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Should You Form an LLC for Your Restoration Business?

What an LLC does, how to set one up, and what to ask a pro, in plain English.

What an LLC does

A limited liability company is a business set up under state law that’s separate from you as a person. Done right, it can help keep business debts and claims separate from your personal assets. In restoration, where you work in other people’s homes and handle insurance money, that separation matters. It also makes you look more established to property managers and adjusters.

An LLC isn’t a replacement for insurance. Liability coverage is what pays when something goes wrong on a job.

Basic setup steps

  1. Pick a name and check it’s available. See restoration business name ideas.
  2. File with your state’s business division (usually the Secretary of State).
  3. Get a free EIN (tax ID) from the IRS.
  4. Open a business bank account and keep business money separate.
  5. Check local business licenses and any contractor licensing for your state.

LLC vs. S-Corp

An S-Corp is a tax choice, not a different kind of company. Many LLCs elect S-Corp taxes once profits grow, which can change how much you pay in taxes. Whether and when that makes sense depends on your numbers, so ask an accountant.

Questions to ask an accountant

  • Should I start as an LLC or a sole proprietor?
  • At what profit level would an S-Corp election make sense?
  • How should I handle subcontractor payments and tax forms?
  • What should I set aside for taxes from each job?

Module 7 of the 6-Figure Launchpad covers business setup, licensing, banking and growth. Also see the startup checklist and startup costs.

General information, not legal, tax or financial advice. Rules vary by state; consult an attorney or accountant.