Should I Start an LLC for My Shoe Repair Business?

Starting a limited liability company (LLC) for your shoe repair 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 shoe repair business, lawsuits can arise from things like accidentally damaging a customer’s shoes while trying to fix them, or defaulting on a loan.

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

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

Do I Need an LLC for a Shoe Repair 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 Shoe Repair Business

By starting an LLC for your shoe 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.

Shoe repair businesses will benefit from liability protection because of the risk of being sued for personal injuries, and property damage.

Example 1: After your shop gets robbed, you realize that your clients’ expensive shoes are all gone. Your clients are unhappy and ask you to provide compensation to replace their shoes. If they decide to sue for it, your business may pay compensation, but their lawsuit will not affect your private assets.

Example 2: Your employee lifts his hammer to drive a nail into a shoe; the hammer flies out of his hand and hits the waiting customer. The customer sustains a knee injury and demands funds for his treatment bill. If he sues for it, your business may pay damages, but your personal assets will not be affected.

Example 3: While your new apprentice works on a shoe, he mistakenly damages it. The client complains that his shoe is expensive and demands that you kindly replace it or he sues. If he proceeds to sue, your business may pay damages, but your LLC status will protect your personal assets.

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 Shoe 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 shoe 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

Shoe 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.

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.

Shoe repair businesses need insurance to cover risks such as injury to staff and clients, lawsuits, damage to equipment, and loss of goods.

Common Situations Business Insurance May Cover for a Shoe Repair Business

Example 1: You are excited about a new logo you had made for your business, and you begin to use it in all of your new marketing materials. A competitor claims that your logo is too similar to his own logo and sues you over it. The general liability insurance policy you have will pay for your legal defense and cover the cost if you need to settle out of court.

Example 2: You are carrying a stack of shoeboxes from the back to the front of your store when you accidentally run into a customer. She stumbles and falls backward, catching herself awkwardly. She breaks her arm and requires medical care. Your general liability insurance policy will likely pay for her medical treatment.

Example 3: A customer drops off his prized shoe collection for you to re-sole. Overnight, a storm hits and causes a leak in your roof, pouring water onto the shoe collection and ruining it. Your general liability insurance would cover the cost of replacing the collection.

Other Types of Coverage Shoe Repair 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 shoe repair businesses should obtain:

Commercial Property Insurance

The supplies and equipment you have invested in would be expensive to replace if you were to lose it in an unexpected event like a fire. To avoid needing to come up with the money for replacing your property on your own, you can purchase a commercial property insurance policy. Your policy will help you pay for replacing your commercial property if it is damaged or destroyed by a covered event.

Professional Liability Insurance

The professional liability insurance policy you carry for you and your business will be designed specifically for you as a shoe repair company. It will protect you from liability related to your professional work. For instance, if a customer was to sustain an injury while wearing the shoes you repaired and he was to claim that your repair work was the cause of his injuries, he could sue you. Your professional liability insurance would pay for your legal defense fees.

Workers’ Compensation Insurance

If you have employees, chances are your state requires that you carry workers’ compensation insurance. The policy you purchase will protect your business and your employees by paying for medical treatment for job-related injuries. It will help to pay for lost wages while injured employees recover.

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 commercial property insurance.

Read our Shoe Repair Business Insurance article for more info.

To start this business, you will need to acquire a space. To reduce costs, you may partner with clothing and shoe stores and rent a space within their already established businesses. Also, you will need to budget for machinery and supplies such as heels, soles, leathers, and dyes.

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

The ongoing expenses of running a shoe repair business include repair supplies, utilities, rent, and insurance.

Learn more about running a shoe repair business.

Shoe repair businesses make money by charging a fee for the time and materials used to repair shoes, boots, and other accessories for their customers.

Learn more about starting a shoe repair business.

In addition to repairing footwear and other leather goods, shoe repair businesses can customize shoes for customers with specifications like arch support. Customers are usually those who own very expensive or unique shoes.

The US shoe repair industry is estimated at $290 million with over 3,500 businesses in the industry. Although the forecast for the industry is grim with the influx of cheap footwear from abroad, shoe repair businesses can adapt their services to the needs of their customers.

Learn more about starting a shoe repair business.