are protected by the inherent limited liability of this structure, the same cannot be said of the business’s assets.

If you wish your art supply store’s business assets to be protected, you must purchase business insurance.

Common Situations Business Insurance May Cover for an Art Supply Store

Example 1: One of your staff members accidentally bumps into a customer, causing them to fall into a stack of merchandise. General liability Insurance will likely cover the cost of the customer’s injuries.

Example 2: You sell a defective set of paints to a customer and the merchandise ruins a valuable commercial project they were working on. General liability Insurance will likely cover their claims against you if the customer can prove a loss of income.

Example 3: You want to open your store as part of a franchise rather than an independent entity. Having enough general liability insurance can help ensure your approval for the larger parent company.

Other Types of Coverage Art 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 art supply stores should obtain.

Commercial Property Insurance

Commercial property insurance covers not just the building you're located in, but also the merchandise stored within it. If a covered event such as inclement weather or vandalism damages either the structure or its contents, you can use commercial property insurance to recoup your losses. Inventory can be damaged easily in an art supply store, and depending on the cost of the products, it can be expensive to replace without proper insurance coverage.

Workers' Compensation Insurance

If you have employees working in your art supply store, workers' compensation insurance will cover them in case they're injured on the job. While an art supply store may not be as dangerous as many other businesses, your workers may be handling dangerous chemicals or tools throughout the day or stocking high shelves with heavy boxes.

Professional Liability Coverage

Professional liability insurance covers you in case you or your employees make a mistake on the job. For example, an employee mistakenly advises a customer that a certain product will not aggravate their skin condition, but it does. Professional liability insurance will help you fight the claim or settle the costs of the customer’s medical bills.

Commercial Umbrella Liability Insurance

This form of insurance offers extra protection in case of a particularly expensive liability claim. For example, if you decide to fight a lawsuit and the suit drags on for months, you'll need additional coverage to cover attorney and court fees.

Commercial liability insurance can also help you restore your reputation in the face of public scrutiny. This form of insurance is highly recommended if you sell supplies to professional artists.

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 Art Supply Store Insurance article for more info.

You can expect reasonably high start-up costs for an art supply store, as you will need to spend money on a number of things.

The total sum will include rent, supply costs, employee pay, business insurance, advertising, and registration of your company.

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

An art supply store will need to account for rent, inventory, payroll, marketing, insurance, and website maintenance (if selling products online).

Learn more about running an art supply store.

An art supply store sells art supplies at a markup based on customer demand and product availability.

Learn more about starting an art supply store.

Art supply stores sell art tools to customers. While some stores will focus on a specific art style such as painting or sculpting tools, many offer a variety of supplies.

An art supply store’s profits will depend on how many items it sells and the profit margin on each of them. More expensive supplies tend to have higher margins.

Learn more about starting an art supply store.