What are the costs to start and maintain a purse store?

Experienced retailers suggest a minimum startup budget of $50,000. This covers: Utilities deposit DBA vendor’s license Insurance Interior design Displays Advertising Business cards Computers and POS software Logo and trademarking. Purse stores do not need a large amount of space, but the location is important so it can attract customers. Visit our How to Open a Purse Store guide to learn more about the costs of starting and maintaining this business.

Should I Start an LLC for My Purse Store?

Starting a limited liability company (LLC) for your purse 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 purse store, lawsuits can arise from things like disputes with suppliers over the details over the contract, injury suffered by customers in your store, and misleading claims about your purses’ quality.

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

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

Do I Need an LLC for a Purse 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 Purse Store

By starting an LLC for your purse 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.

Purse stores will benefit from liability protection because of the risk of product liability, trademark infringement, financial data breaches, and even workplace injuries.

Example 1: A supplier sues your store, claiming you are not selling their product for the agreed upon price. Your personal assets could not be taken in the settlement since they are protected with limited liability as an LLC.

Example 2: While browsing your selection, a customer trips over a display and dislocates their shoulder. They sue for lost wages and medical expenses. Limited liability protects your personal assets so they could not be used to pay for this.

Example 3: A large clothing brand is attempting to sue you over one of your most popular items, claiming you infringed the copyright on one of their products. Should you lose the court case, your personal assets could not be taken in the settlement since limited liability as an LLC protects them.

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 Purse 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 purse 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

Purse stores 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.

An inviting storefront is essential to a purse store, so protecting is of great importance. Having insurance on your store protects it in the case of damages from customers, weather, etc. so if anything goes wrong you will receive help to pay for the damage.

Common Situations Business Insurance May Cover for a Purse Store

Example 1: As a shopper reaches for a purse on a high shelf, she steps on a lower shelf and pulls the entire shelving unit down on top of herself. She suffers broken bones and a concussion, and asks your business to pay for her medical treatment. General liability insurance would cover her medical bills.

Example 2: A local competitor sues you for libel. While you disagree with the claim, you want to hire an attorney right away. General liability insurance would pay for your legal defense and any required settlement.

Example 3: As an employee shows a shopper some purses, he accidentally backs into another shopper and knocks her to the ground. She breaks a wrist in the fall and sues your business for damages. General liability insurance would pay for your legal defense.

Other Types of Coverage Purse 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 purse stores should obtain.

Commercial Property Insurance

You made a major investment in your store’s inventory, displays, furnishings, and real estate. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes structural damage to your building as well as the business materials stored there.

Product Liability Insurance

While you strive to sell quality purses, there’s always a chance someone might decide one of your products caused them injury. In the event of a lawsuit, product liability insurance would cover your legal fees and any required settlement.

Workers' Compensation Insurance

If you have any employees, most states will require you to carry workers’ compensation insurance for your part-time and full-time workers. 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 or death benefits stemming from a workplace accident.

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.

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 Business Insurance article for more info.

Experienced retailers suggest a minimum startup budget of $50,000. This covers:

Utilities deposit
DBA vendor’s license
Insurance
Interior design
Displays
Advertising
Business cards
Computers and POS software
Logo and trademarking.

Purse stores do not need a large amount of space, but the location is important so it can attract customers.

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

The ongoing expenses of running a purse store include inventory, utilities, advertising, marketing, and insurance.

Learn more about running a purse store.

Purse stores make money from the sales of purses, handbags, and other accessories.

Learn more about starting a purse store.

The fashion and accessories industry is very competitive. However, there is room for new entrants in the purse and handbag sector of the industry and opportunities for purse stores to satisfy customers at a wide range of price points.

Learn more about starting a purse store.