Should I Start an LLC for My Greeting Card Business?

Starting a limited liability company (LLC) for your greeting card 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 greeting card business, lawsuits can arise from things like unknowingly selling a greeting card with a trademarked design or from data breaches (if storing customers’ information online).

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

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

Do I Need an LLC for a Greeting Card 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 Greeting Card Business

By starting an LLC for your greeting card 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.

Greeting card businesses will benefit from liability protection because of the risk of workplace injuries, libel, and trademark and copyright infringement.

Example 1: Some customers purchase a bundle of wrapped greeting cards from your store and, upon opening it, discover that the message inside is insensitive. Following this, the customers sue your greeting card business. With limited liability protection, the damages from the lawsuit will only be covered by the business's assets and not the owner's personal assets.

Example 2: A customer buys a pack of greeting cards from the store and, upon opening them, finds that several of the cards are damaged or incomplete. The customer then sues the greeting card business for the cost of the faulty product. With limited liability protection, the owner’s personal assets will be protected from any fees or compensation associated with the lawsuit.

Example 3: A customer places an order for a custom card to be made with a specific message and design. Unfortunately, the business made a mistake with the order and delivered the wrong card to the customer. Following this, the customer sues the business. Limited liability protection will ensure that the owner’s personal assets remain shielded from the lawsuit.

Example 4: Your company is sued by a greeting card designer who claims several of your cards violate their copyrights.

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 Greeting Card 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 greeting card 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

Greeting card 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?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets.

Greeting card businesses need insurance to cover the cost of lawsuits, workers' compensation, and property damage that can threaten the operations of the business.

Common Situations Business Insurance May Cover for a Greeting Card Business

Example 1: While moving a large batch of cards from the production floor to on-site storage, an employee temporarily loses control of a cart in the parking lot. The runaway cart hits a customer’s car, causing serious damage. General liability insurance would pay for the vehicle repair costs and any related damages in the event of a lawsuit.

Example 2: As an employee cleans up for the day, a last-minute shopper rushes in, slips on the wet floor, and injures themself. Your general liability policy would cover the customer’s medical bills and other damages awarded in case of a lawsuit.

Example 3: While touring your production line, a guest trips over some boxes and breaks an arm. She’s upset you did not display a “caution” sign and threatens legal action. General liability insurance would cover her medical bills and any payout awarded in a settlement.

Other Types of Coverage Greeting Card 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 greeting card companies should obtain:

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 or other natural disaster. Commercial property insurance would cover the cost of repairing or replacing your specialized production equipment, computers, and other business materials after an accident so you can recover quickly.

Workers’ Compensation Coverage

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 Coverage

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.

Product Liability Insurance

If your cards or other gift items ever cause harm to a customer, product liability insurance would protect your business and pay for any damages in the event of a lawsuit.

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. You may also need workers’ compensation insurance and commercial property insurance.

Read our Business Insurance article for more info.

To start a greeting card business, you will need an initial investment of between $2,000 and $10,000. This will cover costs such as business insurance, product sourcing, talent sourcing, and initial rent. You will also need a computer, scanner, color printer, desktop publishing software, database software, and a resale license.

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

As a greeting card business owner, you will regularly have to purchase raw paper materials and source artist prints.

Learn more about running a greeting card business.

Greeting card businesses make money by creating and selling greeting cards at a profit.

Learn more about starting a greeting card business.

Greeting card businesses make and distribute greeting cards for most occasions, including birthdays, holidays, anniversaries, and funerals. They are sold either in retail stores or directly to customers.

A greeting card business’s potential profits depend on sales volume and how much the company charges for the greeting cards.

Learn more about starting a greeting card business.