Should I Start an LLC for My Supplement Store?

Starting a limited liability company (LLC) for your supplement store 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 supplement store, lawsuits can arise from things like defaulting on debt (e.g., by missing a number of repayment deadlines), accidentally defaming competitors with social media posts, or fraud (e.g., by not listing certain ingredients on a supplement’s label).

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

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

Lady standing behind a supplement store counter

Do I Need an LLC for a Supplement Store?

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 Supplement Store

By starting an LLC for your supplement store, 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.

Supplement stores will benefit from liability protection because of the risk of product liability, workplace accidents, trademark infringement.

Example 1: In order to help kickstart your supplement store, your business takes out a substantial bank loan to finance the purchasing of a storefront. However, your business struggled significantly after an economic downturn and misses numerous consecutive loan repayments. This prompts the bank to sue your business for defaulting on this loan. In the lawsuit that follows, your personal assets are protected from being pursued by the courts to satisfy any business obligation to pay damages.

Example 2: A bottle of weight loss supplements sold by your store contained a synthetic chemical that was neither listed on the label nor approved for use in dietary supplements. As a result, a customer filed a lawsuit against your business, alleging that it had committed fraud and falsely misrepresented the supplement. Limited liability protects you from being held personally responsible.

Example 3: In a piece of marketing material released on your supplement store’s social media, the company makes a disparaging comment about a local competitor. This competitor interprets the comment as libel, arguing their reputation has been negatively and tangibly affected by it. In the ensuing lawsuit, any obligation to pay damages that the court imposes on your business is prevented from extending to 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 Supplement Store

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 supplement store 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

Supplement storees 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.

Insurance is rendered even more vital for supplement stores, as they are naturally open to a number of unique liabilities due to the customer-focused nature of their industry. That being said, it is also beneficial because of the credibility and peace of mind it grants your store.

Common Situations Business Insurance May Cover for a Supplement Store

Example 1: While shopping, a customer decides to grab an object off a high shelf. The customer accidentally pulls multiple items off the shelf and is hurt when they fall on his head. He wants to sue you for medical costs. General liability insurance should cover those costs.

Example 2: A product sold in your store becomes part of a class action lawsuit because of purported health issues, and your store becomes one of the defendants. Your general liability insurance is designed to pay for legal fees and associated payouts.

Example 3: An employee accidentally recommends three times the dosage of a supplement to a customer. As a result, the customer is hospitalized for three days. They want to sue you for medical costs as well as time missed from work.

Other Types of Coverage Supplement Stores 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 supplement stores should obtain.

Professional Liability Insurance

To gain a loyal customer base, you and your staff must be able to recommend and educate clients regarding the products you carry. Unfortunately, this increases your chances of a liability claim. Professional liability insurance, also known as errors and omissions insurance (E&O), offers coverage should a client sustain injuries or fall ill as a result of the store’s recommendation.

Workers’ Compensation Insurance

Most states require that you purchase workers’ compensation insurance for each employee. This type of policy offers coverage, up to the limits of the policy, for work-related injuries and lost wages. While typically not required, many business owners choose to cover themselves if they work on-site regularly.

Product Liability Insurance

Product liability insurance is important for any business that creates and/or sells products to the public. If a customer falls ill or sustains an injury due to a product you carry, you could be named in a lawsuit. This coverage would offer you legal representation and pay out any damages awarded through the suit. Product liability insurance is tailored to the specifics of your business and the products you sell.

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, workers’ compensation insurance, product liability insurance, and commercial property insurance.

Read our Business Insurance for Supplement Stores article for more info.

Owners of a supplement store should be prepared to pay in the range of $180,000–$200,000 in order to launch. As part of this figure, expect to spend $2,000 on advertising, $5,000 on signage, $4,500 on franchising equipment, $30,000 on fixtures, $40,000 on franchising costs, and $50,000 each on construction and inventory.

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

Ongoing costs are typical and will usually include the cost associated with covering rent, utilities, payroll, and supplement inventory.

Learn more about running a supplement store.

Supplement stores make money by selling nutrition products, dietary supplements, healthy products, and foods to consumers.

Learn more about starting a supplement store.

Supplement stores sell dietary supplements, vitamins, proteins, and occasionally healthy foods. While some supplement stores may operate independently, some may operate alongside grocery stores or supermarkets.

Supplement stores have an average profit margin of 38% on an annual basis.

Learn more about starting a supplement store.