Should I Start an LLC for My Board Game Business?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should form 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 Board Game Business

By starting an LLC for your board game business, 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.

Board game businesses will benefit from liability protection because of the risk of lawsuits for libel of other businesses, intellectual property claims, damage to property, and workplace injuries. 

Example 1: You hire an artist to assist you with the artwork of one of your new board games. After the project is not completed on time, you feel unsatisfied, and let the contracted artist know that you’re no longer happy with paying him the pre-agreed rate since this was based on a specified deadline. If they decide to sue you for breach of contract, your personal assets will remain protected regardless of whether any liability arises in court. 

Example 2: When a customer’s child chokes on one of your board game’s oddly shaped die, you find yourself and your business facing a lawsuit. Since your business is registered as an LLC, you know that your personal assets will remain protected as long as it wasn’t your own actions that negligently caused the claimant harm.  

Example 3: You take on a large business loan to finance the trademarking and manufacturing of two new board games. If your revenue declines in the future and you end up having a hard time paying the loan back, you will not be held personally liable as long as you didn’t personally guarantee the loan. 

Example 4: Following the release of a new board game, a competitor sues your company claiming that the game infringes on copyrights they own.

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 Board Game Business

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 board game business 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

Board game businesses 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.

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.

LLCs need insurance in order to protect their business assets (e.g., board games, manufacturing equipment, etc.). 

This is because the limited liability offered by an LLC structure protects the owners’ personal assets only. When it comes to an LLC’s assets, business insurance is required in order to protect them from foreseeable financial harm.

Common Situations Business Insurance May Cover for a Board Game Business

Example 1: While touring your factory, a visitor stumbles and falls against a hot plastic molding machine. They sustain serious burns and require immediate medical attention. General liability insurance would likely cover all their related medical costs.

Example 2: While you’re loading up a shipment to go out from the factory, your loading dock ramp malfunctions, slamming into the delivery vehicle. The impact crushes the tailgate and damages thousands of dollars of inventory. Your general liability policy will likely pay for repairs to the vehicle and cover the cost of the damaged items.

Example 3: As a customer leaves your lobby, they accidentally slip on the slick floor and break their arm in the fall. They are angry and threaten to sue you for damages. You file a claim under general liability that will likely cover their medical expenses and pay for your legal fees if there is a lawsuit.

Other Types of Coverage Goard Game Businesses 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 board game companies should obtain:

Workers’ Compensation Insurance

If an employee is injured on the job, workers’ compensation insurance will pay for their medical costs. And if they can’t return to work, they may also be eligible for disability benefits under this policy. Most states require businesses that have full-time or part-time employees to carry workers’ compensation.

Product Liability Insurance

If a customer claims that one of your products caused them harm, they could sue your company for damages. Product liability insurance will help to pay for your legal defense and any payouts that are awarded in a settlement.

Commercial Property Insurance

Producing your board games requires the use of specialized equipment, tools, and expensive computer systems. If any of these items are damaged in an incident like a fire, it can be extremely costly to replace on your own. With commercial property insurance, you can get help to pay for the repair or replacement of this valuable property and keep production going.

Commercial Umbrella Insurance

If your primary insurance policy’s limits are exceeded in a big lawsuit, commercial umbrella insurance will step in to go above those limits to help you avoid paying for damages out-of-pocket.

IRS: Limited Liability Company

IRS: S Corporations

IRS: EIN

SBA: Small Business Guide

SBA: Choose a Business Structure Guide

US Census Bureau: Small Business Statistics

SBA Office of Advocacy: Data on Small Business

FRED: SBA Data for Small Business