Should I Start an LLC for My Stationery Business?

Starting a limited liability company (LLC) for your stationery 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 stationery business, lawsuits can arise from things like data breaches which cause financial loss for a customer, negligence (e.g. if shelves are stocked in an irresponsible way, resulting in a client’s injury), or loans it is unable to repay.

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

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

Do I Need an LLC for a Stationery 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 Stationery Business

By starting an LLC for your stationery 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.

Stationery businesses will benefit from liability protection because of the risk of trademark infringement and even workplace accidents.

Example 1: You take on a large printing job for an important client. During the process, their personal information is breached and they suffer financial loss as a result. In situations like this, liability protection will limit any potential legal damages to only your business assets, protecting your personal finances from any losses.

Example 2: You take out a loan to purchase more stock for the shop but are unable to make the payments due to some unforeseen issues. As long as you did not personally guarantee the loan, your personal assets will be untouched if your business defaults on the debt.

Example 3: One of your employees slips and falls while stocking shelves in the store. They file a compensation lawsuit claiming negligence on behalf of your business. With LLC protection, the lawsuit damages will be limited to your business assets, leaving your personal savings and property safe from any losses.

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 Stationery 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 stationery 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

Stationery 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.

Stationery businesses need insurance to protect their investments from potential risks and liabilities. In a stationery business, there is a risk of theft or damage to property and merchandise. Insurance can cover the costs of replacing lost or damaged items and help the business stay financially secure in case of an unexpected disaster.

Common Situations Business Insurance May Cover for a Stationery Business

Example 1: While reaching toward the back of a shelf, a customer cuts themself on a concealed rusty nail. The customer doesn't have a current tetanus shot and requires medical care. General liability insurance would normally cover legal liabilities associated with the incident.

Example 2: An elderly patron trips on the steps leading up to your store and sustains a fractured pelvis in the fall. General liability insurance would normally cover injuries resulting from the fall.

Example 3: While restocking supplies in the back storeroom, a vendor bumps into a shelving unit. The unit falls on them, and they suffer multiple injuries from the incident. General liability insurance would probably cover medical care required for the injuries.

Other Types of Coverage Stationery 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 stationery shops should obtain:

Commercial Property Insurance

Stationery shops that own the building they operate out of should protect their building with commercial property insurance. Additionally, shops may want this insurance for their inventory depending on how much they keep in stock.

This insurance is available through a business owners policy (BOPs).

Product Liability Insurance

Product liability insurance helps protect businesses from risks that come with selling products. While the likelihood of paper causing significant damage or injury, stationery shops should still consider getting coverage. If a child were to choke on a pen cap or something else tragic happens, a potentially expensive lawsuit could follow.

This insurance is available through package policies and as a standalone policy.

Workers’ Compensation Insurance

If your stationery shop has employees, it undoubtedly needs workers’ compensation insurance. Most businesses that have employees are required to carry the coverage, which protects against injuries that are job-related.

Professional Liability Insurance

If your stationery shop has its own line of greeting cards or other stationery, you might want professional liability insurance. This insurance protects against errors that skilled workers make in their work, and copyright infringement is commonly included in the list of covered errors. If an artist sues alleging copyright infringement on some stationery, this insurance would likely cover the legal costs.

Professional liability insurance is available through package policies and as a standalone 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.

Read our Business Insurance article for more info.

Your startup costs for this business will depend on whether you’re starting from home, renting a storefront, or purchasing your own letterpress. Still, you’ll need to set aside capital to purchase a powerful computer, website and tech support, camera and tripod stand, design suite software, and marketing materials.

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

Operating expenses for a stationery business can be kept relatively low. The main ongoing expenses will be marketing and buying materials to make your stationery.

Learn more about running a stationery business.

Stationery businesses make money by charging customers for unique paper products like letterhead paper and cards.

Learn more about starting a stationery business.

Stationery businesses fill this provide unique paper products like envelopes, cards, and even journals.

Stationery generally isn’t something people truly need, which means a stationery company must offer unique products that customers will be enticed to buy. Focusing on special events like weddings or hobbies like journaling and scrapbooking could be a good way to boost profits.

A stationery business is unlikely to see big profits right off the bat, but keeping expenses low can help your margins.

Learn more about starting a stationery business.