Do you need an LLC for a handyman business?
Short answer: no. No state requires a handyman to form an LLC, and you can start as a sole proprietor. An LLC keeps business debts and lawsuits mostly away from your personal assets, but it doesn't replace insurance, and it doesn't protect you from your own mistakes on a job.
General information, not legal or tax advice. Talk to an accountant or attorney in your state before you decide.
Sole proprietor vs. LLC
| Sole proprietor | LLC | |
|---|---|---|
| Setup | Nothing to file (a DBA if you use a business name) | File articles of organization with the state |
| Cost | Free, or a small DBA fee | A state filing fee plus, in some states, a yearly fee or tax |
| Personal assets | On the line for business debts and lawsuits | Generally shielded from business debts and claims against the business |
| Taxes | Business income on your personal return | Same by default for a one-person LLC; can elect S-corp later |
| Bank account | Recommended | Required in practice; keep business money separate |
What an LLC doesn't do
- It doesn't cover your own work. If you personally cause damage, you can still be sued personally. That's what general liability insurance is for.
- It doesn't replace a license. Your state's rules still apply. See handyman license requirements by state.
- It can be ignored if you mix money. Paying personal bills from the business account weakens the protection.
Costs to know about
Every state charges a filing fee, and some charge a yearly fee on top. A few are expensive: California charges an $800 minimum franchise tax every year, and New York requires new LLCs to publish a notice in newspapers, which can cost hundreds of dollars in some counties. Check your state's Secretary of State site for current fees.
When an LLC is worth it
- You're signing contracts with property managers or commercial clients who ask for it.
- You have employees or helpers on jobs.
- You own a home or savings you want separated from the business.
- Your income is high enough that an accountant suggests the S-corp election.
Many handymen start as sole proprietors with good insurance, then form an LLC once the business is steady. Either way, put every job in writing with a simple contract.
Questions
Does a handyman need an LLC?
No. No state requires it. You can work as a sole proprietor, though an LLC can separate business debts and claims from your personal assets.
Does an LLC protect a handyman from lawsuits?
Partly. It shields personal assets from claims against the business, but you can still be sued for your own work. General liability insurance covers that.
How much does a handyman LLC cost?
A state filing fee, plus yearly fees in some states. California has an $800 yearly minimum franchise tax, and New York has a publication requirement for new LLCs.
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