Should I Start an LLC for My Photo Booth Business?

Starting a limited liability company (LLC) for your photo booth 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 photo booth business, lawsuits can arise from things like a customer’s personal information and photos being leaked due to employee carelessness, or if a client trips while trying to leave the booth.

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

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

Two girls posing with prop glasses and moustaches

Do I Need an LLC for a Photo Booth 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 Photo Booth Business

By starting an LLC for your photo booth 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.

Photo booth businesses will benefit from liability protection because of the risk of injury to guests while using and operating the photo booth, along with other general business risks like trademark infringement.

Example 1: A customer trips and falls while exiting one of your photo booths. The fall results in an injury, and the customer sues the business for medical expenses and damages. Limited liability protection would help to ensure that the owner's personal assets are safeguarded if the business is found liable.

Example 2: A customer's photographs are lost due to a technical issue. Following this, the customer sues the business. In this scenario, limited liability protection would help to protect the owner's personal assets if the business is found liable.

Example 3: A customer is injured due to an altercation at your photo booth. The customer claims you didn't provide a safe business environment and proceeds to sue you for medical bills and damages. If found liable, limited liability protection will ensure that only the business’s assets will be used to cover any compensation.

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 Photo Booth 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 photo booth 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

Photo booth 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.

A photo booth business needs insurance to protect against risks such as damage to equipment, liability for accidents or injuries that may occur on the property, and loss of income due to unexpected events or circumstances.

Common Situations Business Insurance May Cover for a Photo Booth Business

Example 1: When an employee fails to properly secure the background, someone trips and knocks the set onto two guests. General liability insurance would cover the guests’ medical bills, your legal fees, and any damages they file in a lawsuit.

Example 2: You used the incorrect cord on the picture printer, causing it to overheat and explode at a wedding. The wedding venue wants repayment for fire damage and its lost revenue for the time it closed for repairs. General liability insurance would cover your legal fees and payouts awarded by the court.

Example 3: A cord comes loose, causing a guest to trip and fall. They sue you for help covering their medical bills. General liability insurance would cover those bills.

Example 4: To help build your business, you decide to partner with a franchise. They require a minimum of $1 million in general liability insurance. Having a policy would help ensure your eligibility to join the franchise.

Other Types of Coverage Photo Booth 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 photo booth businesses should obtain:

Home-Based Business Insurance

Many photo booth business owners handle administrative tasks out of their homes, storing all equipment on-site. If your home suffers a loss or a client has an accident during a meeting there, you may find you’re underinsured or uninsured through your existing homeowner's insurance policy. Home-based business insurance fills in those gaps, protecting against losses a standard homeowners policy excludes.

You can typically purchase home-based business insurance as a part of a business owner's policy (BOP). For an additional premium, some homeowners insurance providers offer this coverage as a rider (extension of coverage).

Commercial Auto Insurance

If you have an accident while traveling to or from a customer venue, your personal auto policy may exclude that loss. A separate commercial auto policy helps fill that coverage gap, and each state mandates the minimum levels of auto coverage for all vehicles that operate on public roadways. Most often, those minimums only offer basic protection, leaving you underinsured in the event of a loss, so consider purchasing limits greater than those required by state law.

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. 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 work-related accident. While your state may allow exemptions for business owners, you should consider including yourself in your workers’ compensation policy if you engage in the day-to-day operation of the business.

Professional Liability Insurance

Many of the events your business serves are exciting, emotional times for your clients. Unfortunately, you may not always capture every moment a client expects. Professional liability insurance, also known as “errors and omissions” insurance, provides protection for negligence claims brought on by human error and/or misunderstandings between you and the client.

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 Business Insurance for Photo Booth Businesses article for more info.

To start a photo booth business, you will need to invest in a booth, camera, laptop, hardware and software, and other supplies. The total cost for these items is estimated to be around $5,000.

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

Some of the ongoing expenses will include the cost of equipment upkeep and maintenance, in addition to gas needed to travel to events.

Learn more about running a photo booth business.

Typically, photo booths make money on a per photograph basis; however, when they are hired for events, businesses may choose to offer package offerings for large groups of people to utilize photo booth capabilities.

Learn more about starting a photo booth business.

Photo booths provide individuals with a place to take fun photos. While photo booths can be relatively simple, modern photo booths have started to include advanced photo-taking capabilities including props, digital amenities, and social media sharing options.

The typical photo booth business makes around $35,000 a year.

Learn more about starting a photo booth business.