Do I Need an LLC for My Personal Styling Business?

Starting a limited liability company (LLC) for your personal styling 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 personal styling business, lawsuits can arise from things like accidental damage to a client’s garment or claims by clients that your services caused them financial harm.

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

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

A personal stylist getting ready for the day

Should I Start an LLC for My Personal Styling 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 Personal Styling Business

By starting an LLC for your personal styling 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.

Personal styling businesses will benefit from liability protection because of the risk of lawsuits for trademark infringement, libel, personal injuries, and negligence.

Example 1: A client hires you to help style a new collection of clothes she just had custom-made for her. While handling them, you mistakenly damage an expensive leather jacket, and she sues you. As a result of the limited liability offered by your business’s LLC structure, your personal assets will remain safe regardless of whether your business is required to compensate the claimant.

Example 2: You are hired by a model to prep her for an event. The following day, she becomes a topic of scorn in many tabloids, which she blames your services for. If she files a lawsuit against your LLC, limited liability will ensure that your personal assets remain protected regardless of how the claim progresses.

Example 3: You are hired to handle the fashion and hair for a small movie production. One of the actress's scalps is badly burned after a dying session, and she proceeds to sue you. As a result of the limited liability offered by your business’s LLC structure, your personal assets will remain safe regardless of whether your business is required to compensate the claimant.

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 Personal Styling 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 personal styling 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

Personal styling 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 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.

Without insurance, your personal styling business’s assets are not safeguarded from lawsuits stemming from issues such as trademark infringement, loss or damage of properties, and personal injury.

Common Situations Business Insurance May Cover for a Personal Styling Business

Example 1: While entering your office, a client trips over a rug, falls, and breaks her wrist. Your general liability policy may cover the costs of treating the injury. If a lawsuit arises from the injury, it may also cover the costs of the lawsuit.

Example 2: One winter morning, your area experiences unforecast snow and ice. Before you can shovel your sidewalks and apply ice melt, your early morning client arrives. Upon stepping onto the stairs leading to your front door, the client slips and falls, landing hard on his backside. The intense pain sends him to the nearest urgent care center, where he receives medical attention. Your general liability insurance policy should cover the costs of the medical care needed for the fall.

Example 3: When placing an ad online for your services, you accidentally forget a zero, making your introductory personal styling offer much cheaper than you intended. You don’t realize the mistake until a potential client calls to inquire about your services and the advertised price. Upon telling the client that you made a mistake in the ad and telling them your actual sale price, they sue you for false advertising. Your general liability insurance policy may cover the costs associated with the lawsuit.

Other Types of Coverage Personal Styling 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 personal styling businesses should obtain:

Home-Based Business Insurance

If you operate your personal styling business out of your home, you’ll want to consider purchasing a home-based business insurance policy. These policies help financially protect you in the event your business equipment is damaged or destroyed due to a covered event.

Professional Liability Insurance

Professional liability insurance protects you against lawsuits that arise due to your advice accidentally harming a client or not leading to the desired results.

Data Breach Insurance

Data breach insurance is also known as cyber liability insurance. It helps protect you against lawsuits from clients if any information is stolen from your computer systems.

Commercial Property Insurance

If you own an office or commercial space where you meet with clients, you’ll want to acquire a commercial property insurance policy. This helps financially protect you in the event that your building or the property stored inside the building is damaged or destroyed due to a covered event.

Workers’ Compensation Insurance

If your personal styling business employs other workers, like front desk personnel and assistant stylists, you’ll want to purchase workers’ compensation insurance, which may help pay for any on-the-job injuries that your employees experience. Most states legally require businesses to carry this if they have any part-time or full-time employees.

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 professional liability insurance.

Read our Personal Styling Business Insurance article for more info.

You can set up a personal styling business for just $3,000. The nature of this business doesn't call for major overhead costs like rent. Your major goal would be to generate a lot of publicity, so the greater portion of this startup capital would be geared toward local and online advertising. You'll also want to get a website professionally designed for your business.

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

Website maintenance, personal grooming products, and fuel are the primary ongoing expenses.

Learn more about running a personal styling business.

Personal stylists charge by the hour or by the session.

Learn more about starting a personal styling business.

A personal stylist assists clients with fashion choices and can advise on hairstyles, clothing, makeup, and anything else that impacts the client’s image.

The number of clients, how much you charge each client, and overhead costs all affect profits.

Learn more about starting a personal styling business.