Should I Start an LLC for My Garage Door Business?
Starting a limited liability company (LLC) for your garage door 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 garage door business, lawsuits can arise from things like an employee accidentally damaging a customer’s property while installing or repairing a garage door or personal injuries as a result of negligent installations.
LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your garage door business seem more credible.
Recommended: Use Northwest to form an LLC for $29 (plus state fees).
Do I Need an LLC for a Garage Door 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 Garage Door Installation and Repair Business
By starting an LLC for your garage door installation and repair 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.
Garage door installation and repair businesses will benefit from liability protection because of the risk of being sued for libel, trademark infringement, and personal injuries.
Example 1: An employee of your garage door business accidentally damages a customer's car while working on it, resulting in costly repairs. In the event of a lawsuit, your personal assets will not be affected if your business is found liable.
Example 2: A customer's garage door falls off its tracks and injures the customer while being used. Following this, they proceed to sue your business for damages and compensation. In this scenario, liability protection will ensure that your personal assets are safeguarded.
Example 3: A customer's garage door fails to open due to a faulty installation, causing the customer to be late for work and leading to a lawsuit. Should the court find your business liable, your personal assets will remain unaffected.
Example 4: A tension spring releases after installation and severely damages the customer’s car. The customer sues you, claiming that you did not properly install the garage door.
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 Garage Door Installation and Repair 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 garage door installation and repair 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
Garage door installation and repair 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.
How to Form an LLC
Forming an LLC is easy. There are two options for forming your LLC:
- You can hire a professional 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
- Alabama LLC
- Alaska LLC
- Arizona LLC
- Arkansas LLC
- California LLC
- Colorado LLC
- Connecticut LLC
- Delaware LLC
- Florida LLC
- Georgia LLC
- Hawaii LLC
- Idaho LLC
- Illinois LLC
- Indiana LLC
- Iowa LLC
- Kansas LLC
- Kentucky LLC
- Louisiana LLC
- Maine LLC
- Maryland LLC
- Massachusetts LLC
- Michigan LLC
- Minnesota LLC
- Mississippi LLC
- Missouri LLC
- Montana LLC
- Nebraska LLC
- Nevada LLC
- New Hampshire LLC
- New Jersey LLC
- New Mexico LLC
- New York LLC
- North Carolina LLC
- North Dakota LLC
- Ohio LLC
- Oklahoma LLC
- Oregon LLC
- Pennsylvania LLC
- Rhode Island LLC
- South Carolina LLC
- South Dakota LLC
- Tennessee LLC
- Texas LLC
- Utah LLC
- Vermont LLC
- Virginia LLC
- Washington LLC
- Washington D.C. LLC
- West Virginia LLC
- Wisconsin LLC
- Wyoming LLC
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?
LLCs in the garage door industry, like all other businesses, need insurance to protect their assets and shield them against potential liabilities. While limited liability protection can safeguard the personal assets of LLC owners, insurance is necessary to safeguard the business's assets.
Common Situations Business Insurance May Cover for a Garage Door Business
Example 1: While showing a partially installed garage door to a customer, the door falls on the customer and severely injures them. General liability insurance would cover the customer’s accident-related medical bills.
Example 2: A tension spring releases during installation and severely damages a nearby car. General liability insurance would pay for the vehicle repair costs.
Example 3: A customer slips on a wet floor in your showroom and injures themself. General liability insurance would cover the customer’s medical bills and legal fees in the event of a lawsuit.
Other Types of Coverage Garage Door 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 garage door installation businesses should obtain:
Product Liability Insurance
Because you sell products alongside installation services, there’s always a chance a customer may file a lawsuit if they believe one of your products caused significant harm — such as if a malfunctioning door sensor leads to a child trapped under a heavy door. Product liability insurance would protect your business by covering your legal fees and any damages awarded in a product-related lawsuit.
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 Property Insurance
If you own the building in 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 equipment, inventory, and supplies after an accident so you can recover quickly.
Commercial Auto Insurance
Any truck or van 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 equipment or supplies you carry to job sites in your vehicles.
Commercial Umbrella Insurance
While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they exceed the limits of your primary coverage — such as a claim involving a person’s death caused by a flying tension spring. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.
Business Interruption Insurance
If a fire, tornado, or other major disaster forces you to temporarily close, business interruption insurance would help cover your bills and financial losses until you can reopen. You can usually purchase business interruption insurance as part of a business owner policy or BOP.
Should I Start an LLC FAQ
Which is better for my garage door installation and repair business — an LLC or sole proprietorship?
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.
What type of insurance does a garage door installation and repair business need?
At a minimum, you’ll need general liability insurance, workers’ compensation insurance, and commercial property insurance.
Read our Business Insurance for Garage Door Installation Businesses article for more info.
What are the costs to start and maintain a garage door installation and repair business?
Startup costs for garage door businesses can range from $4,000 to $8,500 and may include expenses such as carpentry and power tools, transportation, insurance, business and contractor licenses, and brick-and-mortar or storage facility rentals.
Visit our How to Start a Garage Door Installation and Repair Business guide to learn more about the costs of starting and maintaining this business.
What are the ongoing expenses of running a garage door installation and repair business?
Your garage door installation and repair business will have recurring costs, including tool replacement, employee salaries, fuel, and vehicle maintenance.
Learn more about running a garage door installation and repair business.
How do garage door installation and repair businesses make money?
A garage door installation and repair business makes money by selling, installing, and repairing garage doors.
Learn more about starting a garage door installation and repair business.
What is a garage door installation and repair business and is it profitable?
A garage door installation and repair business installs and repairs garage doors, replacing the doors if necessary.
Profits depend on the size of your client base, your location, and your overhead costs.
Learn more about starting a garage door installation and repair business.