What are the costs to start and maintain a tile business?

Your largest startup cost will likely be retail space. This is because you will need to find a location that’s both easily accessible and offers ample parking for your customers. You will then need to factor in the cost of: Your inventory A work computer, business website, and Point of Sale software system Business insurance Fixtures Visit our How to Start a Tile Business guide to learn more about the costs of starting and maintaining this business.

Should I Start an LLC for My Tile Business?

Starting a limited liability company (LLC) for your tile 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 tile business, lawsuits can arise from things like not paying your store’s lease on time, accidentally damaging a client’s property, and generally performing a poor job while installing tiles in a customer’s house.

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

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

Do I Need an LLC for a Tile Business?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should form 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 Tile Business

By starting an LLC for your Tile 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.

Tile businesses will benefit from liability protection because of the risk of personal injury lawsuits if someone gets injured in the store. They also can be sued for causing damage to someone else’s property.

Example 1: After a customer claims that one of your employees installed tiles unevenly in their bathroom, they file a lawsuit against your LLC, seeking compensation. Assuming that your own negligence did not directly influence the employee's actions, your personal assets will remain protected from the claimant as a result of your limited liability in law.

Example 2: You apply for two large business loans in order to expand your tile business into a second city, as well as hire a full-time social media manager. If your business is unable to pay the loan back in the future, you will not be found personally liable for compensating the lending party if your business is registered as an LLC.

Example 3: When one of your contracted workers damages a client’s bathroom floor whilst installing a new set of tiles, your business faces a compensation claim. Here, you will not have to personally compensate the claimant, even if your business is unable to.

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 Tile 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 tile 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

Tile 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.

As a tile business owner, purchasing business insurance can be a great way of protecting your business’s assets against unhappy customers, as well as against claims that arise as a result of workplace accidents.

Common Situations Business Insurance May Cover for a Tile Business

Example 1: A customer is visiting your store to pick out tile for a bathroom renovation. While she is rounding a corner, one of your employees runs into her, dropping a box of tile on her foot and breaking it. She asks that your business cover her medical treatment for the broken foot. Your general liability insurance policy will likely cover this expense.

Example 2: One of your employees is bringing a dolly stacked with boxes of tile to the car of a customer when he trips and falls. The dolly falls over, spilling the tiles all over the car of the customer. The damage is extensive, and the customer files a lawsuit against your business. The general liability insurance you carry will pay for your legal fees, including the cost of a settlement if necessary.

Example 3: A visitor to your store begins to rant incoherently and knock over boxes of tile, scaring both customers and employees. You call the police, and they take the man away. Later, you are notified that the man is suing your business over the incident. Your general liability insurance will pay for your legal costs related to the lawsuit. It will also pay for any payouts or settlements if you need to settle the case out of court.

Other Types of Coverage Tile 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 tile businesses should obtain:

Commercial Property Insurance

Your stock of tile, along with your other inventory, took a considerable investment to acquire. Losing all of your inventory, or even a large portion of it, would put a great financial burden on your business. But if you have commercial property insurance and you lose your property due to a covered event—like a fire—then you can get compensation to help buy new inventory. With the financial help provided by your insurance policy, you can get new tile and other supplies as soon as possible so you can get back to doing business.

Workers’ Compensation Insurance

Workers’ compensation insurance will ensure that medical treatment for employees’ work-related injuries is paid for. It will also cover some of the wages they lose while recovering. Most states require employers to carry workers’ comp.

Commercial Auto Insurance

If you have one or more vehicles that you use primarily for your tile business, you need commercial auto insurance. Your state requires auto insurance for commercial vehicles. Having commercial auto coverage will ensure that you can get your vehicle repaired or replaced in the event of an accident. It will also pay for medical care if anyone is injured.

Commercial Umbrella Insurance

The general liability insurance policy you have is excellent for most circumstances, but it is possible to exceed your policy limits—like if you lose a major lawsuit. With just a general liability insurance policy, when the limits of your policy are exceeded, you are left needing to pay the damages that are left over. But if you have a commercial umbrella insurance policy, it will pick up where the general liability insurance leaves off, so you don’t have to pay the rest out of pocket.

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, and commercial property insurance.

Read our Tile Business Insurance article for more info.

Your largest startup cost will likely be retail space. This is because you will need to find a location that’s both easily accessible and offers ample parking for your customers. You will then need to factor in the cost of:

Your inventory
A work computer, business website, and Point of Sale software system
Business insurance
Fixtures

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

In addition to standard overhead costs, budget for payroll, marketing and networking, insurance, and inventory replenishment.

Learn more about running a tile business.

Tile stores make money by selling and installing tile. Customers can be homeowners or contractors. Some retail stores offer tile cleaning and repair services.

Learn more about starting a tile business.

A tile business sells tile as well as installing and repairing it. Tile is used in a variety of applications, including kitchen backsplashes, showers, floors, and countertops.

While many tile businesses do not make a profit in the first three years, others do. As you gain experience in the industry, your profits will start to rise.

Learn more about starting a tile business.