Should I Start an LLC for My Inflatable Bounce House Business?

Starting a limited liability company (LLC) for your inflatable bounce house 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 an inflatable bounce house business, lawsuits can arise from things like customer injuries that occur within a bounce house that you installed, or damaging a client’s property while installing a bounce house in their backyard.

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

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

child playing in an inflatable bounce house

Do I Need an LLC for an Inflatable Bounce House Business?

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 an Inflatable Bounce House Business

By starting an LLC for your inflatable bounce house 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.

Inflatable bounce house businesses will benefit from liability protection because of the relatively high risk of customer injury. There are also the general business risks of trademark infringement and workplace accidents.

Example 1: Your inflatable bounce house has a contract to host a school event. Malfunctioning equipment causes you to cancel and the school sues. No matter what the outcome of the lawsuit is, rest assured your personal assets are under protection.

Example 2: Your inflatable bounce house is unable to pay off an overdraft and the bank takes legal action to recover the outstanding balance. Even if the court rules against you, your personal assets would be protected from the judgment.

Example 3: Business is bad and you make the unhappy decision to close your inflatable bounce house. Unfortunately, the business does not have enough assets to pay off all the trade accounts. Regardless, if your business is an LLC, your personal assets would be protected by its limited liability status.

Example 4: A child is enjoying one of your bounce houses when he gets his foot stuck in a crevice and breaks his ankle. While your business may ultimately be found not liable, there is still the possibility that the child’s parents could file a lawsuit, which could include significant legal fees.

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 an Inflatable Bounce House 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 an inflatable bounce house 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

Inflatable bounce house 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.

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?

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.

In particular, inflatable bounce houses need insurance because of the risk of being sued for personal injury. General liability insurance would cover personal injury, as well as damage to property and many other risks.

Common Situations Business Insurance May Cover for an Inflatable Bounce House

Example 1: A child is enjoying one of your bounce houses when he gets his foot stuck in a crevice and breaks his ankle. While your bounce house business may ultimately be found not liable due to the risks the customer assumes when using your bounce houses, there is still the possibility that the child’s parents could file a lawsuit. Your general liability insurance will pay for your legal fees, including any payout or settlement resulting from the injury.

Example 2: An excited parent is visiting your business to do some research on what kind of bounce house experience will be best for her child’s birthday party. While leaving the restroom, she slips and falls on the tile floor and breaks her hip. Your general liability insurance would likely cover the costs of her medical care.

Example 3: Your employee is loading a box of supplies onto a customer’s truck when he loses control of the forklift, driving a fork through the side of the truck. With general liability insurance, the damages to your customer’s property will likely be covered.

Other Types of Coverage Inflatable Bounce Houses 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 inflatable bounce houses should obtain.

Commercial Auto Insurance

Since you will be driving your business vehicle on public roadways, you are mandated by the state to carry a commercial auto policy. Auto insurance protects not only your vehicle but any liability you may have in an accident. Your personal car insurance will not cover you if you are driving the business vehicle even if you are off duty.

Commercial Property Insurance

If you own your location instead of renting, you need commercial property insurance to protect the building. Property insurance also covers items owned by your business.

Inflatable bounce houses invest heavily in the equipment that is used to complete their work. Be sure that you have enough coverage to replace all of your equipment in the case of a loss. This coverage is generally offered in a Business Owner Policy (BOP).

In addition to the policies outlined above, there are a few other types of coverage your inflatable bounce house may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.

Workers' Compensation Insurance

If your inflatable bounce house has any employees (full-time or part-time), you are legally required to carry workers’ compensation insurance. This type of coverage will help compensate your employees in the case that they get injured on the job.

Read more about workers’ compensation insurance.

Business Interruption Insurance

In the event of a fire, flood, or other catastrophes, there is a good chance your business operations will be halted for some time. Business interruption coverage is designed to help you recoup a portion of the revenue your business would lose due to the inability to operate.

This type of insurance is typically included in a business owner’s policy.

Commercial Umbrella Insurance

Umbrella coverage allows you to extend above and beyond the standard limits of your other business insurance policies. If you are faced with a large lawsuit or other claim situation, there’s a possibility that the coverage limits of your standard policies will be insufficient. In this case, your umbrella policy will allow you to surpass these limits.

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.

Read our Bounce Business House Insurance article for more info.

Startup costs for an inflatable bounce house rental company will include the purchase of at least one bounce house and a vehicle to transport the bounce house. Just a website may do. Otherwise, renting premises on a busy main street could cost a lot. Franchise costs at $166,000 to $250,000 will be a great deal more.

Visit our How to Start an Inflatable Bounce House Business guide to learn more about the costs of starting and maintaining this business.

Operating expenses for an inflatable bounce house business include insurance, cleaning supplies, marketing costs, and potentially for rent and payroll.

Learn more about running an inflatable bounce house business.

Inflatable bounce house businesses make money by charging customers to use inflatable bounce houses. This could either be a temporary rental delivered to the customer’s house or in a permanent location that customers pay to visit.

Learn more about starting an inflatable bounce house business.

Inflatable bounce houses are a popular activity for children’s birthday parties and other occasions. However, because they aren’t practical to own, there is a big demand for a bounce house rental service.

An inflatable bounce house business can provide short-term bounce house rentals to customers’ homes, or it can be a permanent indoor space that people pay to use. Startup costs will vary considerably depending on your business model.

Potential profits for an inflatable bounce house business vary considerably depending on how many bounce houses you have and if your business is mobile or if it has its own space that customers pay to use.

Learn more about starting an inflatable bounce house business.