How to Start an Advertising Agency (and Make $500K/Year)


May 12, 2021

How to Start an Advertising Agency (and Make $500K/Year)

One of the hottest industries to start a business in is the tech industry—more specifically social media marketing.

We’re going to walk you through the process of how to start an advertising agency so you can begin your path to success in digital marketing.

We talked to Jason Yormark, founder and Chief Social Officer of Socialistics, about how he started his company and has 4x the revenue since starting it 2.5 years ago.

He started off with Microsoft then started blogging during a year layoff before getting hired back.

He started the Socialistics advertising agency as a side project but has grown it to managing $2-5K social media marketing campaigns for 15 clients, including Habitat for Humanity and the U.S. Air Force.

We’ll give you everything you need to know when starting an advertising agency, including an overview of the industry, developing the business concept, getting all the licensing/business requirements, commonly asked questions about advertising and marketing, strategies for launching, and business operations. 

Throughout, we’ll provide input from Jason and myself on what we have found that works and doesn’t work. Keep reading to find out more.

Advertising Industry Overview

Business owners in all industries need marketing. Most small businesses don’t have the time and knowledge to run their own ad campaigns, so there’s a ton of opportunity for starting a new business in marketing or advertising.

Let’s start by discussing the state of the industry. Because of the global pandemic, marketing spending dropped to $1.28 Trillion in 2020 according to PQ media. Jason experienced a drop in revenue which he attributes to:

Companies trying to keep employees overspend on marketing.

I saw similar results in my marketing and blogging business from February through September of last year and then spending started ramping up again.

This year I’ve been getting approximately 3x the requests of previous years, which I attribute to my business maturing, combined with more business confidence.

Despite a drop in overall spending, according to Beroe Inc, global digital marketing was between $330-340 billion in 2020 and grew almost 13% over 2019.

Meanwhile, spending on legacy advertising formats like TV, billboards, and radio declined by 30%.

According to Safe Frog Marketing Group (through Hubspot), nearly 2/3 of companies hire an advertising agency or freelancer to manage part of their digital marketing needs. 

Combine this with the number of marketing companies staying the same ,and spending on advertising expected to increase by 8-15% according to Forbes, this is the perfect time for starting an advertising agency.

One of the opportunities Jason told us about in digital advertising is the ability to attract potential clients with reduced retainers. Here’s what he had to say,

Look for what companies hate about the industry. Then look to disrupt it. Month-to-month contracts have been a disruptor for us that has allowed us to do 3-4X growth in such a short time.

Major Advertising Agencies and Other Competitors

Globally, the 50 largest marketing/advertising agencies make over $460 million in revenue or more. The top ad agency, Accenture Interactive made over $4.4 Billion in 2018. Wow! They are killing it! If you want to see the full list check out this article by Agency Spotter.

According to IBIS World, there are 5,585 digital advertising agencies in the United States, so there is a ton of competition, but plenty of revenue to start your own agency and work for your ideal client.

I did a little estimation of what the average marketing agency makes based on these numbers, and it’s around $20 million.

Granted, some aren’t going to be anywhere near this, but even if you are making $75,000+ working from home as a one-man company, that’s not bad money.

Currently 2 years in, I make enough working part-time to pay the bills without stressing. It’s not nearly what Jason estimated:

I was making about $60k with 80-90% profit when it was just me.

Inspiration for Starting an Advertising Agency

inspiration for starting an advertising agency 1 1

The first step when you want to start an ad agency is to conduct research to determine what is right for you. Your marketing company should be focused on satisfying your potential client’s marketing needs while utilizing your current skill base. 

You may want to start a marketing company focused on a specific niche, such as Business to Business (B2B) or Business to Customer (B2C), a general marketing company, or you may want to start a digital marketing firm focused primarily on a specific social media network like Facebook.

You aren’t limited to just one type, but this decision will impact how to start a media company. This decision will drive every move going forward.

Some of the common types of marketing companies are:

  • Social Media Marketing – Focused on marketing through social media 
  • Email Marketing – Email-based marketing
  • Brand Management – Building a brand through a variety of techniques
  • Content Management – Managing the flow of content
  • Copywriting – Writing about products, services, tutorials, or website wording
  • Product Marketing – Focused on analyzing interest in a product then selling the product
  • Marketing Analysis – Analyzing how to improve through meeting market demand
  • Growth Marketing – Focused on increasing the market share through marketing
  • PR/Communications – Communicating with external stakeholders
  • Event Marketing – Marketing events like concerts or business conferences
  • SEO/SEM – Improving organic search results or paid search results
  • E-Commerce – Marketing products sold online

The Muse has a great article that describes what each type of marketing is like.

Socialistics focuses on social media marketing for B2B primarily. Jason told us,

It’s too hard to fight for every business out there. We look for clients who believe marketing is valuable, their business is ready to be marketed, and that we are confident we can help them. If either of those aren’t there, then we aren’t the right company for them.

Marketing is focused on helping people or companies become aware of a product or service and helping them move from unaware, to aware, to researching the offering, and finally to purchase.

Each business has a different model for accomplishing this. We’ll show you some of the ways to achieve this.

Keep reading for different types of marketing agencies.

Name Your Marketing Company

I can’t stress enough the importance of the name you choose when starting a marketing company. It will communicate what the company is all about. Keep reading for ideas about how to name your startup marketing agency.

Does the name explain the business?

A man sitting on a chair with his laptop

Socialistics’ name is a bit of a challenge for me to picture what it does. The name is unique, but here’s how I break it down:

Social – of or relating to human society, the interaction of the individual and the group, or the welfare of human beings as members of society” Merriam-Webster Dictionary

-istics- “of, relating to, or characteristic of” – Merriam-Webster Dictionary

It took me a minute to wrap my mind around the name to realize it meant relating to social media. I wonder whether Jason was going for something that made people think more about what it does.

He could be taking the exact opposite strategy of what I’d normally suggest, which could potentially offer similar results.

I tend to prefer including words like Marketing, Advertising, or something to identify what your company actually does, which can make it easier for people to think of it when they are looking for help.

Is it easy to spell?

Make sure your business name is easy to remember when using a search engine. A crazy name like Onomatopoeia Tees makes searching for your business difficult because it’s hard to spell.

Because people tend to type fast, it can be helpful to register domain names for common misspellings of your business name and forward them to your website to make it easier for customers to find you.

Location

Including your state, county, or city identifies you as a local business. For example, Sin City Modeling Agency would obviously be focused on models in Las Vegas.

I would typically discourage this for a marketing company unless you are specifically trying to narrow your business model to serve clients in the local area.

There is too much remote work available to limit yourself from the start. Later it might make sense, but in the beginning, it can be hard to get that first big client.

Branding

A man with a notepad writing the word "brand"

Does your name fit your branding? Some business owners focus on visual ideas for a logo before a name. Fortunately, Socialistics logo spells out what they do for people. Take a look:

Socialistics logo

As you can see, it has their name and “a social media agency.”

The “S” in the logo also hints at one of the advantages of social media marketing: the fact that internet marketing offers a closed-loop marketing strategy, while other forms of advertising do not.

Overall, I like it. It tells what the company does, suggests differentiation to those who know about the industry, and also could have ties to their belief in community service because what we put out into the world comes back to us.

Register a .com

Find a name for which the .com domain is available. It’s the most recognizable. You can conduct a search by clicking here. The longer you can purchase it for, the better. This helps communicate that you are in it for the long haul.

Some great places to buy a domain include:

Test Your Name!

See how people like it. Check Google Trends. Read articles like Five Tools for Naming a Business.

Make sure to check what happens if people shorten it. You wouldn’t want to name a business Sensational Product Advertising & Marketing because people might shorten it to SPAM, and that goes right to junk mail.

Once you’re satisfied with the name, register your business name with the government so you can protect someone else from getting it.

Write a Business Plan for Your Ad Agency

You need a business plan to help define the advertising agency’s objectives and strategy.

A business plan for your advertising agency guides decision-making, helps financiers consider whether to provide startup costs, and gives you something to show businesses who could be potential partners or clients. 

A business plan should answer the following questions:

  1. What was your inspiration for starting an advertising agency?
  2. What problem are you solving for clients?
  3. What is the market opportunity? Who are your clients? What types of businesses need your services?
  4. What is different about your advertising agency? Why should other businesses believe you will be successful?
  5. What progress has your agency made so far?
  6. What startup costs have you already incurred by starting an agency?
  7. What do you need funding for? What are the costs associated with incremental sales?

A creative business plan goes a long way. It needs to be inspiring, informative, and factual. There are a ton of businesses in constantly changing environments, so you need to stand out to a potential client.

A business plan that is constantly evolving helps you keep your business plan in line with where the business is and where you want it to go. We’ve compiled some resources to help you build an awesome business plan.

Templates

We’ve gathered templates to help you develop your business plan. Here are some of the best:

  • One-page business plan
  • U.S. Small Business Administration (SBA) Business Guide
  • State-specific templates
  • Business Plan Template for a Startup Business

Resources

A keyboard with the word "resources"

It gets better! Here’s some free and low-cost education on business plans:

  • How to Write a Business Plan
  • SCORE’s free business plans and startup assistance resources
  • The Complete Business Plan Course (Includes 50 Templates)

How to Start an Online Advertising Agency

Most types of businesses have similar processes that have to be performed.

