Do I Need an LLC for My Escape Room Business?

Starting an escape room business is a thrilling and enriching experience, but you must make sure to set up your business correctly from the start. One of the best ways to do this is by setting up a limited liability company (LLC). An LLC is a corporate structure designed to limit your personal financial liability should your business ever be sued or go into debt. Setting up an LLC isn't too complicated, so follow these five steps to get your escape room business off on the right foot.

Written by:

Newfoundr

Updated on:

August 2, 2023

7 Steps to Setting up an LLC for your Escape Room Business:)

1. Pick a Name For Your Escape Room LLC.

When naming your Airbnb LLC, it is important to consider the potential impact it could have on your business. Your name should be catchy and memorable, while still accurately representing the services that you provide, whether that’s rental properties or travel experiences. Consider the following tips when making a decision:

Research the competition - Look at the names of other Airbnb businesses to get an idea of what is already out there. Are there any words or phrases that you find especially appealing?
Be unique - Aim for a name that isn’t already in use, either online or in real life. A good rule of thumb is to make sure there aren’t any other companies with the same name.
Think of a memorable phrase - If you’re having trouble coming up with something new and fresh, look for different adjectives and nouns to get your creative juices flowing.
Stay relevant - Your name should be rooted in the concept of travel and hospitality, which can easily be accomplished by including keywords such as “lodging”, “vacation” or “rooms''.

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2. Choose a Registered Agent For Your Escape Room LLC.

Choosing a registered agent for your escape room LLC can be a daunting task, but it is an important step in setting up shop. A registered agent is responsible for receiving and delivering documents like tax forms and legal notices on behalf of the business. Here are some tips to help you pick out the right registered agent for your escape room LLC:

Research providers that specialize in the escape room industry.
Check local laws and regulations to ensure you are compliant with any filing requirements.
Look for reviews from other small businesses to get an idea of the quality of services offered.
Ensure that the provider will forward important documents in a timely manner.
Compare prices, availability, and customer service offered by each provider.

3. File Your Escape Room LLC Certificate of Organization.

The first step to starting a successful escape room business is filing your certificate of organization. To do this, you will need to complete the necessary paperwork required by your local government. Additionally, you'll need to register for any applicable taxes such as sales and use taxes. Here are the steps you will need to take to complete your certificate of organization:

Research regulations for escape room businesses in your state.
Complete the Certificate of Organization form.
Locate the designated filing office and submit your paperwork.
Pay any applicable filing fees.
Wait for your certificate of organization to be processed and approved.

4. Draft Your Escape Room LLC Operating Agreement.

Creating an operating agreement for an escape room business is essential to ensuring its success. The agreement should include industry-specific terms that reflect the individual business model, while also taking into account factors such as potential risks and best practices. An ideal operating agreement will offer comprehensive and enforceable solutions, as well as protect the interests of all parties involved in the escape room business.

Begin by outlining key principles of the escape room business, such as its purpose and management structure.
Specify the rights, duties, and obligations of each party involved in running the escape room. This includes setting out who will have authority to make decisions and enter into contracts.
Define processes for handling finances, such as how profits will be distributed.
Include procedures for managing risks related to premises liability, copyright infringement, insurance coverage and other legal issues.
Address dissolution or termination of ownership or partnership agreements.
Provide guidelines for resolving disputes among parties to the agreement.

5. Grab Your Escape Room LLC EIN.

Applying for an employer identification number (EIN) is a crucial step in starting or expanding an escape room business. An EIN allows you to open a business bank account, hire employees, and file taxes. Here are the steps to obtain your EIN for an escape room business:

Go to the Internal Revenue Service’s online portal at https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number
Answer the questions about your business entity, contact information, and responsible party.
Verify your identity and complete the application.
Receive your new EIN in 25 minutes or less.

Frequently Asked Questions:

Is it Legally Required to have an LLC for Your escape room Business?

Starting an escape room business does not necessarily require you to form a limited liability company (LLC). The main advantage of forming an LLC is that it can provide protection for your personal assets by limiting your exposure to personal liability. However, several other business structures do also offer liability protection as well. For example, if you are a solopreneur who plans to operate their business in their own name or under a fictitious business name (DBA), they may opt to structure their business as a limited liability partnership or corporation. These types of structures will provide the same level of personal asset protection as an LLC without the additional administrative burden that comes with forming and maintaining an LLC. In the end, it all boils down to a few key factors. How much personal risk are you willing to take on? How much complexity do you want in setting up and operating your business? Answering these questions can help you determine the best structure for your escape room business.

What are the Tax Benefits for Having an LLC for Your escape room Business?

Having an LLC for your escape room business can provide a range of tax benefits. For starters, LLCs protect the owner from personal liability for business debts and obligations. Additionally, LLCs can offer significant tax savings compared to other legal entities. Here are a few tips for optimizing your escape room’s tax benefits as an LLC:

Make sure you keep your personal and business expenses separate.
Set up company-sponsored retirement accounts.
Take advantage of the home office deduction.
Hire employees who are qualified to take advantage of payroll tax deductions.
Take full advantage of the self-employment tax deduction.
Look into purchasing equipment that’s eligible for depreciation.

What Does it Cost to Form an LLC For Your escape room Business?

What Liability Risks do escape room Businesses Face?

Escape room businesses face a variety of liability risks, including but not limited to: personal injury, property damage, negligence and premises liability claims, contractual risks and risks related to the delivery of activities and services. Additionally, escape room businesses may also be exposed to copyright infringement claims, product liability risks, regulatory compliance issues and privacy-related claims.

Additional Resources for Starting an Escape RoomBusiness:

Starting an escape room business can be a challenging but rewarding experience. There are many resources that can make the process simpler, from finding the right space to creating an engaging game.
The following are some great resources to help you in starting your escape room business:

Prop Vendors: Prop vendors such as Escape Room Props can provide a variety of puzzles, locks, and clues for your game. These props are designed to create a unique and immersive experience for participants.
Escape Room Designers: Professional escape room designers such as Room Escape Artist specialize in creating puzzle-based experiences tailored to your goals and budget.
Marketing Resources: There are several marketing resources available to help you promote your business. Social media accounts like Instagram, Twitter, and Facebook are essential for getting the word out about your new venture.
Business Advisors: Advisors such as Business Planning Services can provide guidance on financials, legal issues, and more during the startup process.