Appliance Repair Business Entity Structure: LLC, S-Corp, or Sole Proprietorship

Entity comparison for appliance repair:

Sole proprietorship / single-member LLC:

• Simplest structure
• All net profit subject to SE tax
• Full QBI deduction
• Best for: solo technicians under $80,000 net profit

S-Corp:

• Distributions avoid FICA
• Reasonable salary for an appliance repair tech/owner: $45,000-$65,000
• The salary reflects the market rate for an experienced appliance technician (EPA 608 certified, manufacturer-trained)
• Best for: appliance repair businesses with $90,000+ net profit

Business model considerations:

1. Service call revenue model. Most appliance repair businesses charge: service/diagnostic fee ($80-$150) + labor ($75-$150/hour) + parts (cost + 30-50% markup). The service call fee is pure profit; labor is high-margin; parts carry moderate margin.
2. Parts inventory. Some technicians carry common parts in the van (capacitors, thermostats, belts, igniters). Others order parts job-by-job. Carrying inventory ties up cash but allows same-day repairs (higher customer satisfaction and revenue per call).
3. Manufacturer authorization. Authorized service providers for specific brands (Samsung, LG, Whirlpool, GE) get warranty work referrals. Warranty work pays less per job but provides steady volume. The mix of warranty vs. COD (customer-pay) work affects profit margins.
4. Low equipment costs. The major business assets are the service van ($25,000-$40,000), diagnostic tools ($2,000-$5,000), and hand tools ($1,000-$3,000). This means net profit is a high percentage of revenue, making the S-Corp valuable at relatively low revenue.