Whether you want to know how to start a digital marketing agency or how to start a social media marketing agency, there are related expenses that will be incurred. Every agency will need to:

  • Legally establish the advertising agency
  • Obtain necessary licenses and tax requirements
  • Obtain funding
  • Establish a location
  • Create a website
  • Create social media profiles
  • Have a tech stack that simplifies the operations of your small business

We’ll give you tips and information on how to get the most of your digital marketing company in each of these areas.

Legally Establish the Advertisement Agency

You’ve developed a plan and created a name for your advertising agency. It’s time to create the legal structure.

For best results, hire legal representation that has experience starting advertising agencies, like an attorney, accountant, or tax specialist.

It will simplify the process so you can get clients, build a team, and run creative campaigns.

There are five basic types of legal structures that most people will utilize: sole proprietorships, Limited Liability Corporations (LLC), Partnerships, Corporations, and Franchises.

Each has its pros and cons. You’ll have to decide which is best for you, but we’ve gathered information on each to make it easier.

Sole Proprietorship

A sole proprietorship is the easiest way to start a digital ad company, but the structure doesn’t protect the owner’s personal assets from legal issues. That means if something goes wrong, you could lose both your agency and your home.

This structure is the least difficult to set up, but I’d recommend agencies getting professional liability insurance and cybersecurity insurance because you’ll be a potential entry point to clients’ systems.

If your website, email, or other services get hacked, it could be detrimental to more than just your agency: it could cause client lawsuits.

To start a sole proprietorship, fill out a special tax form called a Schedule C. Sole proprietors can also join the American Independent Business Alliance.

Limited Liability Corporation (LLC)

Three cubes with the letter LLC

An LLC is the most common business structure used in the United States because an LLC protects the owner’s personal assets.

It’s similar to partnerships and corporations, but can be a single-member LLC in most states. An LLC requires a document called an operating agreement.

Each state has different requirements. Here’s a link to find your state’s requirements. Delaware and Nevada are common states to file an LLC because they are really business-friendly. Here’s a blog on the top 10 states to get an LLC.

Partnerships and Corporations

Partnerships and corporations are typically for massive organizations or legal firms.

Unless there is a specific reason you need a partnership, it is better to do a multi-person LLC. Investopedia has good information about partnerships and corporations here.

Franchise

There are several opportunities to purchase successful franchises. TopFranchise.com has a list of 10 advertising companies that you can start as a franchise.

This makes it where an entrepreneur can benefit from the reputation of an established clothing printer that has already worked out many of the kinks of starting from scratch.

Check out our BigFrog videos to learn more about franchise benefits. They are a t-shirt printing company, but they still have great advice on the business model.

Obtain Necessary Licenses

Each location has different licenses, permits, or tax forms required. Use the SBA License and Permits page to find requirements for your locations. Some locations have very confusing regulations.

If you don’t work with a legal representative, make sure to talk to the employees who work in the licensing and tax offices. They can give you advice on which licenses you actually need.

Make it a point to follow the laws. I once met a person who failed to follow the proper regulations, and it cost her a substantial fine and nearly 100 hours of community service per month.

Obtain Funding

People sitting and planning about funding a business

Ad Agency startup costs can be achieved for under $1,000. You basically need some space in your home, a website, social media, and some time.

If you are going to rent an office space or run a ton of paid ad campaigns, the cost goes dramatically up.

That’s not really necessary unless you are starting a franchise or have a local team that needs a space to all work together. When it’s just you, an advertising agency can be started for less than a few hundred per month.

If you do need to obtain external funding, other options include:

  • Loan from family or friends
  • Business partner(s)
  • Government programs

The SBA offers free courses on financing options and funding programs. For info on using personal funds to start a business, check out this article from The Hartford.

Alternative sources of funding include:

  1. Crowdfunding 
  2. Credit cards
  3. Home equity loan
  4. Rollover for business startups (ROBS)

Establish a Location

For most small business owners, an advertising agency can be a home-based business until you’ve reached profitability. Many will meet a client at a local coffee shop.

If you feel you need a more professional location to book the job, I’d recommend looking into office-sharing services like WeWork. They let you share space with others, reducing the expenses of having an office.

Some things to consider if you go other routes are:

  1. How many people will be on my team?
  2. How many people will come to a client meeting?
  3. How can I display my campaigns?
  4. Does space encourage the exchange of ideas?
  5. How quickly is the company growing?
  6. Will we have a sales team to answer client calls?
  7. Are we 24/7 because we offer services across the world?

Contact a local commercial real estate agent to assist you in the search. You can search for them by your area here.

Create a Website

A notepad with web design ideas

A website is critical to a marketing company. It’s often the first thing people see, and if the job isn’t done right, why should they trust you to do their advertising right?

From a marketing perspective, your website needs to show you get results. But what does that mean?

Some things I look for when I search for businesses include:

  • Do they come up when I search them? With Target, Yes they do.
  • Does it show Wikipedia or Google My Business information in the search? If not, make sure you fix that.
  • When I click on the link, how fast does it load? I want instantaneous on desktop or less than 3 seconds if over cell phone data. Any less, and you are losing customers. Google has extensive data on what is expected to rank high in search.
  • Now that I’m on the site, does it look professional? If not, I’m probably going to run unless I can tell they use it for experimentation.

Building a great website is so important. Fortunately, there’s a lot of things that make it easy. Using web builders has never been easier. They have tons of plugins and drag-and-drop functionality. I’d recommend the following:

  1. Easiest to use: Wix
  2. Best features: WordPress
  3. Other Options: Great List

Add the list of website builders into the article. Get affiliate links from Serge.

Alternatively, you can hire a web developer, but they’ll probably charge you up to $25k to do the same setup you would anyways. They just accomplish it quicker because they know what they are doing.

Create Social Media Profiles

I’d recommend having all possible social media profiles because you never know where you’ll find a client. For B2B, the best is LinkedIn, but I’d also make sure you are on:

  • YouTube – Best for Video 
  • Instagram – Best for products and other marketing that uses pictures
  • Facebook – Best for B2C marketing
  • Twitter – Financial markets, political, and crypto are big industries on Twitter
  • TikTok – Short fun videos primarily targeted to ages 30 and under

You can start with one and focus on it or try them all and narrow them down based on the results. Hootsuite has some good information on best practices. You’ll need to keep up to date on these if you are starting an advertising agency.

Have a tech stack that simplifies the operations of your advertising agency

Every advertising agency will need a tech stack to make running the business easier.

I’m not going to go into great detail on each of them as they all have great educational resources available that I suggest you utilize as you’ll be using them a lot. Here’s the list of some I love:

  1. HootSuite or other social media management tools that put all your social accounts in one place and let you manage it from their dashboard.
  2. Google Workspace for email, spreadsheets, presentations, and cloud storage.
  3. Integrated accounting software that connects to your bank and allows automation so you only have to set a rule once. PC Mag has a great article about various options.
  4. Customer Relationship Management (CRM) software to keep all your information in one place. Agencies have a ton of content they handle for a lot of clients. Being able to keep track of it in one place is crucial for the success of the business.
  5. Content Management Software (CMS) is used for storing, labeling, and sorting content. A CMS may be part of a CRM, or it may have to be integrated, but easy access to files is critical to assist clients.
  6. Analytics Software will be needed and attached to all web assets so you can track how you are performing. This will be true for both the advertising agency and your clients. You can’t improve results if you aren’t measuring them.

These are the bare minimum I would suggest before starting an advertising agency.

Business Expansion

Now that you have everything you need to start an advertising agency, it’s time to find clients and expand the business.

Marketing and Advertising Strategy for an Advertising Agency

Finding clients can be done in a variety of ways. Agencies can use their personal network, the same ad strategies you plan to use for clients, conventions, and other techniques. The biggest thing is to be sincere.

Jason told us about how he managed to land the Air Force and Habitat for Humanity. He told us,

The  Air Force was more about nurturing them than pursuing. They were frustrated with 30-page reports they didn’t understand. So I sat down with them and took my time, understanding what was really important to them.

In other words, always be ready to listen because that might be enough to land a client.

Here’s what he had to say about Habitat for Humanity:

They had somebody at an event. Heard a speech and liked what they heard. We had to pursue them though. We had to follow up because it was a strategic decision. It’s feel-good work and brings us clients because it speaks about our morals.

In that scenario, he had to do lots of follow up and be patient. When clients say “no,” they mean they aren’t ready yet.

Potential Partnerships and Collaborations for an Advertising Agency

Partnerships and collaboration for an advertising agency may come from selling other tech that they find useful, being listed in blogs and reviews, or through fields like photographers, graphic designers, and developers.

Another source of partnerships is non-profit institutions. As Jason pointed out:

Habitat for Humanity wasn’t so much about the money as the message it sends about our business and our values.

If you can get a client that people know and share their values, it makes expansion so much easier.

Contact List Building for an Advertising Agency

Every person you come in contact with is a referral. Anything you do you should be trying to get followers, likes, and people signing up for your email list.

This makes a huge difference. You can then share more content with them to help them get closer to becoming a client. Even if they don’t own a business one day, they might soon.

Some useful tools include:

  1. Hubspot – Free email marketing tools, including forms, databases, analytics, and templates
  2. MailChimp – Similar to Hubspot’s marketing services but started as an email marketing company.
  3. SendGrid – Most of my software development clients prefer SendGrid. It’s more tech-heavy though

Advertising Agency Daily Operations

An advertising agency makes its money from retainers and is mostly a time-intensive business.

