How to Start A Personal Shopper Business
Do Business the Right Way
Now is a great time to start a personal shopper business from home. Personal shoppers have been in growing demand for a while, and have only become more so due to COVID-19. If you’ve struggled to find employment in this economy, but you have a car and are a motivated, friendly person, this could be a good way for you to earn an income.
Below, we’ve done the legwork for you to provide a free guide to starting a home-based personal shopper business today.
Not interested in starting a personal shopper business? Visit our generic Start A Business Guide.
What Does a Personal Shopper Business Do?
A personal shopper helps a customer (individual or business) with their shopping needs, which usually means filling a list provided by the customer and delivering those items. The term “personal shopper” has evolved in recent years. Traditionally, this term referred to department store employees who help customers choose flattering outfits, or even to employees of the very wealthy who do the same. This page, however, will focus on a new, more generalized version of the personal shopper, one more democratized, made possible by technology.
In recent years, a number of apps have emerged that make it simple and affordable for lots of people to hire a personal shopper on a gig basis. Personal shoppers on these apps might fulfill a grocery shopping list or a hardware shopping list. Like Uber or Lyft, these apps have expanded both the customer base and the supply of shoppers interested in pursuing it.
Steps to Starting a Personal Shopper Business
Create a Business Plan for Your Personal Shopper Business
Before you get started, you’ll need an idea of what resources you’ll need—and how to monetize your business in a practical way. We’ve answered the biggest questions about clients, costs, and profits below.
How do I get clients?
Traditionally, this type of service could only be afforded by the very wealthy, and marketing yourself to those people would have been very difficult. Today, thanks to a number of different apps, these services are available to people across the economic spectrum. Because there are so many more people interested in using this type of service, there is a growing demand for its providers. Instacart, Shipt, and WeGoShop are just a few examples of apps that you can use to get clients if you are interested in starting a personal shopping business.
However, these apps are not without their issues. Many have come under scrutiny for taking advantage of their shoppers. Some shoppers have reported making hourly incomes of under $10/ hr. If this doesn’t sound good to you, there is no reason you couldn’t create your own client base and charge your own rate, taking control of your income. With recent increased interest in these services, you could market yourself on social media, make windshield fliers, or reach out to family and friends. Over time you could build up a community based clientele and not be subject to the algorithms of an app for your income.
How does a personal shopper business make money?
In years past, personal shoppers generally charged a flat fee for delivery, plus a percentage of the total receipt. Today, almost all of this commerce takes place through shopping apps. This has increased dramatically the number of people hiring personal shoppers, but has also obfuscated the monetization of the service. Shoppers are now paid a fee for each delivery. The amount of this fee is determined by the app and varies based on the type of goods ordered and total dollar amount of the delivery. This can often make it confusing for personal shoppers to know exactly how much they can expect to make. Shoppers are then generally also free to keep 100% of tips they receive upon delivery.
How much money will it take to get started?
The major expense of being an independent personal shopper is a car. Assuming you own a dependable vehicle ($10,000 minimum), you should budget $350/ month for gas and at least $50/ month for maintenance. Note that leased vehicles typically restrict or prohibit commercial use, including delivery services.
How much do personal shopper businesses make each year?
Earning a living as a personal shopper can be challenging. Glassdoor reports the average annual income of a personal shopper to be $26,000/ year. Indeed claims the average Instacart shopper makes $14.64 hour. Increased competition in this market has caused shrinking margins and, many shoppers complain, lower pay. Also, many of the apps that connect shoppers with customers have come under scrutiny lately for misleading users about how much they compensate shoppers. Still, many shoppers claim to make $20/ hour with tips. Staying abreast of the technology is therefore very important. As the apps and means of service evolve, make sure you are also prepared to adapt and use the apps that treat their shoppers with the dignity and respect they deserve.
How much should I charge?
If working with personal shopping apps, you won’t have much of a choice in how much you charge—you’ll be paid pre-determined fees per delivery, plus tips.
But if you work outside the apps you have some flexibility. If you’re simply picking up and delivering orders, you might charge a flat fee, such as $20 for trips within 10 miles. However, for more involved tasks—such as navigating a hardware store to pick up a long list of obscure items, you might charge an hourly rate of $20/ hour.
Select a Name for Your Personal Shopper Business
As a member of the gig economy, you probably won’t need a business name at first, particularly if you work entirely with online apps. However, if you start to develop your own connections and clients, you may want a business name to market and brand yourself.
If that’s the case, you’ll need to ensure your name is available. Most states prohibit or restrict businesses from adopting names that are already in use. Even if it’s legally allowed, a copycat name puts your business at risk of a lawsuit.
See if your business name is available in your state with our Free Business Name Search.
Trademarks and Domain Names
Plan to trademark your business name? You can see if the trademark is available on a website like Trademarkia. It’s also a good idea to see if the domain name is available, which you can do on websites like Network Solutions and GoDaddy. Even if you don’t plan on putting together a website right away, you can buy the domain name to make sure no one takes it in the meantime.
Choose a Business Structure
Should you form an LLC? A sole proprietorship? Your choice of business structure will affect many aspects of your business, from liability to taxes.
Sole Proprietorships & General Partnerships
If you don’t file any paperwork to legally form a different kind of business—you have a sole proprietorshipor general partnership. Essentially, these are “default” business structures. A sole proprietorship has one owner, and a partnership has multiple owners. Most gig economy workers start out as sole proprietors. These structures have a few initial benefits. They’re easy, fast and cheap to start and maintain. You can start and stop your business at any time.
