Should I Start an LLC for My Candy Store?

Starting a limited liability company (LLC) for your candy 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 candy store, lawsuits can arise from things like mislabelling a candy that contains peanuts as allergen-free and a customer breaking their arm after tripping over a stack of boxes in your lobby.

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

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

Do I Need an LLC for a Candy 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 a Candy Store

By starting an LLC for your candy 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.

Candy stores will benefit from liability protection because food and beverage businesses, including candy stores, face a variety of risks associated with guest and employee safety while on the business premises, as well as copyright and trademark infringement liability.

Example 1: A small batch of candies labeled as allergy friendly accidentally have peanuts mixed in, leading to many customers attempting to sue you. Your LLC status gives you limited liability, protecting your personal assets should you have to pay for compensation.

Example 2: While picking up their order, a customer injures themselves by tripping over the furniture in your lobby and they demand you pay for their medical bill. Being an LLC, limited liability ensures your personal assets can not be used to pay for the bill.

Example 3: When making batches of your candy, a fire breaks out in the kitchen and spreads to a neighboring store front. The business is now suing you for property damage. Since your candy store is an LLC, the limited liability status means that only the store’s assets can be used to pay the cost, not your own personal assets.

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 Candy 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 candy 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

Candy 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 limited liability protection from being an LLC protects your personal assets, not your business assets.

In case of unexpected accidents or damages, insurance can help pay to replace or repair your business’ assets such as machinery or property.

Common Situations Business Insurance May Cover for a Candy Store

Example 1: An excited child sticks his hand far into a candy dispenser, where it becomes stuck. Extracting his hand causes him injuries that require medical care. His parents determine that your business is responsible for the injuries and file a lawsuit against your company. The general liability insurance policy that you carry will pay for your legal costs. It will also pay for any payouts or settlements if you settle the case out of court.

Example 2: One of your customers is not paying attention to the wet floor sign placed by an employee. The customer tries to round the corner of an aisle too quickly and slips and falls. Her injuries include a broken elbow and a concussion. She demands that your business pay for her injuries. Your general liability insurance will likely help to pay for the costs of her medical treatment.

Example 3: Your candy store and another competing candy store are engaging in marketing campaigns to attract business. Your competitor has determined that your current marketing campaign is too direct in its criticism and hires an attorney to file a lawsuit. The general liability insurance you have will pay for your legal costs in relation to slander and libel. It will also pay for the cost of settling out of court if necessary.

Other Types of Coverage Candy 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 candy stores should obtain.

Product Liability Insurance

The candy and other goods you sell are intended to bring happiness to the customer, but there is always the possibility that a customer will decide your product caused him or her injury. If this happens and the customer files a lawsuit against your business, you will need to defend yourself legally. A product liability insurance policy will pay for the costs of your defense, including the cost of payments or settlements if you wind up settling the issue out of court.

Commercial Property Insurance

In the event of a fire or other disaster, most or all of your candy and other inventory could be destroyed. Replacing so much inventory would put a significant financial burden on your business, but a commercial property insurance policy can help cover the costs and allow you to get back to selling candy.

Workers' Compensation Insurance

In most cases, if you have employees, your state will require you to carry workers’ compensation insurance. There are many benefits to workers’ comp insurance that go far beyond meeting your legal requirements. A workers’ comp policy will pay for the medical treatment necessary to treat work-related injuries sustained by your employees. If they are injured on the job, workers’ comp will kick in and pay for treatment as well as help cover lost wages while they are unable to work.

Business Interruption Insurance

If you have a company vehicle that is used primarily for business, that vehicle needs to be covered by a commercial auto insurance policy. The coverage is likely required by your state for you or your employees to be able to drive the vehicle. In the event of an accident, the policy will help cover the costs of repair or replacement of the vehicle. If you or your employees are responsible for the accident, the policy will pay for repairs to the other vehicles involved and for the medical treatment of any injured parties.

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 and commercial property insurance.

Some confectioners have a separate facility for making their tasty treats, while others house everything in one location. The location of your storefront is critical to the success of your business.

The majority of costs after picking a location and obtaining equipment is ingredients and wrappings which can be bought in bulk.

Visit our How to Open a Candy Store guide to learn more about the costs of starting and maintaining this business.

Ongoing expenses for candy stores will include the cost of replacing inventory, rent, utilities, labor costs, and insurance.

Learn more about running a candy store.

Candy stores make a profit through the sale of candy to customers that visit their business location. Some candy stores also find success in selling their products online.

Learn more about starting a candy store.

Average profits for candy stores may vary depending on location and business model; however, with such high candy consumption levels by Americans on a yearly basis, there is great earning potential for a candy store.

Learn more about starting a candy store.