Should I Start an LLC for My Bowling Alley?
Starting a limited liability company (LLC) for your bowling alley 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 bowling alley, lawsuits can arise from things like a customer accidentally injuring an employee (or another customer) while bowling as well as from food poisoning allegations.
LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your bowling alley seem more credible.
Recommended: Use Northwest to form an LLC for $29 (plus state fees).
Do I Need an LLC for a Bowling Alley?
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 Bowling Alley
By starting an LLC for your bowling alley, 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.
Bowling alleys will benefit from liability protection because of the risk of lawsuits for personal injuries to customers, property damage, or the libel of other businesses.
Example 1: You ask a close friend for a small business loan of $30,000 in order to redesign your bowling alley and purchase new equipment. Since the agreement was made between the LLC and your friend, you will not be held personally liable if you fail to pay the loan back in the future.
Example 2: When a drunk customer gets frustrated at their inability to bowl successfully, they recklessly hurl a bowling ball backward and end up accidentally breaking another customer’s foot. After recovering from the accident, the injured party files a lawsuit against your LLC, claiming that you had a duty of care to prevent them from foreseeable harm. Since your business is registered as an LLC, you cannot be held personally liable regardless of the outcome of the claim.
Example 3: When you discover that one of your employees has been stealing bowling alley equipment, you withhold their full monthly salary and terminate their employment. Claiming that this violates the employment law standards of your state, they file a claim against your LLC, seeking compensation. Here, limited liability will ensure that your personal assets remain protected, regardless of whether any liability arises in court.
Example 4: A patron slips and falls on the alley floors, sustaining an ankle injury. They decide to sue you, claiming that you did not provide the proper safety measures.
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 Bowling Alley
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 bowling alley 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
Bowling alleys 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).
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
- Alabama LLC
- Alaska LLC
- Arizona LLC
- Arkansas LLC
- California LLC
- Colorado LLC
- Connecticut LLC
- Delaware LLC
- Florida LLC
- Georgia LLC
- Hawaii LLC
- Idaho LLC
- Illinois LLC
- Indiana LLC
- Iowa LLC
- Kansas LLC
- Kentucky LLC
- Louisiana LLC
- Maine LLC
- Maryland LLC
- Massachusetts LLC
- Michigan LLC
- Minnesota LLC
- Mississippi LLC
- Missouri LLC
- Montana LLC
- Nebraska LLC
- Nevada LLC
- New Hampshire LLC
- New Jersey LLC
- New Mexico LLC
- New York LLC
- North Carolina LLC
- North Dakota LLC
- Ohio LLC
- Oklahoma LLC
- Oregon LLC
- Pennsylvania LLC
- Rhode Island LLC
- South Carolina LLC
- South Dakota LLC
- Tennessee LLC
- Texas LLC
- Utah LLC
- Vermont LLC
- Virginia LLC
- Washington LLC
- Washington D.C. LLC
- West Virginia LLC
- Wisconsin LLC
- Wyoming LLC
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?
An LLC must purchase business insurance if it plans to protect its business assets (e.g., bowling balls, shoes, music equipment, etc.) from foreseeable harm. This is because the limited liability offered by an LLC structure applies to the owners’ personal assets only.
Common Situations Business Insurance May Cover for a Bowling Alley
Example 1: While horsing around on the polished wood surface of a bowling lane, a customer slips, breaks his wrist, and decides to sue your business. General liability insurance would pay for your legal defense and any required settlement.
Example 2: As one of your patrons walks to the restroom, she stumbles, falls, and sustains a concussion. She asks you to pay for her medical care due to your uneven flooring. General liability insurance would cover her medical treatment.
Example 3: A local competitor sues your business, claiming you stole his company logo and used it without his permission. General liability insurance would pay for your legal defense and any required settlement.
Other Types of Coverage Bowling Alleys 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 bowling alleys should obtain:
Commercial Property Insurance
You made a major investment in your alleys and bowling equipment. If you own the building in which you operate, commercial property insurance would cover the cost of repairing or replacing your business-related property in the event of a fire, theft, or natural disaster. This includes structural damage to your building as well as your bowling equipment and supplies.
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 or death benefits stemming from a work-related accident.
Product Liability Insurance
If your bowling alley sells products, such as bowling equipment, there’s always a chance someone might claim one of your products caused them harm. In the event of a lawsuit, product liability insurance would cover your legal fees and any required settlement.
Liquor Liability Insurance
If you serve alcohol in your bowling alley, liquor liability insurance can help protect your business against related damages. For example, if a customer gets hurt after consuming alcoholic beverages at your bowling alley and decides to sue your business, this coverage would pay for your legal defense costs.
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.
In order to start a bowling alley, you will need to purchase or rent a large commercial space, as well as bowling equipment. Such equipment includes:
- Rental shoes, balls, and lockers
- Music and intercom systems
- Bowling seats
- Arcade and pinball games
You will undoubtedly also need to periodically maintain your bowling alley, as well as most of its equipment.
Visit our How to Start a Bowling Alley guide to learn more about the costs of starting and maintaining this business.
Ongoing expenses include maintenance (e.g., lanes, balls, shoes, machinery, and any additional entertainment systems, etc.). In addition, you’ll need to regularly purchase food and beverages if you sell them.
Learn more about running a bowling alley.
Bowling alleys charge customers by the hour to bowl as well as to rent bowling shoes and balls.
Learn more about starting a bowling alley.
Bowling alleys provide a place for individuals to bowl, play arcade games, and partake in concessions. Many bowling alleys also host bowling leagues and tournaments.
A bowling alley’s profits depend on how many customers it can attract and how much it spends on overhead costs.
Learn more about starting a bowling alley.