The reason digital marketers use scheduling tools for as much of their work as possible is they need someone to be available when their clients need them.

People tend to use Facebook at specific times every day. If no one is available to respond to comments because they are working on something else, that is going to harm the advertising agency’s clients.

If you are unable to satisfy your clients’ needs, they’ll go somewhere else.

Jason focuses on “service over revenue growth” because the revenue growth will come with time.

As long as they retain the customers they have, they know they’ll have around $40k/month coming in consistently while managing 15 clients.

Remote Workforce in Advertising Agencies

A man at his desk working remotely

Jason was concerned that his team being spread across the world would hurt him.

The idea that your team couldn’t be all together was something he viewed as a challenge at first, but now he views it as one of the main sales points.  He told us:

Turn weaknesses into strengths. Remote saves clients money and gives more access to talent. It also gives the client 24/7 service.
You can expect each client to be around $2,000-5,000 and require 20-40 man-hours to give them proper service.

There are a ton of great resources to be able to utilize the global workforce. Companies like Upwork are a great place to start. You can find reviews of other places to find marketing freelancers in this blog.

Top Advertising/Marketing Influencers

  • Neil Patel – He’s marketed everything and has over 2 million followers across all channels. His blog gets over 4 million views per month.
  • Matt Bailey – Over 20 years in Marketing and author of Internet Marketing: An Hour a Day (2011)
  • Gary Vaynerchuk – Over 30 Million followers across his platforms. 

Conclusion

Starting an ad agency can be a highly rewarding career. We used insights from Jason Yormark and myself to help you get an inside look at what life in the marketing business is like.

We provided you with the knowledge and resources to learn about the industry and name your company.

You have tons of resources to get the business up and running, ideas on where to find clients, and ways to operate the business.

Now it’s up to you. Will you be the world’s next great advertising agency?


80% of businesses fail... Learn how not to.

Learn from business failures and successes in 5 min or less. The stories, frameworks, and tactics that will make you a 10x better founder.


Author

Brandon Boushy


Related articles

Do you have items you don’t use often?

We all buy items we need and then stop using them. Depending on what they are, you might be able to make great money by renting them out.

We’ve compiled 141 of the best profitable rental business ideas to help you find an idea that works for you. We’ve broken rental businesses into 10 categories so you can pick a rental business idea that’s perfect for your lifestyle and business dreams.

[su_note note_color="#dbeafc"] Click on any of the links below to learn more about the section you want.

Author’s Note

Due to the sheer number of rental business options available, we did not review them all. We list dozens of niche rental markets in 10 categories then share specifics of some of the best rental business ideas below them. We hope you enjoy the way this piece is written; it allows us to provide you with lots of ideas and inspiration without getting too long.

Let’s start by discussing whether it makes sense to start a rental business.

Should I Start a Rental Business?

Hand holding keys over a desk with a stack of notepads and a miniature house

A rental business can be a good side hustle or a small business if you have time and in-demand assets. Rental businesses have high profit margins and are sustainable because they don't need to replenish their inventory constantly.

Some reasons to start a rental business include:

  • Profit margins: Rental businesses can have higher profit margins than traditional retail businesses. For example, bike rentals can have 60-70% margins, while party rentals might have 40-50% margins.
  • Sustainable business model: Rental businesses don't need to replenish their inventory constantly.
  • Asset ownership: Rental businesses own an asset or inventory, giving them control over their primary source of revenue.

You can also automate or provide value-added services to increase the profits of rental business ideas.

Keep reading to learn how to choose a great rental business idea for you.

How to Choose a Rental Business Idea

When choosing a rental business idea, you can consider things like:

  • Demand
  • Competition
  • Products

Let’s look at how each of these will impact whether a rental business idea makes sense in your area.

Demand

Research your local market to determine your area's demand for rental services. For instance, running a beach rental company in a desert doesn’t make sense. On the other hand, it makes perfect sense if you live near the beach.

Competition

Consider the competition in your area. You’ll want to compare how many competitors are in your area to the average for the U.S. population.

For example, the U.S. has 10,360 equipment and tool rental companies, meaning there is one tool and rental business per 32,000 people.

If your town has ten companies and 20K people, it’s probably not a great rental business idea. Meanwhile, you should start one ASAP if your location has a million people and no equipment rental businesses.

Products

You can broaden the scope of your rental products to improve your rental business offerings and create more demand. Just make sure that the products make sense with each other.

For instance, it wouldn’t make sense for a party rental company to start offering construction equipment rentals.

Next, let's look at how some of the best rental business ideas are performing in today's economic environment.

Rental Business Industry Overview

Businessman in a sports coat and jeans smiling in front of a rental car with a cityscape and a jet plane in the sky in the background

The rental industry has grown over the past decade, but its growth has been heavily weighted toward areas like weddings, car rentals, party supplies, and real estate rental businesses.

Each rental industry has different growth rates and revenue. The table below shows some of the main sectors of the rental industry.

Industry Revenue Companies Compound Annual Growth Rates
 Real Estate Rentals  $1,200,000,000,000.00  4,000,000  0.20%
 Weddings  $60,000,000,000.00  336,725  2.10%
 Car Rentals  $58,000,000,000.00  11,135  7.50%
 Party Supplies  $7,900,000,000.00  10,118  3.40%
 Tool & Equipment Rental  $4,600,000,000.00  10,360  -1.40%
 Furniture Rental  $607,300,000.00  371  -3.60%
 Total  $1,331,107,300,000.00  4,368,709  0.62%

It should be noted that the size of real estate rentals is so large that it makes up nearly 90% of the revenue for rental business ideas. Don’t expect rentals to stop any time soon.

Note that we use IBIS World and NYU Stern throughout this blog as references. Both are useful resources for understanding all kinds of industries.

Next, we’ll look at some of the best rental businesses for real estate agents and others who love buying property.

12 Real Estate Rental Businesses

Realtor holding keys in front of a beautiful modern house with a for rent sign in the yard

Property rentals are the most profitable rental business on the planet. They account for 90% of the rental services revenue and 5.15% of U.S. GDP. They include:

1. Long-term house rentals
2. Shop spaces for rent
3. Vacation rentals and Airbnbs
4. Commercial spaces for rent
5. Conference room rentals
6. Garage rentals

7. Storage rentals
8. Office space rentals
9. Rent rooms in a house
10. Venue rentals
11. Campsite rentals
12. Land activities

These are by far the most profitable rental business ideas. Below, we share info and inspiration for getting started in a few of the most lucrative real estate rental niches.

Long-Term Home Rental Business

45.2 million people rent their homes and spend an average of $1,300 each month. That means the long-term rental business industry makes over $700 billion each year, making it the best rental business idea on the list.

The way this rental business works is a little different than many others. You will commonly see a small paper loss (-.76%) until market conditions change. Conditions that improve profits include:

  • Rent increases: The average rental increases 5.77% per year, but in any given year, locations can range from -16.1% to 33.89%.
  • Refinance for lower interest rates and payments: A 1% reduction in interest rates saves approximately $20K per $100K financed over the life of the loan, while refinancing without taking out some of the equity saves approximately $45 per $10K additional equity.
  • Pay off the property: Yields nearly 90% monthly profits.
  • Sell the property: When you sell a property, you can make profits from the difference between the price you sell it for and the sum of the pay-off amount and selling costs.

After making any of these moves, your profits increase substantially. In the meantime, your cash flow and net worth are steadily increasing. Once you reach 10 houses with 20% equity, you’re a millionaire.

This is an ideal rental business idea for real estate agents. Thach Nguyen built his real estate business investing in single-family rental properties. He’s since expanded into multi-family units and apartments and makes around $800,000 in monthly revenue using this business model. Hear his insights in this interview:

https://www.youtube.com/watch?v=TWCzwn3R78A&ab_channel=UpFlip

Shop Space for Rent

When you own a commercial building and rent a shop to a local business, you benefit from the asset appreciation of the building and the cash flow from the shop owners. The margins will be similar to how long-term home rentals work, but you’ll have other factors that impact the rental.

A rental business focused on shop spaces starts with having a commercial space for rent. This can mean a fairly large initial investment compared to other options on this list.

The plus side is that they have a higher profit margin than residential renting—around 30-50% on average, compared to a 10-15% average across the rental market for residential or vacation rental properties.

Bear in mind that renting out shop space doesn’t need to mean someone occupies an entire storefront. Some brick-and-mortar businesses add revenue streams by renting spaces within their store to other small businesses.

For example, a grocery business could offer pop-up booth space to local farmers, or a retail store could rent display space to local artisans. You could also offer short-term shop rentals for a seasonal business that only needs the space for a few months a year. There are various ways to start a successful rental business by offering shop space to another entrepreneur with their own business.

Airbnb Rentals

Average Annual Revenue: $201K
• Average Profit Margins: 8.10%
• Startup Cost: $100K-$3.5M
• Time to Revenue: 6-18 months
• Annual Market Growth Rate: 2.20%
• Best For:
Homeowners, frequent travelers, people with hospitality experience

Airbnb commanded 20% of the vacation rental market in 2023, with a global user base of over 150 million people. It’s also one of the fastest and most affordable ways to start your own rental business and among the top rental business ideas for homeowners.

The variety of business models based on Airbnb is one advantage of this business idea. You can start small and rent out a room in a house, or invest in multiple vacation rentals to manage for higher rental business revenues.

