Should I Start an LLC for My Snow Plow Business?

Starting a limited liability company (LLC) for your snow plow 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 snow plow business, lawsuits can arise from things like damaging a customer’s property while cleaning up snow or accumulating debts that the business is unable to pay to its creditors.

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

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

Do I Need an LLC for a Snow Plow 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 Snow Plow Business

By starting an LLC for your snow plow 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.

Snow plow businesses will benefit from liability protection because of the risk of property damage and personal injury.

Example 1: You lease a truck for your snow plow business, and it eventually gets damaged. The lease period expires, and the truck owner asks that you kindly fix or replace his truck. If he insists and proceeds to sue, your business may be required to pay damages but your personal assets would be shielded by the LLC.

Example 2: While plowing a street, your heavy-duty snow removal equipment hits a fence and brings a part of it down. The building owner demands that you fix his fence. If he decides to sue, your business may be liable to pay damages. But as the business owner, you will personally not be responsible for any compensation if you have an LLC in place.

Example 3: You take a loan to buy modern equipment for your snow plow business. However, you could not secure enough contracts in the season. Resultantly, you are unable to repay your loan when it’s due. If the lender runs out of patience and sues, your business may be affected, but their lawsuit will not affect your personal assets if you have an LLC.

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 Snow Plow 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 snow plow 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

Snow plow 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.

Snow plow businesses need insurance for risks such as damages to hired trucks, theft of the company's equipment, and clients' lawsuits.

Common Situations Business Insurance May Cover for a Snow Plow Business

Example 1: After one of your salespeople criticizes a competitor in order to drive new business, your rival files a defamation lawsuit. General liability insurance would cover your legal fees and any damages awarded in a settlement.

Example 2: While climbing on snow removal equipment you store in a commercial customer’s parking lot, a child slips and injures themself in the resulting fall. General liability insurance typically covers such “common nuisance” situations and would pay for the child’s medical bills.

Example 3: While delivering a new plow to your garage, the delivery driver slips on the wet floor and sustains a concussion among other injuries. General liability insurance would cover the driver’s medical bills and your legal fees in the event of a lawsuit.

Other Types of Coverage Snow Plow 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 snow-plows should obtain:

Commercial Auto Insurance

Any vehicle you use primarily for business requires commercial auto insurance to protect the vehicles, drivers and others on the road in the event of an accident. Be sure to select a policy that covers not only accident-related vehicle repair costs and medical treatment for anyone injured, but also sufficient protection for plows, salters, and your other specialized equipment.

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. This coverage is highly recommended because your business faces an increased accident risk as employees regularly drive in winter storms and poor road conditions.

Commercial Property Insurance

If you own the building in which you operate and store your snow removal equipment, you’re responsible for all business-related property housed there in the event of a fire, burglary, or natural disaster. Commercial property insurance would cover the cost of replacing your equipment and other business property after an accident so you can recover quickly.

Workers’ Compensation Insurance

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.

Product Liability Insurance

While snow removal businesses mainly offer services, you may want to purchase product liability insurance in case the salt you use accidentally harms an animal. If someone’s pet becomes ill or dies after eating salt from a driveway you treated, this insurance would cover your legal fees 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 and commercial auto insurance.

Read our Business Insurance article for more info.

To start, you will need a reliable truck, plow, snow blower, salt sprayer, etc. All these can cost between $3,000 and $10,000 to acquire. You will also need to budget for insurance premiums, maintenance, fuel, and advertising costs.

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

The ongoing expenses of running a snow plow business include vehicle and equipment maintenance, fuel, utilities, insurance, marketing, and labor.

Learn more about running a snow plow business.

Snow plow businesses make money by offering snow plowing and snow removal services in the winter and oftentimes, lawn care services in the summer months.

Learn more about starting a snow plow business.

Snow plow businesses provide plowing and sometimes deicing services for clients. Residential customers alone make up about 34% of the estimated $18 billion US market.

Snow plow businesses can be very profitable with high margins if well managed.

Learn more about starting a snow plow business.