Should I Start an LLC for My Circus Business?

Starting a limited liability company (LLC) for your circus business 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 circus business, lawsuits can arise from things like Animal Welfare Act (AWA) violations, animal abuse, or an acrobat getting injured during a performance.

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

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

Do I Need an LLC for a Circus?

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 Circus

By starting an LLC for your circus, 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.

Circuses will benefit from liability protection because of risks associated with guests visiting and engaging with the performers and performance venue. There is also the risk of workplace accidents for your employees.

Example 1: A young elephant that frequently performs for your circus falls critically ill. Without your knowledge, an employee of your circus business forces the critically ill elephant to continue to perform against veterinarian advice to rest. As a result, the elephant dies after a series of performances. This provokes the EPA to sue your business for violating the Animal Welfare Act. As you were not personally responsible for making the elephant perform, any damages your company must pay cannot be levied against your personal assets.

Example 2: During a tightrope performance, one of your circus business’s acrobats loses balance and falls onto a visitor, who suffers serious injuries as a result. If the injured party was to sue your business for the bodily harm she had suffered on your premises, you could not be held responsible for satisfying this compensation with your personal assets.

Example 3: You take out a loan in order to afford some of the more expensive equipment for your circus; however, your business performs much worse than you expected, and you realize you are no longer able to repay this loan. This prompts the creditor to sue your business for defaulting on the loan. Given you didn’t personally guarantee the repayment, your personal assets will be protected from being used to satisfy the debt.

Example 4: During a particular act involving fire, the fire spreads throughout the tent and requires guests to evacuate the area. Several guests that end up injured sue your business for damages.

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 Circus

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 circus 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

Circuses 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 trusted 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

Do LLCs Need Insurance?

As is the case for all businesses, LLCs need to buy insurance. In particular, circus businesses must own insurance in order to protect their assets, such as huge venues and complex equipment.

There is a simple difference between the protection of limited liability and insurance: the former provides protection to the personal assets of the owner, while the latter provides protection to the business’s assets.

Common Situations Business Insurance May Cover for a Circus Business

Example 1: A small fire occurs in one of your circus tents, causing spectators to panic. The resulting stampede injures several guests, who sue your circus for damages. General liability insurance would cover your legal fees associated with the lawsuits as well as any awarded damages.

Example 2: When a loose monkey scratches a guest during one of your acts, the guest sues for repayment of their medical bills and for general pain and suffering. General liability insurance would cover your legal fees and any awarded damages.

Example 3: While wandering into an area closed to the public, a ticket holder walks too close to the elephant-holding area, and an animal knocks their child to the ground. If the ticket holder sues for damages, general liability insurance would pay for your legal fees and any damages awarded by the court.

Other Types of Coverage Circus 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 circuses should obtain.

Commercial Property Insurance

The circus can’t operate unless it keeps its property in safe, working order. Commercial property insurance covers the cost of repairing or replacing all business-related property in the event of a fire, burglary, or natural disaster. Because a circus moves its property from place to place, and that property includes animals, circus owners should discuss proper commercial property insurance endorsements to ensure coverage of business property during travel.

You can purchase commercial property insurance as part of a business owner's policy (BOP).

Business Interruption Insurance

Your business faces significant revenue loss if you need to shut down temporarily to make repairs after a fire or major storm. Business interruption insurance would cover some of your lost revenue, helping to ensure you don’t go out of business while you complete the necessary repairs.

Again, you can typically purchase this coverage as part of a business owner's policy (BOP).

Commercial Umbrella Insurance

A circus relies on the patronage of tens of thousands of customers each year, which places business owners at greater risk for liability claims. 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.

Workers’ Compensation Insurance

Without the talent and dedication of your employees, the show would not go on. 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. It also would cover your legal fees if an employee sues for damages.

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.

The cost of getting your circus business up and running depends on its specific size. If you are not intending to buy complex equipment, large venues, and exotic animals, the cost will be very manageable. The only substantial cost you should be faced with if starting a smaller circus would be the salaries of your employees (such as acrobats, etc.).

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

The main ongoing costs will include equipment maintenance, employee wages, and advertising costs.

Learn more about running a circus.

Circuses make a profit by charging guests for tickets to attend shows. Other profits may stem from selling concessions or refreshments.

Learn more about starting a circus.

Often provided by traveling fairs and entertainment groups, circuses provide entertainment using a number of performances, including acrobats, entertainers, and animals. While some circuses are mobile and move from place to place, others secure a place of residency where they perform on an ongoing basis.

The average circus performs at a 15% profit margin, with the ability to profit upwards of $100,000 a year.

Learn more about starting a circus.