NICASA was started with a single property in 2009 and has grown to 22 properties, generating up to $400,000 a month in revenue. Hear founders Sid and Eva’s advice for those starting Airbnb rental companies in this interview:

https://www.youtube.com/watch?v=6m-MosXlpOE

Commercial Spaces for Rent

Average Annual Revenue: $298K+
• Average Profit Margins: 44.6%
• Startup Costs: $500-$5K
• Time to Revenue: 1-3 months
• Annual Market Growth Rate: -0.3%
• Best For: Strong salespeople and negotiators, entrepreneurs who want a passive income

Shopfronts aren’t the only type of commercial business renting. Other business rental space that you could offer includes:

  • A small warehouse for rent by owner
  • Office space rental
  • Conference room rental
  • Commercial kitchen rental for pop-up or mobile food businesses
  • Storage rental business for mobile construction industry businesses

There are certainly other rental business ideas in the commercial space niche, too. Renting commercial space has the potential to be a very profitable rental business idea.

The initial investment is also typically high, as with any rental business idea today that’s based on owning property or land. That said, the cost per square foot is usually much lower than for residential property, particularly for spaces like warehouses, which can translate to higher profit margins.

6 Wedding Rental Business Ideas

Outdoor wedding ceremony setup with a sign that reads "Wedding rentals" on an easel halfway down the aisle

The wedding industry is full of business ideas that are profitable if you provide quality rental services. Some of the most profitable businesses in the wedding industry are:

1. Wedding dress rentals
2. Wedding suit rentals
3. Wedding decoration rentals

4. Photo booth rentals
5. Tux rentals
6. Venue rentals

Want to learn more about wedding business ideas? Consider the following insights on why photo booth rentals make a great wedding rental business…

Photo Booth Rentals

Average Annual Revenue: $50K
• Average Profit Margins:
7.3%
• Startup Costs:
$1K-$10K
• Time to Revenue:
1-6 months
• Annual Market Growth Rate:
0.3%
• Best For: Photographers and visual artists with strong customer service, communication, and organization skills

If you’re looking for unique rental business ideas, a photo booth rental service could be an excellent option. Photo booths are popular event rentals for school dances, birthday parties, and other types of celebrations, too, expanding your potential sources of revenue.

Since the majority of these events happen on weekends or in the evenings, this is one of those small rental business ideas you can easily run as a side hustle.

That’s how Josh Pather started. Within three years, he was doing over 800 events a year and turned it into his full-time job. Today, he averages $500,000 a month in revenue. Hear how he got started in this podcast interview:

Pro Tip: Check out our interview with a wedding photographer to learn more about the wedding industry.

Next, let’s discuss car rental businesses.

34 Vehicle Rental Business Ideas

Crossover vehicle in front of a screenshot of a Zippia car rental statistics article

Vehicles are among the most commonly rented items. It is estimated that 46.8 million cars will be rented in 2024, and the car and truck rental market is expected to grow by 11% per year through 2025.

These are just the tip of the iceberg for a rental business idea related to vehicles. From a bike rental business to hourly truck rental, construction equipment, or boat rental businesses like canoe and kayak rentals, there are a lot of options in this category. Let’s take a closer look at some options.

1. Race car trailers
2. Antique car rentals
3. Electric car rentals
4. Exotic car rentals
5. Golf cart rentals
6. Horse carriage rentals
7. Racecar rentals
8. RV rental business
9. Boat rentals
10. Trailer rental business
11. Truck rentals
12. Trolley car rentals
13. Racecar trailer rentals
14. Food truck rental
15. Bike rental business
16. E-bike rentals
17. Mobile bar rentals

18. Mobile solon rentals
19. Snowmobile rentals
20. Moped scooter rentals
21. Motorcycle rental business
22. Limousine rentals
23. ATV rental business
24. Kayak rentals
25. Canoe rentals
26. Electric scooter rental
27. Fishing Boat Rentals
28. Horse trailers
29. Jet ski Rental
30. Pontoon Boat Rentals
31. Sailboat rentals
32. Scooter rentals
33. Segway Rentals
34. Yacht rentals

Car Rental

Average Annual Revenue: $5M+
• Average Profit Margins:
6.8%
• Startup Costs:
$100K-$3.5M
• Time to Revenue:
6-18 months
• Annual Market Growth Rate:
2.0%
• Best For: Mechanics, car experts, and collectors

Car and truck rentals have seen steady growth in the past few years as business travel rebounds and vacationers cooped up during pandemic lockdowns get back on the road. This makes 2024 a great time to start car rental businesses.

The main downside of a car rental business is that it has a relatively high initial investment. Car rental companies also often have fairly high ongoing costs for things like insurance and storage of the rental fleet when it isn’t in use.

The flip side of this is that car rental can be very profitable—one of the reasons it’s among the most popular rental business ideas. Ronnie Danelian started Legends Car Rentals in 2015, and today their fleet of exotic cars brings in around $175,000 a month in revenue. Hear how he built his business in this YouTube interview:

https://www.youtube.com/watch?v=W_01eckETe0

Bear in mind, too, that you don’t need a whole fleet to get started. Car collectors and car owners who only use their vehicles occasionally can rent out the vehicles they already own. You can find more tips in this blog post on how to start a car rental business.

Boat or Bike Rentals

Average Annual Revenue: $285K+
• Average Profit Margins:
6.8%
• Startup Costs:
$100K-$3.5M
• Time to Revenue:
6-18 months
• Annual Market Growth Rate:
2.0%
• Best For:
Mechanics and vehicle repair pros with excellent sales, marketing, and customer service skills

If you’re looking for a vehicle rental service that has a lower initial investment, boats and bikes are an excellent way to go. This is the best rental business to start for individuals who are mechanically inclined and can handle the maintenance and repair of their fleet themselves, reducing the potential expense of running this type of business.

The cost to start rental business ventures involving boats or bikes varies largely depending on the type of equipment you plan to rent out. For instance, a kayak rental business at a resort or campsite requires lower startup funds than a luxury yacht charter company.

If you live in a large urban area, a bike or scooter rental business can be a profitable idea. Last-mile public transportation is often lacking in these markets, and your company can be very successful if you can fill that need.

You can also combine these vehicle rentals with related services to add revenue streams. For instance, you can offer a fishing rental service as an add-on to boat rentals, or provide guided tours as an extra service for visitors renting bikes or scooters.

10 Party Rental Business Ideas

Woman in a sequined dress holding a glass of champagne in front of a party bus

A lot of the things people need to throw a great party aren’t items they’ll just find around their homes—and aren’t things they’ll use very often (if ever again). This is what makes a party rental business a smart investment: you’re providing equipment that many people won’t have reasonable access to otherwise.

Just like there are a lot of different types of parties, there are many ways you can make money with rental equipment or a party supply rental business. This includes things like furniture rental of chairs and tables for dinner parties, fun items like karaoke machines or bounce houses, or the space where people host gatherings as an event rental business. Here are our top party rental business categories:

1. Bounce houses
2. Party bus rental
3. Party tent rental
4. Costume rentals
5. Margarita machine rentals

6. Holiday decor rental
7. Masquerade costume rentals
8. Popcorn machine rental
9. Prop rentals
10. Inflatable rentals

Party Bus Rental

Average Annual Revenue: $689,656
• Average Profit Margins:
8.8%
• Startup Costs:
$1K-$100K
• Time to Revenue:
3+ months
• Annual Market Growth Rate:
0.7%
Best For: Outgoing and social entrepreneurs, people with event planning and party planning experience

For those who want a unique and profitable party rental business, a party bus fleet is a strong contender. For one thing, there are multiple revenue streams built right in. You can rent out just the bus, or provide full service with snacks and drinks for an extra fee.

Along with this, it offers a lot of flexibility. There’s the potential for passive or side income if you put effective processes in place. More hands-on and extroverted entrepreneurs can put their people skills to work, hosting party games or other activities while the group is on the go.

The initial investment to start a party bus rental business is also lower than you might expect. If you don’t have a ton of startup cash and are mechanically inclined, you can repurpose used school buses or similar vehicles and save on that initial expense. 

23 Equipment and Tool Rental Business Ideas

Construction worker in a hard hat and orange vest pointing to construction rigs in the background

Construction equipment is expensive, and the average person only needs it occasionally. This is what makes it ideal as rental equipment, particularly for avid DIY-ers or construction pros who already have the tools and want to make a bit of extra profit from them.

Compared to something like a home or car rental business, an equipment rental business has a lower initial investment, even if you’re starting from scratch.

While construction equipment offerings like crane, dump truck, or mini-dumpster rental involve more sizeable initial investments (and require more storage space), renting out smaller gear as a power tool rental business or camping equipment supplier can make for excellent equipment rental business ideas.

As camping rental businesses prove, a tool rental business doesn’t need to be focused on construction projects. There are lots of other categories that can be very profitable. Depending on where you live, a business in ski and snowboard rentals, fishing equipment rentals, or similar outdoor adventure gear can be very profitable.

Another growing category is a medical supply rental business, which can help older adults stay independent longer or be a godsend for people in recovery from illnesses or injuries.

