Should I Start an LLC for My Chimney Sweep Business?

Starting a limited liability company (LLC) for your chimney sweep business 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 chimney sweep business, lawsuits commonly occur as a result of employee-related injuries (e.g., contracting respiratory diseases as a result of inhaling smoke, needing dermatological treatment as a result of being exposed to high levels of creosote, etc.).

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

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

Do I Need an LLC for a Chimney Sweep Business?

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 Chimney Sweep Business

By starting an LLC for your chimney sweep business, 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.

Chimney sweep businesses will benefit from liability protection because home cleaning and service businesses face a variety of risks associated with visiting client property.

Example 1: You find out that one of your long-term employees has contracted a serious respiratory disease as a result of inhaling soot and smoke during work. As a result, you start considering whether you would have any personal liability if your employee’s condition deteriorates, but realize that your limited liability in law will shield your personal assets, regardless of whether a lawsuit arises.

Example 2: After being exposed to high levels of creosote, one of your workers asks you whether your LLC could pay for his dermatology treatments, given that his skin issues are a direct result of the job. If you were to refuse, you could not be personally sued for compensation, regardless of whether a legitimate claim could be brought against your company.

Example 3: Given how successful your first chimney sweep business has been, you decide to find a group of investors to finance your expansion. Since the terms of the contract are made between your LLC and the creditors — and you do not personally guarantee the loan — your personal assets will remain safe regardless of whether your business is unable to pay the lending parties back in the future.

Example 4: While servicing a client’s property, one of your employees damages their chimney. The client asks you to cover the repair costs.

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 Chimney Sweep Business

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 chimney sweep business 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

Chimney sweep businesses 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 trusted 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?

Even if most LLCs do not “need” business insurance from a legal point of view, it remains necessary if you want to protect your business’s assets (e.g., equipment, supplies, company vehicles, etc.). This is because an LLC’s inherent limited liability protects its owners’ assets only, not the business’s.

Common Situations Business Insurance May Cover for a Chimney Sweep Business

Example 1: While working at a client’s home, an employee damages a chimney. The client sues because that damage requires them to replace part of their roof. General liability insurance would cover your legal fees and any damages awarded in the lawsuit.

Example 2: You leave your cleaning equipment and ladder out while speaking with a client, and the client’s son trips over your gear and breaks his arm. The injury requires an emergency room visit and several follow-up appointments, leading the client to sue for repayment of his son’s medical bills. General liability insurance would cover these medical costs and your legal fees stemming from the lawsuit.

Example 3: Your marketing manager starts an advertising campaign with a new slogan. A competitor claims your new slogan resembles theirs and files a lawsuit. General liability insurance would cover your legal fees and any damages awarded to the claimant.

Example 4: As you consider franchising your business, you realize you need a bank loan to cover associated costs. As part of the loan terms, your bank requires you to carry at least $1 million in general liability insurance.

Other Types of Coverage Chimney Sweep Businesses 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 chimney sweeps should obtain:

Commercial Property Insurance

If you own the building from which you operate, you’re responsible for all business-related property housed there in the event of a fire, burglary, or natural disaster. Commercial property insurance would cover the cost of repairing or replacing your building, special equipment, and other business materials after an accident so you can recover quickly.

You can typically purchase commercial property insurance as part of a business owners policy (BOP).

Specialty Property Insurance Coverage Endorsement

Many commercial property insurance policies exclude — or limit coverage for — property you take off your business premises. With this endorsement, you can protect your business property while it’s in transit or at your client’s home. This endorsement also includes coverage for business interruptions and employee theft.

Commercial Auto Insurance

This profession requires travel to and from client sites, increasing your exposure to auto liability losses. Any vehicle you use primarily for business requires commercial auto insurance to protect the vehicle, driver, and others on the road in the event of an accident. Be sure to select a policy that covers not only accident-related vehicle repair costs and medical treatment for anyone injured but also sufficient protection for any special equipment you carry in your vehicles. Also, consider purchasing coverage higher than the state-mandated minimum coverage to safeguard your business from the unknown.

You can purchase commercial auto insurance as part of a business owner's policy (BOP) or as a standalone policy.

Workers’ Compensation Insurance

Because chimney sweepers work away from the office, they face many risks outside of their control. 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 or death benefits stemming from a work-related accident. Your policy also should cover your legal fees if an employee sues your business for further damages.

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 auto insurance.

Read our Business Insurance for Chimney Sweeps article for more info.

You should be able to start a chimney sweep business by spending anywhere between $27,000 and $87,000.

You will need to pay for a small workshop, cleaning equipment, a franchise (if applicable), as well as business insurance. If you plan to hire workers, you will also need to factor in the cost of labor.

Visit our Starting a Chimney Sweep Business guide to learn more about the costs of starting and maintaining this business.

There are very few ongoing costs involved with running a chimney sweep business. However, expenses do include the replacement of service materials, employee wages, and insurance.

Learn more about running a chimney sweep business.

Profit is made by servicing clients’ fireplaces and chimneys.

Learn more about starting a chimney sweep business.

Chimney sweep businesses are involved in the cleaning and sweeping of chimneys and fireplaces.

There is little cost involved with cleaning out chimneys; however, only a small number of people have the knowledge and resources to do so, which can make it an extremely profitable business.

Learn more about starting a chimney sweep business.