What are the costs to start and maintain a convenience store?

You can start a convenience store for around $50,000, the majority of which will go towards: Leasing a space Furnishing the interior of your convenience store Installing a point-of-sale system Purchasing fax machines and photocopiers Purchasing goods, snacks, and other products Visit our How to Start a Convenience Store guide to learn more about the costs of starting and maintaining this business.

Should I Start an LLC for My Convenience Store?

Starting a limited liability company (LLC) for your convenience 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 convenience store, lawsuits can arise from things like robberies, accruing business debt, and selling certain products without a license (e.g., liquor, tobacco, etc.).

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

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

Someone handing their credit card over to pay for items at a convenience store

Do I Need an LLC for a Convenience 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 Convenience Store

By starting an LLC for your convenience 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.

Convenience stores will benefit from liability protection because of the risk of product liability, property damage, workplace accidents, and financial data breaches.

Example 1: When one of your employees asks for a raise, you decline. Since you had promised to offer him a raise three months after his contract of employment commenced, he threatens to bring a breach of contract lawsuit against you. Regardless of the validity of the claim, the limited liability offered by an LLC classification will ensure that you cannot be held personally liable for compensating the claiming party.

Example 2: After struggling to bring in customers, a friend tells you about the benefits of digital marketing and offers to front your LLC $2,000 for PPC ads. Since the agreement was made between your company and your friend (and not between your friend and yourself), you will not be personally liable for paying the loan back if your business fails to do so.

Example 3: When an unhappy customer claims that you’ve been raising your prices, your employee lets them know that this is not true and calmly asks them to exit your convenience store. After being shoved, your employee falls and ends up getting a serious head wound, which requires immediate medical attention. If he was to bring a breach of duty and/or medical damages claim against your LLC, your personal assets would remain protected by law as a result of your limited liability.

Example 4: A customer walks across a section of the floor that is still wet from mopping, slips, and injures her ankle. She asks for you to pay her medical fees.

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 Convenience 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 convenience 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

Convenience 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 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?

All LLCs need business insurance in order to protect their assets. This is because limited liability protects the LLC owners’ assets only.

For a business such as a convenience store, business assets may include convenience store supplies, point-of-sale systems, delivery vans, and more.

Common Situations Business Insurance May Cover for a Convenience Store

Example 1: A customer walks in shortly after the store’s floor has been mopped, and they slip and fall hard on the floor. General liability insurance would probably cover legal costs and injuries resulting from the fall.

Example 2: When making deliveries, a supplier knocks over a full supply shelf and injures their leg. General liability insurance would likely cover the vendor’s injuries.

Example 3: An advertised special is canceled, and a customer files a false advertising lawsuit because they couldn’t get the deal. General liability insurance would likely help pay associated legal costs.

Other Types of Coverage Convenience 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 convenience stores should obtain:

Commercial Property Insurance

Convenience stores should have commercial property insurance for the physical property they own. This may include a parking lot, a building, coolers, equipment, and inventory.

Commercial property insurance can be purchased through business owner’s policies (BOPs).

Workers’ Compensation Insurance

Assuming your convenience store has employees, the store needs workers’ compensation insurance. This insurance covers work-related illnesses and injuries, and it’s generally required by state law if your business employs workers.

Product Liability Insurance

Businesses can sometimes be held responsible for damage or injuries caused by the products they sell. Product liability insurance protects against risks that come with selling products.

When selecting product liability insurance, make sure it covers the full range of products that your convenience store sells. Coverage for packaged foods and beverages, prepared foods and beverages, alcohol, tobacco, and non-food items should all be included if your store carries those products.

Product liability insurance can be purchased by itself or through a package policy.

Business Interruption Insurance

Recovering from a disaster can take time, and bills often still need to be paid. Business interruption insurance may provide supplemental revenue during a post-disaster recovery period so that your convenience store can continue to pay its due bills.

Business interruption insurance can be purchased through BOPs.

Crime Insurance

Commercial property insurance usually protects against burglaries, but it often excludes theft by employees. Crime insurance provides coverage for employee theft and similar perils.

Crime insurance can be purchased by itself or through a package policy.

Liquor Liability Insurance

If your convenience store sells alcohol, it might need liquor liability insurance. This coverage shields businesses from liability suits associated with alcohol-related incidents that their customers are involved in. Whether your store is required to carry it depends on what type of alcohol is sold and the laws in your state.

Liquor liability insurance can be purchased by itself or through a package 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, commercial property insurance, and workers’ compensation insurance.

Read our Business Insurance for Convenience Stores article for more info.

You can start a convenience store for around $50,000, the majority of which will go towards:

Leasing a space
Furnishing the interior of your convenience store
Installing a point-of-sale system
Purchasing fax machines and photocopiers
Purchasing goods, snacks, and other products

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

Payroll, rent, inventory, and insurance are some of the main operating expenses of a convenience store.

Learn more about running a convenience store.

Convenience stores make money by selling products to customers at a higher markup price than larger stores like supermarkets.

Learn more about starting a convenience store.

With the right location, a convenience store could be a very profitable business. Convenience stores typically mark up prices about 10% to 20% more than supermarkets and other large retail stores. While they don’t carry as wide a variety of items as a supermarket, they can attract a lot of business from customers who want to come in and make a quick purchase.

Some convenience stores also sell items like sandwiches or pizza to add more revenue. They are also often connected to gas stations, which could be a good option depending on the location.

Learn more about starting a convenience store.