Last Updated: May 10, 2024, 10:51 am by TRUiC Team

Do I Need an LLC for My Sports Memorabilia Business?

Starting a limited liability company (LLC) for your sports memorabilia 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 sports memorabilia business, lawsuits can arise from things like misrepresentation, product liability, and false advertising claims, as well as from general breach of contract and land law disputes. 

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

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

A collection of sports gear

Should I Start an LLC for My Sports Memorabilia 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 Sports Memorabilia Business

By starting an LLC for your sports memorabilia 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.

Sports memorabilia businesses will benefit from liability protection because of the general risks that come along with owning a business, such as trademark infringement, financial data breaches, and even workplace accidents. 

Example 1: An employee at your sports memorabilia business lied that a certain sports jersey was signed by a famous athlete with full knowledge that the signature was fake. When the customer who bought this jersey discovered this, he filed a lawsuit against your business for fraud. Limited liability would ensure that only your business’s assets are used to pay any damages the court awards the plaintiff.

Example 2: A customer was sold a faulty piece of sports equipment that an employee knew to be unsafe. Despite this, the customer was not warned of this and suffered a serious injury to his eye when the item broke. This prompted the customer to sue your business for its negligence in this matter. In the following lawsuit, you are safe from having your personal assets used to meet any business liability to pay compensation.

Example 3: In a social media post made by your sports memorabilia business, an employee can be heard making fun of a competitor. After this joke became a popular internet meme, the competitor decided to sue your business for this slander, claiming its reputation had suffered great harm. In this instance, any liability to pay compensation can only be imposed on the business’s assets and never 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 Sports Memorabilia 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 sports memorabilia 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

Sports memorabilia 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.

Northwest will start an LLC for you for just $29 (plus state fees).

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.

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.

Read our small business insurance article for more info.

Sports memorabilia business owners should be prepared to need between $2,000 and $10,000 in startup costs. The majority of this sum will be used on the memorabilia itself, with the remainder left for leasing out a space for your business.

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

Inventory, rent, and payroll are the primary ongoing costs of a sports memorabilia business.

Learn more about running a sports memorabilia business.

Sports memorabilia businesses sell sports memorabilia at a profit.

Learn more about starting a sports memorabilia business.

Sports memorabilia businesses sell items like signed balls, jerseys, and other things, many of which athletes actually use during games. Profits vary and depend largely on sales volume and clientele. 

Learn more about starting a sports memorabilia business.

Related Articles

Article Sources

IRS: Limited Liability Company

IRS: S Corporations


SBA: Small Business Guide

SBA: Choose a Business Structure Guide

US Census Bureau: Small Business Statistics

SBA Office of Advocacy: Data on Small Business

FRED: SBA Data for Small Business