Should I Start an LLC for My Juice Bar?

Starting a limited liability company (LLC) for your juice bar 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 juice bar, lawsuits can arise from things like employees damaging customer property or customers alleging that they got food poisoning as a result of drinking contaminated juice.

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

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

Do I Need an LLC for a Juice Bar?

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 Juice Bar

By starting an LLC for your juice bar, 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.

Juice bars will benefit from liability protection because food and beverage businesses, including juice bars, face a number of risks associated with employee and guest safety while on the business premises, as well as a number of copyright and trademark infringement risks with company branding and marketing.

Example 1: Your business hires three part-time waiters for your juice bar. If your business is unable to pay them their agreed salary in the future — and accrues debt as a result — the employees will not be able to sue you personally in order to seek compensation if your juice bar is registered as an LLC.

Example 2: After your business is unable to pay back a large business loan, you begin to worry that the creditor will sue you personally in order to recoup their investment. Since your business is registered as an LLC — and you didn’t personally guarantee the loan — your personal assets will remain 100% protected regardless of whether your business is able to pay the creditor back or not.

Example 3: When one of your waiters spills a freshly-made smoothie over a client’s expensive jacket, the client demands that you compensate her. If a compensation claim was to arise against your LLC, the claimant would not be able to sue you personally in order to seek compensation since your juice bar is registered as an LLC.

Example 4: You create a new logo for your juice bar, but it’s too similar to a competing juice bar’s trademarked design. They sue you for infringement.

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 Juice Bar

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 juice bar 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

Juice bar 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).

Get Started

How to Form an LLC

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

You can hire a professional 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?

LLCs are required to purchase insurance if they want to protect their business assets. This is because limited liability is “limited” in the protection it offers and in fact shields the personal assets of the LLC’s owners only, not the business’s assets as well.

Limited liability also does not protect owners against tort or negligence claims that they are personally liable for.

Common Situations Business Insurance May Cover for a Juice Bar

Example 1: One of your customers is waiting for a juice order to arrive at the serving counter and leans on the counter with his arm. A combination of a short in the wiring of one of your blenders and water on the counter causes the customer to sustain an electric shock. Your general liability insurance policy will likely cover the cost of treating his injuries as well as any legal fees should he choose to take legal action against your business.

Example 2: An employee is transporting boxes of fruit from the back to the prep area when he slips and drops the boxes on the foot of a customer, causing a fracture. The customer is angry about the accident and hires an attorney to sue your business. Your general liability insurance will pay for the costs of the customer’s medical bill and defending yourself against the lawsuit. If it is decided that settling out of court is in your best interests, the general liability insurance will pay for the settlement as well.

Example 3: You hire a local artist to create a new logo, which you then use on all of your marketing materials over the course of several months. A competitor decides that your new logo is too similar to her own and files a lawsuit against your business. The general liability insurance policy you have will pay for the legal costs associated with defending your business. It will also cover payouts or settlements if they are necessary.

Other Types of Coverage Juice Bars 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 juice bars should obtain:

Commercial Property Insurance

The different equipment and supplies you have in your juice bar—like your commercial blenders and refrigerators—took considerable investment to obtain. If a disaster like a fire destroys your property, commercial property insurance will help you cover the costs of replacing your equipment and supplies so you can get back to serving your customers as quickly as possible.

Workers’ Compensation Insurance

If you have employees, you are most likely required by state law to carry workers’ compensation insurance. But a workers’ comp policy does more than help you meet your legal obligations. It also ensures that you can take care of your employees if they are hurt doing a work-related task. Should they become injured, your workers’ comp policy will pay for their medical care and help cover lost wages while they are recovering from the work-related injury.

Data Breach Insurance

Also called cyberattack insurance, data breach insurance helps protect your business if you are the victim of cybercrime. For example, if your customer rewards program was hacked and customer information was stolen, you could find yourself being sued by those who were affected. Data breach insurance will protect your business by paying for your legal costs and the cost of any settlements you may need to pay to settle out of court.

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 article for more info.

You should be able to start a juice bar for under $10,000. Of course, this will depend on your business’s size and location.

You will need to rent a space that includes a sink for washing and preparing your fruits and vegetables, purchase a basic juicer or cold-press machine, and get all required business licenses and permits.

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

Ongoing expenses for juice bars might include rent, utilities, ingredient costs, payroll, equipment rental, and point-of-sale (POS) software for registers.

Learn more about running a juice bar.

Juice bars profit through the sale of quality, juice-based beverages to customers. Some juice bars partner with local markets to sell juice beverages as well.

Learn more about starting a juice bar.

Juice bars provide a number of smoothie and fruit juice beverages to appeal to individuals with diverse tastes, dietary restrictions, and health interests.

The average profit margin for juice bars can range from 30% to 40% on an annual basis.

Learn more about starting a juice bar.