Last Updated: October 2, 2024 by TRUiC Team


Should I Start an LLC for My Roofing Business?

Starting a limited liability company (LLC) for your roofing company 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 roofing company, lawsuits can arise from things like customer property damage (e.g., as a result of improperly repairing a roof) or the inability to repay workers according to their agreed-upon contracts.

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

A house being re-roofed
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Do I Need an LLC for a Roofing 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 Roofing Business

By starting an LLC for your roofing 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.

Roofing businesses will benefit from liability protection because of the risk of property damage, personal injury, and other general business risks. 

Example 1: Your company is hired to renovate the roof of a restaurant. Months later, a few employees are diagnosed with asbestos exposure. They proceed to sue your company accordingly.  In the ensuing lawsuit, you would be protected from being held personally liable to pay any damages. 

Example 2: An employee is injured while working on a roofing project for your company. He has to undergo rehabilitation therapy for the next year and sues your company for lost work, citing defective equipment. If found liable to pay the injured party damages, this requirement will only be levied against your business’s assets.

Example 3: A visitor to a construction site where your company is installing a roof is injured by some falling material. He sues your company for failing to provide personal protective equipment. In the ensuing lawsuit, you would be protected from being held personally liable to pay any 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 Roofing 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 roofing 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

Roofing 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 loansgrants, and credit.

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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.

Roofing companies need insurance to protect them from financial losses due to accidents, injuries, or damage caused by their work. Depending on the type of roofing job a company is conducting, the likelihood of incidents such as slipping and falling, working with heights, and using hazardous materials can increase. 

Common Situations Business Insurance May Cover for a Roofing Company

Example 1: While removing shingles and other existing roofing materials from a home or business in order to install a new roof, one of your roofers accidentally drops a piece of roofing material on a passerby, injuring them. Your general liability insurance may pay the expenses related to the injury claim. If the injury results in a lawsuit, your general liability insurance may help cover court costs and settlement fees or judgments related to the lawsuit.

Example 2: Your roofers failed to adequately lay down tarps in order to catch all the roofing materials, like shingles and nails. As a result, a visitor or occupant of the building stepped on a nail, resulting in a puncture wound that needed medical attention. General liability insurance may help pay for the treatment of the injury as well as any costs associated with a lawsuit.

Example 3: In order to get a closer look at the new roof, the building’s owner climbs a ladder and subsequently falls, resulting in many cuts and scrapes and possibly a broken bone. Your roofing company’s general liability insurance may pay the expenses related to treating the injury. If the injury results in a lawsuit being filed by the owner, insurance may pay all the court-related costs, lawyer fees, and any settlement amounts or judgments that arise.

Other Types of Coverage Roofing Companies 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 roofing companies should obtain:

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time workers. 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 or death benefits stemming from a workplace accident. 

Commercial Property Insurance

You made a major investment in the tools, equipment, and supplies needed to run your roofing business. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property.

Commercial Auto Insurance

If you use trucks and other vehicles to transport your equipment and/or employees to job sites, you will need commercial auto insurance in order to cover any accident-related expenses if your work vehicle were to collide with another car or object while being driven.

Installation Coverage Insurance

Installation coverage insurance covers accidental damage to other items while the roof is being installed. For example, if one of your roofers drops a nail gun on a glass outdoor table and the glass is cracked, this insurance would pay for the repair or replacement of the outdoor table.

Commercial Umbrella Insurance

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.

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.

Starting a roofing company will require storage to house the roofing materials. You’ll also need trucks for the transportation of materials, an administrative office, high-speed Internet, utilities, and capital for labor costs. Liability and workers’ compensation insurance premiums should also be factored into your budget.

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

The ongoing expenses of running a roofing business include equipment maintenance, labor, utilities, marketing, and insurance.

Learn more about running a roofing business.

Roofing businesses make money from their services which include roof installations, roof repairs, and roof evaluations.

Learn more about starting a roofing business.

Roofing businesses perform installations and repairs of residential and commercial buildings. There is a continuous demand for roofers because roofs need maintenance and repairs after installation.

The average profit margin for a roofing business is between 20% and 40%.

Learn more about starting a roofing business.