Do I Need an LLC for My Mobile Bartending Service?

Starting a limited liability company (LLC) for your mobile bartending service 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 mobile bartending service, lawsuits can arise from things like unpaid wages that are owed to ex-employees or the business running up debt that it is not able to repay to creditors.

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

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

Should I Start an LLC for My Mobile Bartending Service?

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 Mobile Bartending Service

By starting an LLC for your mobile bartending service, 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.

Mobile bartending services will benefit from liability protection because of the risk of product liability, workplace accidents, and financial data breaches.

Example 1: Your mobile bartending business has run up debt but does not have the cash to pay the creditors as promised. They sue. Be assured that the creditors cannot take action against your personal assets. Because you operate as an LLC, the debts are not yours, but your company's.

Example 2: Your mobile bartending business faces a lawsuit from an ex-employee who alleges he is owed unpaid wages. You suspect he falsified his work records but it may be difficult to prove. If his claim succeeds, he can only be paid from business assets. Your personal assets are protected.

Example 3: You are forced to wind up your mobile bartending business because of a severe downturn in business. Sadly, the business does not have enough assets to clear all its liabilities. Have no fear your personal assets are at risk. They are sheltered by the company's limited liability shield.

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 Mobile Bartending Service

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 mobile bartending service 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

Mobile bartending services 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?

Yes, businesses need insurance because of the risks involved. A mobile bartending business should have general liability insurance which chiefly covers risks that result in personal injury or property damage. It will also cover legal fees and court awards.

LLCs protect personal assets. Business insurance protects business assets.

Common Situations Business Insurance May Cover for a Mobile Bartending Service

Example 1: While bartending an event, a guest was served two shots of tequila and three beers. While leaving the party, he runs off the road, hitting a parked car and a street sign in the process. The driver was seriously injured, resulting in over $60,000 in medical costs, $4,000 damage to his vehicle, and $2,000 to the city’s street sign. While each state has its own rules regarding what type of policy would cover this loss, they all agree on one detail; a general liability policy must be in place for any coverage to kick in.

Example 2: The host of an event has asked you to provide a specialty drink for each guest to try. The cocktail is made with lemon zest. Unaware of its contents, one guest drinks several sips before realizing it contains lemon, which she is highly allergic to. She is rushed to the hospital, where she is treated for anaphylactic shock. General liability insurance would cover your legal costs in the matter.

Example 3: A museum is hosting a fundraising event and they have hired your company to serve wine and beer to its guests. Upon leaving the party, a guest runs off the road and hits a city worker who was picking up trash on the side of the road. His family sues for medical expenses, pain, and suffering. While additional policies may apply, your business must carry General Liability coverage to assist in paying for this loss.

Other Types of Coverage Mobile Bartending Services 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 mobile bartending services should obtain.

Commercial Auto Insurance

Since you will be driving your business truck 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 truck, 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. If your business is based out of your home, your homeowners' insurance will not cover the home when it is being used for commercial purposes. Property insurance also covers items owned by your business.

Mobile bartending services invest heavily in the equipment used to provide their service. Be sure that you have enough coverage to replace all of your equipment in the event of 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 mobile bartending service 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 mobile bartending service 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.

Read our Mobile Bartending Business Insurance article for more info.

A mobile bartending business can be started for around $5,000. With that capital, you should be able to acquire a mobile bar, plus equipment and accessories. Ongoing costs will include vehicle expenses, wages, consumables, and commercial insurance.

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

Some of the operating costs for a mobile bartending service may include payroll, insurance, and marketing.

Learn more about running a mobile bartending service.

Mobile bartending services make money by renting their services to customers. This could just be the bartenders themselves, or it could include the equipment and drinks as well.

Learn more about starting a mobile bartending service.

A mobile bartending service could be a good, relatively low-cost alternative to opening a physical bar. Providing bartending services for private events can still be profitable, especially if you can scale up and add more bartenders to your team.

Most successful mobile bartending services start off with a yearly profit between $25,000 to $40,000, potentially growing to around $75,000 after a few years.

Learn more about starting a mobile bartending service.