Should I Start an LLC for My Gourmet Popcorn Shop?

Starting a limited liability company (LLC) for your gourmet popcorn shop 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 gourmet popcorn shop, lawsuits can arise from things like not disclosing allergens, trademark disputes, or contract law violations.

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

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

Do I Need an LLC for a Gourmet Popcorn Shop?

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 Gourmet Popcorn Shop

By starting an LLC for your gourmet popcorn shop, 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.

Gourmet popcorn shops will benefit from liability protection because food and beverage businesses face the risk of product liability, trademark infringement, workplace accidents, and other general business losses.

Example 1: One of the employees of your gourmet popcorn shop fails to notice a piece of plastic in a box of popcorn that he had just sold to a young child. Soon after, the child nearly chokes on plastic, which prompts his parents to sue your business for its negligence. Limited liability would protect you from being held personally liable for this.

Example 2: In order to afford a storefront in a high-traffic area for your gourmet popcorn shop, you decide to take out a business loan. However, you realize you will not be able to repay this loan after your business does not perform as you hoped it would. When the creditor hears of your inability to repay, he sues your business for defaulting on this debt. Limited liability would protect your personal assets from being used to satisfy the business’s debts.

Example 3: After finishing up at work, an employee of your gourmet popcorn shop accidentally crashes into a customer’s car in your business’s car park. If the customer were to sue your business for this property damage, your personal assets could not be used to satisfy any business liability to pay damages.

Example 4: A customer sues your shop, claiming that you did not properly disclose the ingredients of one of your popcorn offerings and caused them to have an allergic reaction.

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 Gourmet Popcorn Shop

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 gourmet popcorn shop 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

Gourmet popcorn shops 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 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?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets.

This is especially true for gourmet popcorn shops since they are very valuable businesses and need to protect their assets.

Common Situations Business Insurance May Cover for a Gourmet Popcorn Shop

Example 1: An excited child sneaks behind the counter and shoves her hand into the popcorn machine. She sustains burns, and her parents demand that you pay for her medical care. Your general liability insurance will likely cover the child’s treatment costs.

Example 2: One of your customers is entering the restroom when she slips and falls on some water that has recently been spilled on the floor. She hits her head and breaks her wrist. She files a lawsuit against your business, demanding damages. Your general liability insurance will pay for your legal defense in such a situation, including the cost of a settlement if you settle out of court.

Example 3: An employee is carrying a stack of boxes high enough that she cannot see around them. She bumps into one of your customers, knocking her to the ground and causing her injury, including a broken wrist. The customer demands that you pay for her medical treatment. You can likely get financial help from your insurer to pay the medical bills.

Other Types of Coverage Gourmet Popcorn Shops 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 gourmet popcorn shops should obtain.

Product Liability Insurance

Because you sell products to the public, you are always at risk of being sued over those products. No matter how careful you are to sell safe products, there is still a possibility that a customer will claim that your popcorn or other products caused him or her injury. If you are sued over a product you sell, your product liability insurance will pay for your legal defense. It will also pay for a settlement if required.

Commercial Property Insurance

You put in a lot of work and capital to get your popcorn business off of the ground. If you were to lose your commercial property in a disaster like a fire, it would be challenging to replace all of it. If your property is destroyed or damaged by a covered event, you can file a claim and get help purchasing new inventory. With the money from your insurance policy, you can get the new equipment and inventory you need to get back to business.

Workers’ Compensation Insurance

Most states require you to carry workers’ compensation insurance if you have employees. Workers’ comp will pay for medical treatment for employees who have sustained work-related injuries. It will also help pay for lost wages if they cannot work while they recover.

Commercial Auto Insurance

If you have an automobile that you use primarily for business, you need commercial auto insurance to protect you, your property, and your employees. If you or an employee are involved in an accident in the vehicle, your policy will pay for repair or replacement costs and medical treatment for injuries. It would also pay for any legal defense costs you might incur if you faced a lawsuit due to the accident.

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, commercial property insurance, and workers’ compensation insurance if you have employees.

Read our Gourmet Popcorn Shop Business Insurance article for more info.

You can expect to be faced with a sizeable upfront cost in order to start your gourmet popcorn shop. Opening a store for an existing franchise normally ranges from $39,000 to $350,000, with the largest determinant of this price being the location of the store you select.

In addition to this cost, you will also need equipment (such as a popcorn popper), ingredients, and packaging supplies. One way to reduce the overall startup cost is selling from a mobile cart instead of a physical store.

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

The ongoing expenses for a gourmet popcorn shop include the cost of ingredients, maintenance of equipment, packaging supplies, utilities, and general business costs.

Learn more about running a gourmet popcorn shop.

A gourmet popcorn shop makes money by selling gourmet popcorn to customers. Some gourmet popcorn shops also sell gourmet popcorn recipe books.

Learn more about starting a gourmet popcorn shop.

Gourmet popcorn shops are a fast-growing segment of the snack foods industry. The popcorn industry is a $1 billion market in the US.

Furthermore, gourmet popcorn shops can be very profitable small-scale shops, making anywhere from $50,000 to $700,000 in revenue.

Learn more about starting a gourmet popcorn shop.