Should I Start an LLC for My Furniture Upcycling Business?

Starting a limited liability company (LLC) for your furniture upcycling 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 furniture upcycling business, lawsuits can arise from things like not paying your employees on time or insurance disputes over lost or damaged property.

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

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

Do I Need an LLC for a Furniture Upcycling Business?

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 a Furniture Upcycling Business

By starting an LLC for your furniture upcycling 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.

Furniture upcycling businesses will benefit from liability protection because of many risks, including commercial property, product safety risks, and personal injury, to name a few.

Example 1: A customer's newly upcycled furniture piece collapses and causes property damage. The customer proceeds to sue the business for damages. Irrespective of the court’s ruling, the owner’s personal assets will not be affected.

Example 2: A customer complains about the quality of the upcycled furniture and requests a refund, leading to a dispute. Following this, the customer sues the business. The owner’s personal assets will not be used for fees or compensation associated with the lawsuit.

Example 3: A customer is injured while using a newly upcycled furniture piece due to a faulty installation. Following this, the customer sues the business for damages. In this scenario, liability protection will safeguard the owner’s personal assets.

Example 4: While loading a piece of furniture onto your truck, you and an employee lose your footing, causing the piece to fall on a neighboring vehicle. The vehicle owner asks you to pay for 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 a Furniture Upcycling 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 furniture upcycling 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

Furniture upcycling 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 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?

Insurance is necessary for all businesses to protect their valuable assets from potential liabilities. Limited liability protection shields the personal assets of LLC owners, while insurance safeguards the business's assets and protects against financial losses due to a lawsuit or unexpected event.

Common Situations Business Insurance May Cover for a Furniture Upcycling Business

Example 1: One of your employees is hauling a load of furniture on a hand truck to put into the car of a customer. He loses control of the load, and it rolls rapidly downhill to strike another customer’s luxury sedan. Your general liability insurance policy is designed to cover damage to customer property.

Example 2: The new logo you made for your business represents your company perfectly, so you begin to use it on all your marketing materials. Unfortunately, another company feels your logo is too similar to theirs and files a lawsuit against your business. The general liability insurance coverage you have will pay for your legal defense, as well as for any payouts or settlements if they are necessary to resolve the case.

Example 3: A visitor to your business is checking out your renovation process for furniture. An employee accidentally drops one end of a heavy sofa on the visitor’s foot. He sustains several broken bones that require medical care. He demands that your business pays for his medical treatment since the accident happened in your place of business. Your general liability insurance would likely cover this cost.

Other Types of Coverage Furniture Upcycling 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 furniture upcycling businesses should obtain:

Commercial Property Insurance

You put a lot of money into acquiring your tools, equipment, supplies, and the various pieces of furniture you are upcycling. If you were to lose all of these things, such as in a fire, they would be expensive to replace. But with commercial property insurance, you do not have to cover the costs all on your own. You can file a claim with your insurer to get funds for replacements so you can quickly get back to business.

Product Liability Insurance

The furniture that you upcycle and sell to customers could put you at risk of certain liabilities. For example, if a customer gets hurt while using a piece of furniture you sold and then files a lawsuit against your company, you could face expensive legal bills. To avoid needing to pay for your own legal costs out of pocket, it can be quite helpful to have a product liability insurance policy to protect your business. If you have product liability insurance, your policy will pay for your legal costs, including any potential settlements.

Commercial Auto Insurance

You will likely have a truck or other vehicle to pick up and transport furniture. Most states require businesses to carry commercial auto insurance policies if they have vehicles they use primarily for business. But there are more benefits than just meeting the legal requirements of your state. Your commercial auto policy will pay for property damage and medical treatment in the event of an auto accident.

Workers’ Compensation Insurance

If you have employees at your upcycling business, you need workers’ compensation insurance to protect both them and your business. It protects your employees by covering the cost of medical treatment for work-related injuries and by helping to pay for lost wages while they recover from those injuries. It protects your business by ensuring that you meet the likely legal mandate of your state that employers carry workers’ comp.

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 Furniture Upcycling Business Insurance article for more info.

A furniture upcycling business can be opened for as little as $2,000, including the cost of hiring someone to create a website, advertising, and purchasing and refurbishing old furniture. This estimate assumes that the business is starting from home and the business items can be stored there.

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

Insurance, rent, payroll, and raw materials will all vary depending on the volume of furniture you process and sell. Inventory will vary depending on how you obtain the furniture, and upcycling materials will vary to meet the inventory’s needs.

Additional ongoing expenses will depend on how you sell your product and could include website costs, shipping expenses, marketing, and sales commissions.

Learn more about running a furniture upcycling business.

Profitability depends on what you purchase your inventory for and how much you are able to sell it to customers. Inventory costs and sales prices will depend on your market and how interested consumers are in your product.

Learn more about starting a furniture upcycling business.

Furniture upcycling businesses take old, unused furniture and repurpose it for customers and clients.

The average profit margin for a furniture upcycling business will vary pretty significantly and depends on not only the number of pieces you sell but also the cost of raw goods and your overhead.

Learn more about starting a furniture upcycling business.