Should I Start an LLC for My Custom Prints Business?

Starting a limited liability company (LLC) for your custom prints 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 custom prints business, lawsuits can arise from several factors, including IP law violations (e.g., printing a design on a customer’s T-shirt that’s copyrighted or trademarked by another business or individual, etc.).

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

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

Do I Need an LLC for a Custom Prints 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 Custom Prints Business

By starting an LLC for your custom prints 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.

Custom prints businesses will benefit from liability protection because of the risk of being sued for product liability, personal injuries, and copyright infringement.

Example 1: A customer placed an order for bulk custom print shirts. You cannot meet the deadline, angering the customer, who decides to seek redress. If the customer sues, your LLC may be affected, but your personal assets will be free from the lawsuit.

Example 2: You print business cards for a customer. The customer returned them, claims that the custom prints you made on his business cards looked blurred, and demands you replace them. If he decides to sue, your LLC protects your assets and limits his lawsuit to your business only.

Example 3: You take a loan to expand your custom prints business. The due date for repayment comes, but you cannot meet up with the payment. If the loan company sues, your personal assets will not be affected due to your LLC status.

Example 4: An artist sues your business, claiming that you and a customer did not receive the proper permissions to use their artwork on your items.

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 Custom Prints 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 custom prints 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

Custom prints 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?

Yes, LLCs need insurance to protect them from business risks. Insuring your LLC ensures that the business’s and owner’s assets are protected. Business insurance will help safeguard custom print businesses from hazards such as property damages or legal issues.

Common Situations Business Insurance May Cover for a Custom Prints Business

Example 1: A customer develops a skin rash after wearing one of your T-shirts. General liability insurance would cover the customer’s medical bills or your legal costs in the event of a lawsuit.

Example 2: You print thousands of business cards for a customer, but they dislike the final product and demand compensation. General liability insurance would cover the cost of replacing the cards or your legal fees to fight the claim in court.

Example 3: When a customer visits your facility, he trips and falls over some broken asphalt in the parking lot. General liability insurance would cover the customer’s medical bills.

Example 4: Several insects find their way into a box you ship to a customer with a custom print order. When the customer opens the box, the insects escape and infest the customer’s home. General liability insurance would cover the associated extermination costs.

Other Types of Coverage Custom Prints 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 custom prints businesses should obtain.

Commercial Property Insurance

If you own the building in which you operate, commercial property insurance helps protect your business-related property from a variety of events, such as theft, vandalism, and extreme weather. It covers the cost of repairing the structure as well as repairing or replacing any equipment and products you store there.

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 or death benefits stemming from a work-related accident.

Product Liability Insurance

Product liability insurance protects your business against claims associated with faulty or defective products. If someone claims one of your custom prints insured them, for example, product liability insurance would cover your legal fees and any awarded damages stemming from a lawsuit.

Business Interruption Insurance

If your company suffers a significant accident, you may need to shut down for a few days, weeks or months. Business interruption insurance can help cover some of your lost revenue while you make repairs, ensuring your company doesn’t fail before you reopen.

Data Breach Insurance

If your company conducts most of its business online, you face the risk of a cyber attack. Data breach insurance covers damages resulting from a successful hack of your or your customers’ information.

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. This insurance also will cover costs associated with restoring your company’s reputation.

Home-Based Business Insurance

If you use any part of your home for your business, you may need home-based insurance to safeguard your equipment and space in your home devoted to your business. A typical homeowners insurance policy may not cover business-related items if you don’t disclose you use your home for business purposes.

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 Business Insurance article for more info.

Starting a custom prints business requires purchasing numerous pieces of equipment, such as a printer and dryer, costing less than $7,000. Alternatively, you can start small by using Web services such as Printful to print and ship your orders while you expand gradually.

Visit our How to Start a Custom Prints Business guide to learn more about the costs of starting and maintaining this business.

A custom prints business will need to purchase supplies. It also may need to rent a storefront and pay employees.

Learn more about running a custom prints business.

A custom prints business makes money by printing customized words, graphics, and patterns on various items.

Learn more about starting a custom prints business.

Many custom print businesses print customized words and graphics on a variety of items. These can include clothing, mugs, blankets, or even cakes. In addition, some custom print businesses focus on just one or two items, such as T-shirts or mugs.

The average profit margin for a custom prints business needs to be at least 30% to be sustainable.

Learn more about starting a custom prints business.