Should I Start an LLC for My Estate Sale Company?

Starting a limited liability company (LLC) for your estate sale company 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 estate sale company, lawsuits can arise from things like not following due process and negligence (e.g., one of your estate agents fails to communicate obvious issues with a property during its sale).

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

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

interior decor and ceramic mugs at an estate sale

Do I Need an LLC for an Estate Sale Company?

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

You should start 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 Estate Sale Company

By starting an LLC for your estate sale company, 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.

Estate sale companies will benefit from liability protection because of the risk of lawsuits for property damage, personal injuries, copyright infringement, and libel.

Example 1: While moving boxes from a client’s home to a company truck, an employee loses control of the dolly and crashes it, causing items in the boxes to break. The client asks you to cover the resulting damages. Limited liability protects your personal assets as the owner, so they could not be used to pay for the damage.

Example 2: A customer purchases a large wardrobe, and an employee helps carry it to their vehicle. The wardrobe ends up falling, causing damage to the vehicle while loading, and the customer blames your employee, demanding the business pay for the damage. Your personal assets as the owner could not be taken to pay for this since limited liability as an LLC protects them.

Example 3: A competitor believes you to have slandered them in your latest advertisement and is trying to sue your business. If the court rules against you, your personal assets could not be taken in the settlement since limited liability protects them as an LLC.

Example 4: While moving boxes from a client’s home to a company truck, an employee loses control of the dolly and crashes it, causing items in the boxes to break. The client asks to you cover the resulting damages.

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 Estate Sale Company

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 estate sale company 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

Estate sale companies 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 dependable 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.

Estate sale companies need insurance because of the risk involved in handling other people’s belongings. Should any damage be done, insurance can help pay for the cost of the damage or to replace the items.

Common Situations Business Insurance May Cover for an Estate Sale Company

Example 1: While moving boxes from a client’s home to a company truck, an employee loses control of the dolly, and it hits the client’s car. General liability insurance will cover your client’s vehicle repair costs.

Example 2: An employee accidentally collides with a client in your office hallway, causing her to fall and break a wrist. The client decides to sue. General liability insurance would pay for your legal fees and any damages awarded in a settlement.

Example 3: Following your interview with a local news outlet, in which you answered a question about other local estate sale companies, a competitor sues you for slander. Your general liability insurance would cover your legal fees and any damages awarded in a settlement.

Other Types of Coverage Estate Sale Companies 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 estate sale companies should obtain.

Commercial Auto Insurance

Every vehicle you drive for business purposes requires commercial auto coverage. If you use personal vehicles for work duties, your personal car insurance won’t pay for damages to your car or medical treatment for anyone injured in a work-related accident. Commercial auto insurance protects all vehicles you use on the job in the event of an accident.

Professional Liability Insurance

While you strive to help your clients earn maximum value from their estates, there’s still a chance one of them could find fault with your advice or services and decide to sue. Professional liability insurance would protect you in this situation by covering your legal fees as well as any damages awarded in a settlement.

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 benefits stemming from a work-related accident.

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.

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, commercial auto insurance, and commercial property insurance.

Read our Estate Sale Company Insurance article for more info.

Estate sale companies can start with under $10,000. It could take a while for your sales commissions to catch up with your startup costs. Starting with part-time employees and advertising can help you profit on your first sale. There are also licensing and permit requirements, which will vary on where you’re doing business.

Visit our How to Start an Estate Sale Company guide to learn more about the costs of starting and maintaining this business.

Payroll expenses are the largest ongoing cost for estate sale companies. Other expenses may include insurance, licensing and permits, and vehicle maintenance.

Learn more about running an estate sale company.

Estate sale companies make money based on a percentage of gross sales, usually 25% to 50%.

Learn more about starting an estate sale company.

Estate sale companies, otherwise known as estate liquidation or tag sale companies, find buyers for all of the items owned by a home or business. Estate sales usually take several days and are designed to sell all of an estate’s assets relatively quickly.

An estate sale company’s profits depend on how many sales it conducts, how many items it sells, the price of those items, and its overhead costs.

Learn more about starting an estate sale company.