The bottom line is, the equipment rental industry is broad. Here are some ideas within the niche to get you started:

1. Power tool rentals
2. Crane rental business
3. Dump truck rentals
4. Dumpster rental business
5. Fishing equipment rental
6. Forklift rentals
7. Generator rental
8. Heavy equipment rental business
9. Hunting gear rental
10. HVAC rental
11. Landscaping supply rental
12. Lighting rental

13. Medical supply rental
14. Moving equipment
15. Music instrument rental
16. Construction equipment rentals
17. Porta Potty rental
18. Portable sink rentals
19. Scaffolding and ladders
20. Small equipment rental business
21. Camping equipment
22. Beach gear rental
23. Catering equipment

4 Furniture Rental Business Ideas

A furniture rental business is among the top businesses you can start with what you already own.

Short-term furniture rental includes things like tables and chairs for events. You could also rent out furnishings on a more long-term basis, for example, to furnish a short-stay apartment or during the infancy of a new child. Here are some of the most lucrative furniture rental options to consider:

  1. “Furniture rental near me” businesses
  2. Animal crates and haulers
  3. Artificial plant rentals
  4. Baby equipment rental

Baby Equipment Rental

Average Annual Revenue: $2.1M+
• Average Profit Margins:
3.9%
• Startup Costs:
$500-$250K
• Time to Revenue:
3+ months
• Annual Market Growth Rate:
2.7%
Best For: Moms, childcare professionals, organized and system-oriented entrepreneurs

Items like cribs, strollers, and playplaces are must-have equipment for parents. That said, they’re also items with a fairly short useful life, and not all new parents have the money (or the space) to buy a bunch of stuff their kids will grow out of in a few months.

A baby equipment rental business can be an especially smart move for parents looking to make some side income. As your kids outgrow their gear, you can clean it up and rent it out to other parents who need it. If you want to grow the business, you can use the profits from these early rentals to invest in new gear and grow your revenue potential.

8 Tech Rental Business Ideas

Top down shot of drones and camera equipment arranged on a table next to a chalkboard sign that reads "Tech rental"

Similar to construction equipment, high-tech gear can be costly. It also becomes obsolete fairly quickly, which makes it a poor long-term investment for individuals.

Individuals or businesses who have a short-term need for professional recording equipment, drones, or other technology often see it as more cost-effective to rent than to buy. That creates an opportunity in the rental market for people who do own this gear to make more profit from it.

Here are some tech rental business categories worth considering:

1. Online broadcasting
2. Audio rental business
3. AV equipment rental
4. Camera & lens rentals

5. Dehumidifier rental business
6. Drone photography rentals
7. Lighting rental
8. Photo booth rentals

Drone photography rentals

Average Annual Revenue: $50K
Average Profit Margins: 7.3%
• Startup Costs: $1K-$10K
• Time to Revenue: 1-6 months
• Annual Market Growth Rate: 0.3%
• Best For: Photographers and visual artists, tech-literate and creative entrepreneurs

Drone photography has a lot of applications. It’s a great way to get shots of outdoor events like festivals and concerts. Many event planners also use it to record events like weddings, while realtors can use drones to document properties for potential buyers to see online.

This variety of potential customers is what makes drone photography rentals a smart business option. You can focus exclusively on drone photography, or have this as an additional service to a broader camera rental business.

Mile High Photography has made its name working with everything from marketing and advertising professionals to party planners, and they bring in more than $35,000 a month in revenue. See how they built their business in this YouTube video:

https://www.youtube.com/watch?v=EUcv1HAAbns

9 Clothing Rental Business Ideas

People don’t like buying things they’ll only use once—and that applies to things they wear, too. From tuxes to prom dresses and Halloween costumes, here are some of the best types of clothing to start a rental business:

1. Clothing rental
2. Costume rental
3. Designer accessory rentals
4. Handbag rentals
5. Evening gown rentals

6. Fine jewelry rentals
7. Formalwear rentals
8. Fur coat or faux fur rentals
9. Prom dress rentals

23 Experience Offerings Perfect for Rental Businesses

Your business doesn’t need to stop with renting equipment out to use. Offering services and experiences related to that equipment creates new ways to earn revenue from it.

For instance, if you have experience as a construction professional, you can rent out your power tools and teach classes on how to use them. That’s twice the revenue potential from the same gear.

Guided tours are another way to leverage your knowledge and equipment in tandem. For example, offering curated fishing excursions, or renting the camping gear to participants in a wilderness retreat.

Here are some ideas for rental experience businesses:

1. AR experiences
2. Dolphin experiences
3. Manatee experiences
4. VR experiences
5. Curated adventures
6. Dive tours
7. Hand gliding rentals
8. Horseback riding rentals
9. Hunting excursions
10. Kiteboarding rentals
11. Skilled trade lessons and power tool rentals
12. Paddleboard rentals and tours

13. Parasailing
14. Scuba lessons
15. Skydive excursions
16. Snorkeling excursions and rentals
17. Sunset cruises
18. Surfboard rentals
19. Tubing rentals
20. Water activities
21. Windsurfing
22. Flyboarding rentals
23. Ski and snowboard rentals

12 Random Profitable Rental Business Ideas

Camping guide wearing a day pack in front of an RV rental

Just about anything can be rented for a profit if there’s someone else who wants to use it! Here are some final random ideas you could turn into your own rental business:

1. Booth rental business ideas
2. Camping trailer rentals
3. Float rentals
4. Hobie cat rentals
5. Hunting equipment rental
6. Kiteboarding rentals

7. Kombucha stands
8. Lawn sign rentals
9. Movie projector rental
10. Sporting goods rentals
11. Toy rental
12. Tubing rentals

1 Rental Business Idea to Avoid

Do not start a movie rental business. People can watch as many movies as they want on streaming services for a small monthly fee, making a movie rental business a dead business model.

Rental Business FAQs

What are the most profitable things to rent out?

The most profitable rental business category by far is renting out property. Like we mentioned earlier, these account for 90% of rental industry income in the United States. In terms of profitability, commercial space tends to have higher margins, though home and apartment rentals are also a very profitable industry.

How profitable are rental businesses?

Rental business ideas can be extraordinarily profitable. For instance, an Airbnb can be profitable as a rental business idea with as little as 50% occupancy.

While the average Airbnb may lose money (a little bit) on paper, ultimately, it has the potential to increase in value. Profit margins can approach 50% or higher when the property is owned outright.

What profits should I expect from an equipment rental business?

An equipment rental business idea will have different profit margins depending on the economic environment and the equipment.

U-Haul has had gross profit margins of 28% to 40% and net margins of 1% to 20% since 2009. Meanwhile, United Rentals, the largest equipment rental company in the U.S., has gross profits between 25% and 43%, with net profits between -4% and 22% during the same periods.

What are the most profitable rental business ideas to make money in 2024?

While property rentals tend to make the most revenue, equipment rentals can have a higher profit margin. This is because there are fewer ongoing costs to maintain and own them. This is particularly true of durable, long-lasting equipment like power tools.

Which Rental Business Will You Choose?

There are numerous rental businesses to choose from. You just need to decide which is right for you. Consider what you already own, the network of people you know, and the value of the items before choosing which to pursue.

Then you need to create the business and start marketing your rentals. As you start making money, reinvest in other assets to rent, and you’ll build an empire in time.

So which rental business will you start?

When a business owner wants to choose a business structure they will normally consider the battle of a sole proprietorship vs. a limited liability company (LLC). Like two MMA fighters squaring off in the octagon, a sole proprietorship, and a limited liability company, both have their place in the business world. UpFlip is here to help you understand the similarities and differences of a sole proprietorship in comparison to an LLC. We'll explain what business owners should consider when choosing one business structure over another, what LLCs are best at, what sole proprietorships do best, and what they have in common. We'll also explore the process of converting a sole proprietorship to an LLC if you need to change the business structure. Get ready for the battle of sole proprietorship vs. LLC!

What should a business owner consider before choosing an LLC over a sole proprietorship?

There are a variety of considerations when a business owner is choosing between a limited liability company and a sole proprietorship. Some of the most important considerations include:
  • The legal protection of personal assets
  • Formation of LLC or registering the business as a sole proprietorship
  • Treatment of business income

LLC vs. Sole Proprietorship: Legal Protection of Personal Assets

The legal protection for personal assets is the number one reason that most people suggest forming an LLC over a sole proprietorship. When run properly, a single-member LLC will protect both a small business owner and their business in ways that a sole proprietorship cannot. Before I continue, this is not legal advice. I suggest talking to a lawyer to help you create and run an LLC in a way that guarantees these benefits. Liability protection works in the following ways:
  • When running an LLC properly, your business assets cannot be included when a court considers your personal assets, but your income and profit can be if run as a pass-through entity.
  • When running an LLC properly, liability protection prevents your personal assets from being included when a court considers your business assets, as long as you were not personally responsible for the behavior that caused the court judgment.
  • The debts of the business and any personal debts are separate if you follow the requirements to provide liability protection.
Legal protection is accomplished because the business structure creates liability protection, as long as certain rules are followed. Small business owners should be aware of the following practices when seeking legal protection through an LLC:
  • Personal and business banking need to be in separate accounts.
  • If you personally do something in the course of business, an LLC will not provide personal liability protection.
  • Personal liability protection prevents being held personally liable for any debt to a business creditor.
  • A single-member LLC can offer better protection when opting to follow C-Corp requirements by filing Form 8832 and adhering to corporate law.
  • There is insurance that can add additional personal liability protection for LLCs against losses.
You can also run a multi-member LLC using the tax code for partnerships or as a corporation. Personal liability protection is of immense benefit, but in some scenarios, it may not be as valuable.  If neither the business owner nor the business entity has substantial assets or debts, creating a separate business entity may just create extra work and costs for small business owners. If you fall into this category and operate a low-risk business with no employees, a sole proprietorship may be better. Looking at this section, LLC takes the win! Let's look at the differences in the formation of an LLC vs. sole proprietorship.

