Should I Start an LLC for My Mermaid Business?

Starting a limited liability company (LLC) for your mermaid 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 mermaid business, lawsuits can arise from things like breaches of contract (either with employees or customers) or customer injury as a result of one of your employees’ performances.

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

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

Do I Need an LLC for a Mermaid 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 a Mermaid Business

By starting an LLC for your mermaid 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.

Mermaid businesses will benefit from liability protection because of the risk of being sued for property damage, libel, and trademark infringement.

Example 1: You rent an expensive mermaid tail to perform at an event. While dancing, you mistakenly spoil a part of it. The hirer refuses your apology and insists you must replace her expensive tail. If she sues you for it, your business may be required to pay damages, but not you as the business owner.

Example 2: A client comes to your walk-in store to buy mermaid costumes for her daughter's photoshoot. As you stand to attend to her, you step on her daughter's tender feet, and your heeled shoe injures her. If she sues for damages, your business may be affected, but your personal assets will be protected from the lawsuit.

Example 3: You are to supply items for a mermaid-themed party. It is a massive contract, so you rent a vehicle to transport the items. While packing the items, the mermaid treasure box falls and breaks the glass of the vehicle. If the vehicle owner insists on suing, your business may be affected, but your personal assets will remain safe.

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 Mermaid 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 a mermaid 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

Mermaid 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.

Mermaid businesses need insurance to protect them from damages to costumes, loss of properties, and client lawsuits.

Common Situations Business Insurance May Cover for a Mermaid Business

Example 1: While visiting a client’s home to discuss a mermaid performance at her child’s birthday party, you walk through the living room, trip over her dog, and fall into the entertainment center. Your fall smashes some expensive electronics, including a large television. General liability insurance would cover the cost of replacing the client’s damaged property.

Example 2: A competitor sues your company, claiming you libeled her business in your last advertisement. While you disagree with the claim, you know you need to hire an attorney to protect your business. General liability insurance would pay for your legal defense.

Example 3: As you carry your mermaid equipment into an event space, you accidentally knock over a customer’s child. The child breaks an arm in the fall, and the customer decides to sue you for damages. General liability insurance would cover your legal defense and any required settlement.

Other Types of Coverage Mermaid 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 mermaid businesses should obtain:

Commercial Auto Insurance

Any vehicle you use primarily to transport your mermaid gear to and from clients’ homes requires commercial auto insurance to protect the vehicle, driver, and others on the road in the event of an accident. Be sure to select a policy that covers not only accident-related vehicle repair costs and medical treatment for anyone injured but also sufficient protection for any business property you carry in your vehicle.

Commercial Property Insurance

You made a major investment in the mermaid costumes, associated gear, and real estate needed to run your business. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes structural damage to your building and the business materials stored there.

Workers’ Compensation Insurance

If you have any employees, most states will require you to carry workers’ compensation insurance for your part-time and full-time workers. 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 workplace accident.

Home-Based Business Insurance

If you run your business from your home, you may need home-based business insurance to safeguard the equipment and space in your home devoted to your business. A typical homeowners insurance policy may not cover business-related items or customer injuries on your property if you don’t disclose you use your home for business purposes. In the event of a lawsuit, this coverage would pay for your legal fees and other associated costs.

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 and commercial auto insurance.

Read our Mermaid Business Insurance article for more info.

Starting this business requires you to purchase costumes. The most expensive item is the tail, which can vary from $495 to $25,000. However, you may choose to hire a tail until you can afford to buy one. You will also need to budget for transportation to events.

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

Costume maintenance, marketing, and transportation are the primary ongoing expenses of a mermaid business.

Learn more about running a mermaid business.

A mermaid business charges by the hour for bookings.

Learn more about starting a mermaid business.

A mermaid business provides costumed mermaid characters for events like birthday parties and carnivals. Profits depend on the number of bookings, how much is charged per booking, and overhead costs.

Learn more about starting a mermaid business.