Should I Start an LLC for My Driving Range?

Starting a limited liability company (LLC) for your driving range 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 driving range, lawsuits can arise from things like property damage disputes, especially if there are residential and/or commercial properties relatively nearby.

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

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

Do I Need an LLC for a Driving Range?

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 Driving Range

By starting an LLC for your driving range, 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.

Driving ranges will benefit from liability protection because of the risks involved with guests using facility equipment. Additionally, your business may run the risk of copyright or trademark infringement with marketing materials as well as workplace injuries.

Example 1: While an employee is attempting to coach a customer about how to drive the ball further, they accidentally hit the customer with the golf club and break his jaw. This induces the customer to sue your business for this bodily harm. In the court case that follows, limited liability would ensure that your personal assets are protected from any requirement to pay damages imposed on your business.

Example 2: After the netting surrounding your driving range falls, a house that is neighboring your business is struck with numerous golf balls. This resulted in a number of windows being broken, as well as the roof. As a consequence, the house owner decided to sue your business for this property damage, maintaining that it was the fault of your driving range. In this scenario, any requirement to pay the plaintiff compensation can only be imposed on the assets of your business.

Example 3: An employee at your driving range business leaves their work phone on the train, which results in the personal and financial information of numerous important clients being publicly released. One of these clients brings a data breach lawsuit against your business, maintaining that its negligence led to this breach. Limited liability would ensure that any damages the court may require your business to pay cannot be levied against your assets.

Example 4: While golfing at your range, a guest gets hit in the eye. Though they signed a liability waiver, they sue your business, claiming that you did not provide a safe environment.

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 Driving Range

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 driving range 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

Driving ranges 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).

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How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a dependable 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?

Your LLC is going to need insurance, just like all other businesses. Driving ranges own numerous highly valuable assets that it is important to protect from their liabilities.

Limited liability compounds this protection by giving the owners of LLCs safeguards for their personal assets. This is distinct from insurance, which provides tantamount protection for a business’s assets.

Common Situations Business Insurance May Cover for a Driving Range

Example 1: A customer decides to sue when a stray ball hits their eye, and the injury requires surgery. While a court may rule in your favor because customers take on certain risks while using your facility, general liability insurance would cover your legal fees and any damages awarded in a settlement.

Example 2: While organizing the golf carts, an employee accidentally knocks a customer to the ground. The fall breaks the customer’s hip, and she demands repayment for her medical treatment. General liability insurance would cover the customer’s medical bills.

Example 3: A competitor sues your business over marketing materials they claim include defamatory statements about their business. General liability insurance would pay for your legal fees and any damages awarded in a settlement.

Other Types of Coverage Driving Ranges 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 driving ranges should obtain.

Commercial Property Insurance

You’ve made major investments in your equipment and other golf supplies. If you own the building in which you operate, you’re responsible for all business-related property housed there in the event of a fire or other natural disaster. Commercial property insurance would cover the cost of replacing your equipment and supplies after an accident so you can recover quickly.

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability benefits stemming from a work-related accident.

Commercial Umbrella Insurance

While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.

Business Interruption Insurance

If a fire, tornado, or other incident forces you to temporarily close, business interruption insurance would help cover your financial losses until you can reopen. You can usually purchase business interruption insurance as part of a business owner’s policy (BOP).

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, workers’ compensation insurance, and commercial property insurance.

Read our Business Insurance for Driving Ranges article for more info.

While the startup cost of your driving range will vary wildly depending on location, you can expect the figure to be high nonetheless. Basic ranges with few amenities can be established for around $100,000.

When you start to make more money, you can consider buying more high-tech equipment, such as indoor golf simulators.

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

For outdoor facilities, property maintenance is the largest ongoing expense incurred. For indoor driving ranges, on the other hand, there will be more ongoing costs incurred in the form of cleaning, payroll, and replacement costs.

Learn more about running a driving range.

Guests are charged for the use of golf balls and a tee area. Charging guests for equipment use will most likely be the most substantial form of income for your business.

Learn more about starting a driving range.

Driving ranges provide golfers an environment to practice their swings in as well as a recreation activity for those not looking for a full golf course.

Depending on the location and level of technology your driving range provides to guests, your range could profit as much as seven figures in a year. The profits for smaller ranges are generally much lower.

Learn more about starting a driving range.