LLC vs. Sole Proprietorship: Formation

The formation of an LLC and a sole proprietorship is substantially different. Let's look at what the requirements are for each to understand the differences and similarities.

Forming a sole proprietorship

A man holding a brown notebook A sole proprietorship is registered with the state and will require paperwork for “doing business as… ” (DBA) with a fictitious name if you wish to run the business as something other than your given name. You'll also need any state and local business licenses, tax permits, and an Employer Identification Number (EIN) if you wish to have employees. Some states offer sole proprietorships for free as long as you make under a certain amount. When I am just trying to test the water in a field I will register for an NV sole proprietorship using the  exemption from NVSOS.gov: A natural person who operates a business from his or her home as defined by Chapter 76 of Nevada Administrative Code and whose net earnings from that business are not more than 66% of the average annual wage, as computed for the preceding calendar year pursuant to NRS Chapter 612 and rounded to the nearest hundred dollars. The average annual wage generally fluctuates each year. For the average Nevada wage, go to Taxable Wage Base. If you want to be a sole proprietor, check if your state offers this option for sole proprietors. Let's look at how an LLC formation differs from a sole proprietorship formation.

Forming an LLC

An LLC will have several main differences when forming it including:
  • Filing cost
  • Ongoing fees
  • Operating agreement
  • Articles of organization
  • Must have an EIN
  • Does not need a DBA unless operating as something other than the LLC name.
We'll look at the filing costs, operating agreement, and the articles of organization because they are unique to an LLC.

Filing Cost and Ongoing Fees

An LLC will also have to register with the Secretary of State but will require different applications. This will normally require a fee at the state level. None are over $500 and most are under $300, but you'll also have to pay ongoing fees that range from $0 annually to $500 annually. The best one you have to pay ongoing fees for is Pennsylvania at $70 every 10 years.

Operating Agreement

An operating agreement is one of the documents that is required for an LLC that a sole proprietorship does not require. An operating agreement includes:
  • The creation date
  • Location
  • Owners and percentages
  • Management and voting interests
  • Investment in Business
  • How profits, losses, and assets, are distributed
  • How membership changes are handled is important for a single-member LLC because they may want to pass it on when they die
  • How to dissolve the company if there is a desire to close it
  • And anything else required by your state
This document will need to be signed and notarized to be legal. Let's look at the Articles of Organization next.

Articles of Organization

The Articles of Organization are very similar to the operating agreement but need to be submitted to the Secretary of State's office. They include:
  1. Company name
  2. Description of the company
  3. Mailing address
  4. Name and address of the registered (or statutory) agent
  5. Information about company owners, managers, and officers
The most common reason for these to be rejected is they are using a name that has already been taken. A sole proprietorship wins the round on formation, but there are still plenty of rounds to go. Let's look at taxes next.

LLC vs. Sole Proprietorship: Taxes

A pen and a white notebook on a desk Both sole proprietors and single-member limited liability companies can pay personal income tax on a personal tax return because they are both by default pass-through income. Sole proprietors and limited liability companies acting as a pass-through entity will also have to pay self-employment taxes, which are 15.3% broken into 12.4% for social security and 2.9% for Medicare. LLCs can also follow the tax code for partnerships if there are two or more members. These are similar to a single-member LLC because they still have to pay self-employment taxes and only file a personal tax return with the Internal Revenue Service. Unlike a sole proprietor, an LLC can also file as a C Corporation or an S Corporation by filling out the appropriate documentation. Read up on LLCs on the IRS website to learn about their tax treatment. In addition, pass-through LLCs can deduct 20% of net income before being taxed, while a sole proprietor does not have that option. For anyone wondering "do LLCs pay more taxes than sole proprietorships?" The answer should be no. The benefit of an LLC from a tax standpoint is the ability to choose whether filing like a sole proprietor or corporation is best for the business owner. This means you should be able to find a way to pay less in taxes. This round goes to the LLC for their diversity of options when paying taxes. Avoid taxes like Floyd Mayweather dodging punches. Get ready for the next round, business income.

LLC vs. Sole Proprietorship: Business Income

Business income is treated as personal income for a sole proprietor, but an LLC can either be treated as personal income or corporate income and the business owner as an employee. The difference can matter in several ways:
  • A sole proprietor has to claim the income if it is not spent on expenses in that year, while an LLC filing as a corporation can retain the profits and only pay the 21% tax rate for corporations. This makes the income easier to reinvest than a sole proprietor.
  • A limited liability company can pay dividends to the owners, which may create a more favorable tax consequence. A sole proprietorship cannot.
  • A limited liability company can borrow money from its owners at a fair market rate, while a sole proprietorship cannot. This allows you to get returns on your investment until it is paid off, which qualifies as interest income for the person and a business expense for the LLC. When the LLC pays off the investor, the original capital is not taxable.
An LLC definitely has perks that a sole proprietorship doesn't have when it comes to business income. That means that LLCs take this round.

Sole Proprietor vs. LLC: Franchise Tax

A franchise tax is paying for the right to do business in the state. States have different requirements regarding the franchise tax. The best way to find out the requirements for your state is to talk to the local Small Business Administration. You can find local offices on sba.gov. At the time of writing, the following states have a franchise tax: Alabama, Arkansas, California, Delaware, Georgia, Illinois, Louisiana, Mississippi, New York, North Carolina, Oklahoma, Tennessee, and Texas. In addition, Washington DC has a franchise tax. Sole proprietors are not subject to this so they win this round.

LLC vs. Sole Proprietor: Operations

Sole proprietorships are tied directly to the owner's personal tax return and the owner has to be involved in the operations of a business. Operations will also end when a sole proprietor dies. Meanwhile, if your own business is an LLC, you can specify a manager in the LLC operating agreement and collect the profits. When you file articles of organization and the operating agreement, you need to specify how ownership is transferred, making it where an LLC can survive an owner's death. Which is better LLC or sole proprietorship? The benefits of LLC vs. sole proprietorship win out on this one.

Compliance

When wondering about the benefits of an LLC vs. sole proprietorship, compliance isn't one of them. Sole proprietorships don't need a separate bank account for a new business, nor do small businesses have to update the formal business structure of a sole proprietorship. If you already own a business under a sole proprietorship, you don't have to register for a new business because both businesses will be tied to the owner's personal assets. This makes it really easy to try new ideas. Single-member LLCs will have increased compliance requirements for an LLC owner because they will need to have a separate business bank account, keep the business's debts separate, business expenses separate, and build a business credit score. Small businesses will also have more filing requirements than sole proprietors. Compliance is a meaningful difference between LLC and sole proprietorships. In this category, sole proprietorships take the win.

It’s a Tie Between LLCs and Sole Proprietorships 

A chart showing a draw between sole proprietorship business of LLC After comparing the differences between an LLC and a sole proprietorship, we come to a 4 – 4 draw. Ultimately, people choose LLCs to put a barrier of protection between themselves and their business liability, but they pay for that liability in additional compliance and filing fees. In addition, there are potential tax benefits to LLCs that may be of interest once you reach a point in which your taxable consequences are more than 25%. You can change to an LLC later if you want to get started first as a sole proprietor Whichever you choose, make sure to consider your goals and industry before making the decision. What business structure are you using to start or run a business?

Selecting the perfect name for your boutique is a crucial and exciting step in establishing your brand identity. A boutique's name serves as its first impression, encapsulating the essence of your style, vision, and uniqueness.

Your boutique name is more than a label. It's a reflection of what you offer your customers. A distinctive name is a blend of creativity, market research, and an understanding of your target audience.

We’ll help you choose a boutique name by providing you examples of names for your boutique, tips on how to come up with names, and what to do once you’ve chosen a name.

[su_note note_color="#dbeafc"] Click on any of the links below to jump to the section.

Check out these catchy boutique names to find one that works for you.

40 catchy boutique names

Woman fashion designer wearing a measuring tape around her neck and searching for catchy boutique names on a tablet

Creating unique and catchy boutique names can be a fun challenge. Obviously you can’t use famous boutique names like Oscar de la Renta or Louis Vuitton. Availability can change, and it's advisable to check trademark and business name databases to ensure whatever name you like is still available.

1. Lavender Swirl
2. Amber Closet
3. Velvet Whispers
4. Shell Boutique
5. Luxe Haven
6. Bee and Chic
7. The Couture Avenue
8. Boutique Fabrics
9. Hello Gorgeous!
10. Chic-A-Licious
11. Chic Look Style
12. Aura Adore Design
13. Just Released Dresses
14. Amour Stylish Diva
15. Cherie Amour
16. Girly Chic Allure
17. Droga Boutique
18. Mud Honey Dress Up
19. Dress Shop Fashion Atelier
20. Polka Dots

21. The Happy Fashionista
22. Fashionista Boutique
23. Serendipity Boutique
24. Boutique Glamour
25. The Fashion House
26. The Trendy Boutique
27. Haute Couture Boutique
28. Fashionably Chic
29. Posh Boutique
30. Luxe Boutique
31. Fashionista World
32. Ritzy Boutique
33. Fashion Revolution
34. Classy Boutique
35. The Boutique
36. Fashion Frenzy
37. The Trendsetters Boutique
38. Wildflower Fashion
39. Elegant Belle Atelier
40. Gemini Dreams Fashion

Pro Tip: Consider how your boutique business name sounds before finalizing the boutique name. Opt for a name that rolls off the tongue easily and is memorable for your customers. A pleasant, easily pronounced name contributes to word-of-mouth marketing, making it easier for clients to share and remember your boutique.

