Should I Start an LLC for My Bait and Tackle Shop?

Starting a limited liability company (LLC) for your bait and tackle 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 bait and tackle shop, lawsuits can arise from things like a fisherman claiming that they’ve contracted fish handler’s disease after purchasing an order from your store, or from an employee or customer accidentally getting injured within your shop’s premises.

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

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

Do I Need an LLC for a Bait and Tackle Shop?

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 Bait and Tackle Shop

By starting an LLC for your bait and tackle 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.

Bait and tackle shops will benefit from liability protection because of the risk of product liability, workplace accidents, and even trademark infringement.

Example 1: After purchasing a large order from your bait and tackle shop, a local fisherman claims that they contracted fish handler’s disease as a direct result. Since there is no proof to back the fisherman’s claim, you ignore the accusation and continue on with your day. If a legitimate lawsuit were to arise, limited liability would prevent you from having to personally compensate the fisherman.

Example 2: While purchasing bait in your bait and tackle shop, two fishermen get into a heated dispute, which eventually leads to a physical altercation. After one fisherman gets injured, he demands that you compensate him, claiming that the fight escalated in your shop and neither you nor your employees took any reasonable steps to prevent it. Since your bait and tackle shop is registered as an LLC, you know that your personal assets cannot be put at risk in a legal compensation claim.

Example 3: You decide to hire an assistant to help you run your bait and tackle shop. Initially, you agree to pay him a fixed salary of $1,000 a week verbally, and then take this down to $750 on their contract of employment. After the first four weeks, your employee claims that they did not read the contract before they signed it and demand an extra $1,000 in accordance with the initial agreement. If an employment law lawsuit comes into play, your personal assets will remain protected if your business is registered as an LLC.

Example 4: One of your competitors claims that your latest advertising campaign made false claims about their business and they decide to sue you.

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 Bait and Tackle 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 bait and tackle 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

Bait and tackle 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 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?

Whether your LLC is legally required to purchase insurance will depend on certain factors, such as whether your bait and tackle shop hires employees or purchases vehicles.

Having said that, all LLCs need business insurance in order to protect their assets. This is because the limited liability offered by an LLC protects the owners’ assets only.

Common Situations Business Insurance May Cover for a Bait and Tackle Shop

Example 1: A customer walking through the aisles of your store fails to notice the wet floor and slips and falls. The accident causes him to break his arm and fracture his hip, leading to expensive medical bills. He demands that your business cover the costs of his medical care. Your general liability insurance will likely pay for his treatment.

Example 2: In a rush to deliver a large order, one of your employees rounds a corner with a dolly and runs directly into a customer. The customer falls, breaks his wrist, and later files a lawsuit against your business. The cost of your legal defense will be covered by your general liability insurance policy, as will the cost of paying a settlement if it is determined to be in your best interest to do so.

Example 3: You decide to hire a marketing team to create a marketing campaign to make your business more competitive. The marketers are a little too intense in their criticism of one of your competitors, causing the competitor to file a lawsuit claiming libel. The general liability insurance you carry will pay for your legal costs in situations where you are accused of libel and/or slander.

Other Types of Coverage Bait and Tackle 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 bait and tackle shops should obtain:

Product Liability Insurance

A product liability insurance policy covers the damages caused by a product you sell. If a customer decides that your fishing supplies were the cause of his injuries, for instance, and takes legal action, your product liability insurance would pay for the cost of your legal fees and any settlement you wound up paying to settle the case out of court.

Workers’ Compensation Insurance

Your state most likely has laws requiring you to carry workers’ compensation insurance if you have employees. The workers’ comp policy you carry will help you protect your employees. Should one of them be injured performing a work-related task, the policy will pay for their medical treatment and help cover lost wages if they are required to stay home from work.

Commercial Auto Insurance

If your bait and tackle business has one or more company vehicles, you need commercial auto insurance. Commercial auto insurance provides protection should you or an employee be involved in an accident in a company vehicle. It will help pay for the cost of repairing or replacing the company vehicle and any other vehicles damaged. It will also help pay for medical care for you, your employees, and anyone else injured in the accident.

Commercial Umbrella Insurance

A commercial umbrella insurance policy is designed to pick up the slack when a general liability insurance policy reaches its limits. There are certain situations where this can happen, like if your business were to lose a big lawsuit and you were required to pay extensive damages. Once the limits of your general liability insurance are reached, the umbrella policy takes over.

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.

You should be able to start a bait and tackle shop for around $5,000. This will include the cost of rent, utilities, business insurance, and basic shop supplies (e.g., refrigeration, gear, tackle, vending machines, etc.).

When it comes to maintenance, you will need to purchase gasoline for water trips, as well as bait nets.

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

Operating costs for a bait and tackle shop include rent, inventory, and payroll if you have employees.

Learn more about running a bait and tackle shop.

Bait and tackle shops make money by selling bait and tackle to fishermen. Some also sell other items like snacks and drinks.

Learn more about starting a bait and tackle shop.

Not every area is well suited for a bait and tackle shop, but in the right location, it can be a profitable business. The more convenient the shop is for fishermen, the higher its chances for success.

Startup costs for a bait and tackle shop can be kept quite low if it only sells fishing supplies. And while it would make it more expensive to open, including food and drink sales could boost the shop’s bottom line.

Learn more about starting a bait and tackle shop.