However, the limitations and risks of these business structures quickly become more apparent as your business grows. In both of these business types, you are your business, legally speaking. Your company’s legal business name is YOUR name—so you’ll need a DBA to operate under any other name. Any business debt is YOUR personal debt. If anyone sues your business, they are suing YOU personally.
LLCs & Corporations
If you’re working strictly with apps like Shipt or Instacart, odds are you’ll be a sole proprietor. But if you move away from working for apps and start developing your own client lists and providing your own services on your own terms, it might be time for an LLC or corporation.
Limited liability companies (LLCs) and corporations are business entities formed at the state level. The entity is legally separate from its owners, meaning the owners are not personally liable for the debts and obligations of the business. As a separate entity, the business also has multiple tax election options. For example, both LLCs and corporations can choose to be taxed as S-corps if they meet the requirements.
LLCs and corporations are not quite as simple and inexpensive as default structures. LLCs and corporations come with formal requirements like state reports. They also have more fees than default structures, such as formation and annual report fees. However, the benefits of an LLC or corporation—especially liability protection and tax flexibility—are significant.
Legally Form Your Personal Shopper Business
If you opt for a sole proprietorship or general partnership, there’s no formal paperwork to file to legally create your entity—you just start selling your product or service. However, you will not have anyliability protections or tax flexibility.
LLCs and corporations are formed by filing paperwork with a state agency, typically the Secretary of State. To start an LLC, you file articles of organization. To start a corporation, you file articles of incorporation. In most states, you can file these forms online or download a paper form from the state’s website.
Whether you’re forming an LLC or corporation, your articles will require certain basic information about your business, such as your company’s:
- business address
- registered agent and office
- business purpose
- members/managers or directors/officers’ names and addresses
- number and type of authorized shares (for stock corporations)
You’ll also need the signature of someone authorized to sign on behalf of the business, along with the state’s filing fee. Fees vary by state but are typically between $100 and $200. If you hire Northwest to form your LLC or corporation, we complete and submit your formation paperwork on your behalf for just $100 plus state fees.
Create Internal Policies and Procedures
It’s important to put your company’s internal policies and procedures in a written document, especially if you’re starting your business with others. Partnerships have partnership agreements. LLCs have operating agreements. Corporations have bylaws.
These documents look a bit different for each kind of business, but they serve the same general purpose. They ensure there’s a clear path forward for any major issue that may arise, from changes in ownership to closing the business. LLCs and corporations also typically need an operating agreement or bylaws in order to open a bank account.
Get an EIN and Register for Taxes
Nearly all LLCs and corporations will need to request a federal employer identification number (EIN) from the IRS. If you file corporate income taxes, have employees, or file certain franchise taxes, you must have an EIN. An EIN is also a common requirement for opening a business bank account. Most businesses can request an EIN by filling out the IRS’s online form.
Your EIN is for federal taxes—but you’ll likely have state and local tax obligations as well. You will most likely need to set up an account with the state’s Department of Revenue, and you may need to apply for a state tax ID or a sales tax license as well.
Learn more about how to Get an EIN for your business.
Open a Bank Account
A business bank account keeps your personal finances separate from your business finances. For LLCs and corporations, keeping separate finances is essential for maintaining liability protection. To open an account, LLCs and corporations typically need to bring to the bank a copy of their articles, their operating agreement or bylaws, and their EIN.
Obtain Required Licenses and Permits
Many businesses will need a business license to operate. Licensing information—as well as any zoning requirements or other permits—can usually be found on the city or county website.
Whether or not you form a business of your own, you’ll be driving quite a bit. Keeping your vehicle registered and insured will be essential.
Next Steps for Your Personal Shopper Business
After your business is up and running, there are a few additional steps you may want to take as you grow:
- Get online: With your domain name, you can create a business website. You can hire a professional or use a website-builder like Wix or WordPress. You may also want to invest in online ads through a program like Google Ads.
- Hire employees: Hiring employees requires quite a few steps. You’ll need to collect W-4s and I-9s from employees, report the new hires to the state, set up withholding, pay for unemployment insurance, distribute any required documents and notices to employees, and display wage and safety info in the workplace. Employer.gov is a good place to start, followed by your state’s tax or labor office.
- Get business insurance: While LLCs and corporations protect you from personal liability, you don’t want your business to go bankrupt in the face of an accident, injury or other disaster. At minimum, it’s a good idea to look into general liability insurance.
How Do I Know If Personal Shopping is Right for Me?
What’s it really like to work in a personal shopper business?
Though making it as a personal shopper may be tough, benefits abound. As a personal shopper, you set your own schedule and maintain control of that schedule throughout your career. You can work as much or as little as you want. The tasks are clear and manageable and whether or not the job itself is enjoyable depends on how you feel about shopping for groceries or running other small errands for people.
What does it take to succeed in the world of personal shopper?
Being a successful personal shopper means making lots of small decisions under pressure. How much you make depends on how efficiently you get the job done. How much you make in tips will likely depend on how personal and seamless you can make the transaction feel for the customer. This is a specific skill set that tends to draw a certain type of person, similar to the type of person drawn to the food services industry. Like people? Like thinking on your feet and hustling? You very well could excel in this business.
Ready to Form an LLC or Corporation?
Northwest Registered Agent is here to help with all your small business ideas and needs. Answer a few simple questions about your business, and we’ll prepare and submit your formation paperwork to the state. We also provide your new business registered agent service, free business forms and guides, and much more.