26 cool boutique names

Here's a set of 26 cool boutique names:

1. Country Girl Exclusive
2. The Style Studio
3. Fashion Daisy
4. Fashion Express Designs
5. Beach Babes Boutique
6. The Trendy Threads Shop
7. Velvet and Lace Boutique
8. The Fashion Workshop
9. Midnight Atelier
10. Fashion Finesse Designs
11. Urban Elegance Clothing
12. The Style Loft
13. Golden Hour Threads

14. The Fashion Coop
15. Azure Dreamwear
16. Fashion Revolution Designs
17. Suave Clothing
18. The Boutique Hub
19. Slay Boutique
20. The Couture Nook
21. Boutique Noir Atelier
22. Fashion Flair Designs
23. Dapper Atelier
24. The Boutique Emporium
25. The Opulent Threads
26. Fashion District Designs

Pro Tip: Infuse your boutique name with a sense of cool by considering its visual and auditory appeal. Coolness often comes from a combination of stylish aesthetics and a unique, modern sound.

Choose words that conjure vivid images or evoke a contemporary vibe. A cool boutique name not only grabs attention but also sets the tone for a trendy and desirable shopping experience. Test the name with your intended audience to gauge its cool factor and make adjustments accordingly.

30 funny boutique names

Funny boutique names are entertaining and easy to remember. Consider this list of 30 funny boutique names:

1. Sew What? Boutique
2. Dress to Impress Atelier
3. Frock and Roll Designs
4. Clothes Encounter Clothing
5. The Fitting Room Boutique
6. Sew Good Atelier
7. Hem and Haw Designs
8. The Stitchuation Clothing
9. Sew It Seams Boutique
10. Dare to Wear Atelier
11. Frock You Designs
12. Clothes Minded Clothing
13. Sew In Style Boutique
14. Dress Code Atelier
15. Frock Star Designs

16. Clothes Call Clothing
17. Sew Much Fun Boutique
18. Dress Sense Atelier
19. Frock Off Designs
20. Clothes Line Clothing
21. Sew Fine Boutique
22. Dress Up Atelier
23. Frock On Designs
24. Clothes Shop Clothing
25. Sew Happy Boutique
26. Dress Down Atelier
27. Sew What Else? Boutique
28. Dress Me Up Atelier
29. Frock and Awe Designs
30. The Third Kind Clothing

Pro Tip: Injecting humor into your boutique name is a delightful way to engage customers. Ensure the humor aligns with your brand personality and resonates with your target audience.

Play with puns, wordplay, or amusing juxtapositions related to fashion. Consider the visual aspect, too. Can the name inspire a playful logo or marketing materials?

Remember, a funny boutique name not only draws attention but also leaves a lasting impression, making your store more memorable in the minds of customers. Test the name with a diverse audience to gauge its universal appeal and refine it for maximum laughs.

62 creative boutique names

Woman researching boutique names on a laptop with a sketched clothing hanger, the word "Word", and the word "Color" hovering overhead to represent a great formula for generating a new boutique name

You’ll love some of these creative boutique name ideas.

1. Opulent Chic Threads
2. Urban Vogue Atelier
3. Whimsical Crafted Designs
4. Refined Elegance Boutique
5. Ethereal Couture Haven
6. Quirky Style Oasis
7. Timeless Fashion Hub
8. Radiant Velvet Atelier
9. Enchanting Silk Designs
10. Posh Charm Boutique
11. Velvet Whisper Creations
12. Luxe Harmony Atelier
13. Infinite Lace Designs
14. Eclectic Aura Boutique
15. Sublime Silk Threads
16. Vibrant Velvet Haven
17. Divine Driftwood Atelier
18. Serene Silk Elegance
19. Chic Serenity Boutique
20. Regal Tapestry Designs
21. Tranquil Tulle Atelier
22. Fusion Couture Haven
23. Ethereal Linen Boutique
24. Opulent Charm Atelier
25. Celestial Style Designs
26. Bohemian Bloom Boutique
27. Velvet Dreams Atelier
28. Ephemeral Lace Haven
29. Harmony Crafted Designs
30. Sublime Silk Sanctuary
31. Enchanté Couture Boutique

32. Radiant Charm Atelier
33. Timeless Tulle Designs
34. Urban Zen Boutique
35. Refined Elegance Haven
36. Whimsical Velvet Atelier
37. Posh Whispers Boutique
38. Velvet Symphony Designs
39. Divine Drapes Atelier
40. Celestial Silhouette Boutique
41. Tranquil Threads Haven
42. Regal Realm Atelier
43. Serene Silhouette Designs
44. Fusion Whisper Boutique
45. Ethereal Essence Atelier
46. Opulent Tulle Designs
47. Bohemian Hues Boutique
48. Velvet Vista Atelier
49. Radiant Realm Haven
50. Enchanting Elegance Designs
51. Whimsical Charm Boutique
52. Refined Whispers Atelier
53. Posh Panache Designs
54. Velvet Reverie Haven
55. Celestial Craft Boutique
56. Tranquil Tulle Atelier
57. Regal Radiance Designs
58. Serene Silk Haven
59. Fusion Elegance Boutique
60. Ethereal Tapestry Atelier
61. Opulent Threads Designs
62. Bohemian Breeze Boutique

Pro Tip: Crafting a creative boutique name involves combining imagination with a sense of identity. Consider including storytelling, symbolism, wordplay, cultural inspiration, or visual appeal to help create a unique boutique name.

Remember, the goal is not only to have a creative name but one that aligns with your brand's identity and leaves a lasting impression on your customers.

20 professional boutique names

If you’re boutique is more upscal, consider some of the professional-sounding boutique name ideas below.

1. Elegant Atelier
2. Fierce Designs
3. Luxe Designs
4. Modish Clothing
5. Stylus Studio
6. Sophistique Fashion
7. Classy Couture
8. Trends and Threads
9. Posh Outfitters
10. Vibe Atelier

11. Dazzling Designs
12. Boutique Fancy
13. Flair Clothing
14. Vogue Atelier
15. Exquisite Fashion
16. Graceful Couture
17. Splend Atelier
18. Outfits by Ravage
19. Garment Studio
20. Tres Threads

Pro Tip: Establish a professional boutique image with a well-crafted name. Use words that hint at sophistication, elegance, and attention to detail, but are culturally sensitive. Make sure to avoid typos and inconsistencies to maintain the image.

Remember that a professional boutique name is a key element of your brand identity, and it should align with the overall image you want to portray to your customers. Take the time to carefully select a name that reflects the professionalism and quality of your boutique.

48 personal boutique names

Creating personal and unique boutique names can add a special touch. Here are 48 personal boutique name ideas.

1. Lila’s Lavender Boutique
2. Ella Aruna’s Closet
3. Sophie’s Shell Boutique Designs
4. Oliver’s Clothing Atelier
5. Nina’s Destiny Boutique
6. Lucas’s Wildflower Clothing
7. Emma’s Rainbow Fashion Atelier
8. Liam’s Elegant Baby Designs
9. Ava’s Dark Wave Boutique
10. Noah’s Belle Sign Atelier
11. Mia’s Posh Boutique Creations
12. Ethan’s Simply Chic Designs
13. Isabella’s Splashy Hipster Boutique
14. Jackson’s Lavender Field Atelier
15. Olivia’s White Dress Boutique
16. Aiden’s Urban Designs
17. Charlotte’s Bite of Style Boutique
18. Lucy’s Gemini Dreams Clothing
19. Henry’s Whimsical Chaos Atelier
20. Grace’s Possessions Boutique
21. Leo’s Bold Crimson Designs
22. Luna’s Glisten & Glow Boutique
23. Evelyn’s Princess Purple Clothing
24. Carter’s Wow Couture Atelier

25. Lila’s Lavender Boutique
26. Ella Aruna’s Closet
27. Sophie’s Shell Boutique Designs
28. Oliver’s Clothing Atelier
29. Nina’s Destiny Boutique
30. Lucas’s Wildflower Clothing
31. Emma’s Rainbow Fashion Atelier
32. Liam’s Elegant Baby Designs
33. Ava’s Dark Wave Boutique
34. Noah’s Belle Sign Atelier
35. Mia’s Posh Boutique Creations
36. Ethan’s Simply Chic Designs
37. Isabella’s Splashy Hipster Boutique
38. Jackson’s Lavender Field Atelier
39. Olivia’s White Dress Boutique
40. Aiden’s Urban Designs
41. Charlotte’s Bite of Style Boutique
42. Lucy’s Gemini Dreams Clothing
43. Henry’s Whimsical Chaos Atelier
44. Grace’s Possessions Boutique
45. Leo’s Bold Crimson Designs
46. Luna’s Glisten & Glow Boutique
47. Evelyn’s Princess Purple Clothing
48. Carter’s Wow Couture Atelier

Pro Tip: Add a personal touch to your boutique name, and you’ll enhance its uniqueness and connection with customers. You might include a personal value, a nod to your history, your own name, or an homage to a loved one in the business name. Make sure it’s easy to follow, though.

