Do I Need an LLC for My Laundry Delivery Service?

Starting a limited liability company (LLC) for your laundry delivery service 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 laundry delivery service, lawsuits can arise from things like employee injuries (e.g., one of your drivers getting into a car crash, etc.), as well as from accidentally damaging your customers’ clothes.

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

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

Should I Start an LLC for a Laundry Delivery Service?

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 Laundry Delivery Service

By starting an LLC for your laundry delivery service, 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.

Laundry delivery services will benefit from liability protection because of the risk of auto accidents, workplace injuries, and damaging customers’ clothing.

Example 1: When one of your drivers steals a customer’s expensive designer clothes instead of delivering them, you find yourself facing a compensation lawsuit. Since your laundry delivery service is registered as an LLC, your limited liability protection will ensure that you do not have to personally compensate the claimant if your business is unable to.

Example 2: While making a delivery in a company van, one of your drivers gets into an unfortunate car crash. Even though he’s not injured, the other driver suffers a severe head wound and decides to file a medical damages lawsuit against your business. Since you didn’t personally act negligently, the fact that your laundry delivery service is registered as an LLC will shield your personal assets from the claiming party.

Example 3: As a result of a recent fall in revenue, your laundry delivery business has begun to accrue significant debt. You decide it’s time to close the business down but worry about what will happen if your creditors file a lawsuit against you personally in order to get paid. Since you are an LLC owner, your personal assets will remain protected regardless of what happens to your business.

Example 4: While loading a delivery into the truck, an employee accidentally drops a handful of delicate clothing items in the mud, causing them damage. The owners of the clothing ask you to pay for the repair 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 Laundry Delivery Service

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 laundry delivery service 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

Laundry delivery services 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 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

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.

Limited liability also does not protect your business against torts or negligence claims that you are personally responsible for, whereas business insurance can. Such claims include IP law violations, accidents that you are personally responsible for, and employment law disputes.

Common Situations Business Insurance May Cover for a Laundry Delivery Service

Example 1: Your employee fails to secure the client’s property after a pickup. When he arrives back at the office, he realizes most of the laundry fell out of the vehicle during transport. General liability insurance should pay the cost of replacing the client’s property.

Example 2: While showing a potential new employee the operation, he gets burned by a piece of equipment. A general liability policy would pay his medical bills. If he sues for additional damages, the policy should cover your legal fees and associated costs.

Example 3: While unloading deliveries, your employee backs into a building, causing damage that exceeds the limits of your commercial auto policy. Your general liability policy may cover the cost to repair the building once you exhaust the underlying limits.

Other Types of Coverage Laundry Delivery Services 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 laundry delivery services should obtain:

Commercial Auto Insurance

An auto accident can occur while employees are performing business-related activities. Commercial auto insurance can pay to repair damaged vehicles, liability claims, and lost equipment. While minimum coverage limits are state-mandated, business owners should protect themselves by considering higher limits.

Commercial Property Insurance

Building owners and renters should consider purchasing a commercial property insurance policy built around their specific needs. This policy will cover costs to repair or replace business-owned assets, including the physical property and/or its contents.

You can purchase commercial property insurance as part of a business owner’s policy (BOP).

Workers’ Compensation Insurance

State law requires businesses with employees to carry workers' compensation insurance. Its purpose is to provide medical coverage for on-the-job injuries. In the event of a more serious incident, the company will get legal representation and court-awarded damages paid up to the limits of the policy.

Insurers typically write workers' compensation insurance as a standalone policy.

Inland Marine Coverage

A standard policy may exclude coverage for a customer’s property while in their possession or in transit. Inland marine coverage will cover property that isn't on your business's physical site. For an additional premium, the insured should be able to purchase inland marine coverage as an endorsement.

Laundry delivery business owners should have a conversation with their insurance agents to determine if this is necessary coverage.

Commercial Umbrella Liability Insurance

This profession requires the handling of non-owned property and the use of chemicals. Owners concerned with liability risks should purchase a commercial umbrella insurance policy. This insurance acts as an additional layer of protection, taking over where the underlying general liability policy leaves off.

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, commercial auto insurance, workers’ compensation insurance, and commercial property insurance.

Read our Business Insurance for Laundry Delivery Services article for more info.

The costs required to start a laundry delivery service are extremely manageable. In order to get started, you will need a washer and dryer, a delivery vehicle, and cleaning products. You will also need to purchase a business website in order to advertise your business online.

Depending on the size of your laundry delivery service, you may have to hire additional staff (e.g., delivery drivers, etc.).

Visit our How to Start a Laundry Delivery Service guide to learn more about the costs of starting and maintaining this business.

Ongoing expenses include the cost of cleaning products, laundry machine maintenance, utility bills, website upkeep, insurance, and driving costs.

Learn more about running a laundry delivery service.

Profit is generated by charging clients various rates depending on the size of the laundry load or the type of clothing or fabric being laundered.

Learn more about starting a laundry delivery service.

Laundry delivery services are involved in the process of laundering and delivering clothes to clients. The more ongoing client relationships you have, the more profit your business will receive.

Learn more about starting a laundry delivery service.