Remember, the personal touch in your boutique name is an opportunity to create a meaningful and memorable experience for your customers. Make it a reflection of your passion and dedication to providing a unique and personalized shopping experience.

50 location-based boutique names

Boutique locations on a smart phone map app held up in a trendy boutique space

Location-based boutique names help associate your brand with the local community. Check out these boutique names with the name of their location for some business name ideas.

1. Kyoto Silk Boutique
2. Santorini Seaside Atelier
3. Parisian Chic Designs
4. Venetian Lace Clothing
5. Bali Breeze Boutique
6. Cairo Sands Fashion
7. Vienna Velvet Haven
8. Capri Couture Creations
9. Dublin Tweed Boutique
10. Seoul Street Style
11. Barcelona Boutique Avenue
12. Jaipur’s Gemstones Atelier
13. Nairobi Safari Outfitters
14. Reykjavik Frost Winterwear
15. Rio de Janeiro Samba Couture
16. Zanzibar Spicy Styles Boutique
17. Amsterdam Tulip Threads
18. Kyiv Embroidery Studio
19. Cusco Andean Chic
20. Sydney Harbor Fashion
21. Havana Vintage Vibes
22. Marrakech to Medina Boutique
23. Edinburgh Plaid Haven
24. Sapporo Outfitters
25. Cape Town Safari Couture

26. Santorini Sunset Boutique
27. Florence Renaissance Fashion
28. Buenos Tango Atelier
29. Kyoto Kimono Creations
30. Dubrovnik Coastal Chic
31. Savannah Southern Charm
32. Kuala Lumpur Batik Boutique
33. Copenhagen Hygge Haven
34. Lisbon Tiles Couture
35. Budapest Bohemian Threads
36. Seville Flamenco Fashion
37. Wellington Woolen Boutique
38. Beirut Silk Road Atelier
39. Bergen Fjord Fashion
40. Valletta Baroque Boutique
41. Kyoto Geisha Glamour
42. Cape Verde Beachwear
43. Tuscany Vineyard Couture
44. Giza Pyramid Boutique
45. Santorini Blue Boutique
46. Dublin Whiskey Threads
47. Kyoto Bamboo Atelier
48. Cappadocia Couture
49. Bora Bora Island Styles
50. Kyoto Cherry Blossom Boutique

Pro Tip: You can also use nicknames for your area, area codes, or zip codes to help specify your location. For instance, Chicago might have a coat store called Windy City Windbreakers. Learn more about using this naming strategy from the founder of Portland Gear.

https://www.youtube.com/watch?v=xcPqw952Xm8

What makes good boutique names?

A good boutique name should be memorable, unique, and reflective of the brand's identity. Here are some key factors that contribute to a good boutique name:

  1. Memorable: Choose a name that is easy to remember and pronounce. This helps potential customers recall your boutique when they are looking for products or services.
  2. Unique: Aim for a name that stands out from the competition. Avoid common or generic terms that may already be used by other businesses. Conduct thorough research to ensure the name is not already taken or trademarked.
  3. Relevant: The name should reflect the nature of your boutique and the products or services you offer. It can incorporate elements related to fashion, style, or the overall theme of your boutique.
  4. Versatile: Consider a name that allows for future expansion or diversification. You may want to avoid too-narrow or limiting terms if you plan to introduce new products or services in the future.
  5. Cohesive: Ensure the name aligns with the overall brand image and values you want to convey. It should resonate with your target audience and create a positive impression.
  6. Visually Appealing: Imagine how the name will look in your boutique signage, on business cards, and online. Opt for a name that is visually appealing and has a good aesthetic.
  7. Domain Availability: If you plan to have an online presence, check the availability of the domain name associated with your boutique. Consistency across your physical and online presence is crucial.
  8. Legal Considerations: Make sure the name is not already trademarked or in use by another business. Conduct thorough research and, if possible, consult with legal professionals to avoid potential legal issues in the future.
  9. Timeless: While it's good to be trendy, consider whether the name will stand the test of time. Avoid overly trendy or faddish terms that may become outdated quickly.

Remember that your boutique name is an essential part of your brand identity. Take the time to brainstorm and choose a name that reflects your business's personality and appeals to your target customers.

What should I name my boutique?

Designer sitting in her studio looking at a tablet

Naming your boutique is an exciting step, and it's important to choose a name that reflects your brand identity and resonates with your target audience. Here are some steps and considerations to help you come up with the perfect name for your boutique:

  • Define Your Brand Identity: Consider the style and vibe of your boutique, the types of products you'll offer, and the overall experience you want to provide to customers.
  • Identify Your Target Audience: Identify your target demographic. Then, tailor the name to appeal to your specific audience.
  • Brainstorm Keywords: Make a list of words and phrases related to fashion, style, or the theme of your boutique. You can use tools like Google Trends or ahrefs to get ideas.
  • Combine Words: Experiment with combining relevant words to create a unique and catchy name. Consider using your own name or a unique word to add a personal touch.
  • Consider Location: If your boutique is in a desirable location or you’ll be selling goods made in and imported from a noteworthy place, consider incorporating it into the name. Alternatively, think about using words associated with your locale or region.

Remember that your boutique name is a crucial part of your brand, so take the time to find a name that you love and that will resonate with your customers. Don't rush the process, and consider seeking input from others to gather different perspectives.

Great boutique name examples

Portland Gear: Portland Gear says it’s “more than just a brand” and calls itself “a vibrant community united by [its] profound love for the unique city of Portland, Oregon and the Pacific Northwest.” Its name is perfect for the collection of Portland-forward graphic tees, hoodies, bags, and accessories it offers in stores and online.

Urbanity: Lee Smith came up with the name Urbanity in 2009 by combining urban and humanity. Check out our interview with him below.

https://www.youtube.com/watch?v=_wUc28d8KkE

How to register your boutique name

Registering your boutique name is a crucial step in establishing and protecting your brand. Here's a step-by-step guide on how to register your boutique name:

  1. Check Availability: Before you fall in love with a name, ensure that it is not already in use by another business, especially one within your industry and location. Search online, check business directories, and look into trademark databases to verify the availability of your chosen name.
  2. Perform a Trademark Search: Conduct a thorough trademark search to ensure that your chosen name is not already trademarked by another business. This step is crucial for legal protection and preventing potential infringement issues.
  3. Buy the Domain: In today's digital age, having an online presence is vital. Check the availability of your boutique name as a domain to secure a matching website address. Even if you don't plan to launch a website immediately, it's wise to secure the domain for future use.
  4. Form the Legal Structure: Determine the legal structure of your boutique, whether it's a sole proprietorship, partnership, LLC, or corporation. The structure you choose will affect the registration process.
  5. Register With Your Local Business Authority: Register your boutique name with the appropriate local business authority. The process varies depending on your location, but it often involves filing a "Doing Business As" (DBA) or trade name registration with the county clerk's office or a similar local agency.
  6. Register the Trademark Registration: While not mandatory, registering your boutique name as a trademark with the relevant intellectual property office provides additional legal protection. This is especially important if you plan to expand your business nationally or internationally.
  7. Sign up for Online Platforms and Social Media: Secure your boutique name on popular social media platforms and online marketplaces, even if you don't plan to use them immediately. Consistent branding across various channels strengthens your online presence.
  8. Renew and Maintain: Keep track of renewal requirements for your business registration and trademark, if applicable. Regularly update your contact information to receive renewal notices.

By following these steps, you can successfully register your boutique name, establish a strong brand identity, and protect your business from potential legal issues. Consult with legal professionals or business advisors if you have specific questions or concerns about the registration process in your area.

Next steps after naming your boutique

Smartly dressed woman pointing to a grand opening sign hung outside a new boutique

Finding the perfect name for your boutique is a thrilling and essential part of launching your business

With a wealth of options ranging from catchy and cool to funny and professional, you have a diverse array of boutique names to choose from. Whether you prefer a creative, personal, or location-based approach, the key is to encapsulate the essence of your brand.

Great boutique names are all about uniqueness, memorability, and a connection to your target audience. A good boutique name should stand out in a crowded market, leaving a lasting impression on your customers.

In addition to providing hundreds of name ideas, we’ve helped you understand what to consider when naming a boutique and how to register it when you choose a name.

In the end, your boutique name is more than just a string of words—it's the foundation of your brand identity. Choose wisely, register diligently, and watch as your boutique name becomes synonymous with style, quality, and a shopping experience that leaves a lasting impression on your customers. Happy naming!


Comments

Mila@ 2022-10-29 17:04:52

I am interested to join the advertisement

Amine@ 2022-08-10 08:31:56

Thank you so much for those ressources. Love.

Promise Nwadike@ 2021-12-29 13:34:41

Thanks so much Boushy for this helpful and detailed report! I really learnt so much and I figured out for myself couple of new insights on how to craft detailed blog posts, how to get my marketing agency up & running. I guess, 2022 is up to me to put in the work! Thanks.

Brandon Boushy@ 2022-03-10 09:13:55

You've got this! Keep pushing through! I'll talk to the team about writing about blogging.

Become a business owner in less than 90 days

Start your 10-day free trial of the UpFlip Academy and learn how to start your own business from scratch.

Get business advice straight to your  Inbox 

Learn from business failures and successes in 5 min or less. The stories, frameworks, and tactics that will make you a 10x better founder.

Join our 45,000+ entrepreneurs