Registering Your Party Rental Business as a Legal Entity

If you are want to run a party rental business on a long-term basis, you must register your business as a legal entity.

That means you need to get the required licenses, permits, and tax numbers to operate legally in your area.

Since we can establish a party rental business in any part of the world, we can’t guide you with specific blueprints. Each country has certain rules and regulations governing party rental business operations. Therefore, you have to visit your local commercial licensing department to get the list of required documents.

For the sake of clarity and to give you a general idea, we have used the United States as a baseline. However, the requirement in the U.S. may not be applicable in other countries.

Types of Business Registrations

In the United States, you can register your business in several ways. But, the most popular one among them is to become a Limited Liability Company or simply LLC.

Limited Liability Company

Obtaining LLC for your party rental business will protect you from becoming personally liable for damages or debt caused by your business.

In other words, if your company does not hold LLC, you will be responsible for any costs or damages, and you will be held accountable for them under the governing laws.

LLC Limited Liability Company

Sole Proprietorship

Sole Proprietorship

Usually, people think sole proprietorship is the same as LLC. But those two are different. The sole proprietorship is applicable for businesses that are owned by a single owner. Plus, you will be personally accountable for your business debts and other obligations in a sole proprietorship as there is no legal separation between the business and the owner. 

On the other hand, LLC separates the business from the owner, and the owner is not liable for business obligations such as lawsuits, debts, claims, or liens. 

General Partnership

General Partnership

You can form your party rental business as a general partnership when you want to start your business with other individuals like your friends, family members, or acquaintances. 

Although you can also form LLC in partnership with others, General Partnerships are preferred if the owners want to be responsible for their actions. 

Let’s say you and your friend Joe decided to rent inflatables and play structures for parties. And each of you chose to contribute your own equipment. However, one day Joe’s inflatable causes an injury. If you already got business insurance, burdens will be less severe. If not, Joe will be obliged to pay for the damages, not the whole business. 

It is because General Partnership does not legally separate owners’ liability from that of the business. Another example is that your party rental business goes bankrupt under General Partnership, your creditors will go after your personal assets. While under LLC, you are saved from such risks because people and creditors can sue your business instead of you.

Limited Partnership

Limited partnership

This form is a little more complicated than the previous three because it divides the partners into two groups. The first group includes general partners who manage and make decisions on behalf of the business (they are personally liable for issues caused by the business). The second group is limited partners, including investors and stakeholders who cannot intervene in the business operations or decision-making. And they are not liable for any damages or debts caused by the business.  



We are sure you hear this word pretty regularly as international corporations own the world’s big businesses. A corporation is somewhat similar to LLC, but corporations are owned by investors called stakeholders and shareholders. 

Usually, shareholders invest money to procure equipment and supplies for a party rental business. Since they are funding your business, they can make decisions and engage in management through a board of directors (which usually consists of individuals elected by investors). 

We do not recommend forming your party rental business as a corporation initially. As we mentioned in previous sections, you have to build a foundation for your business, start small, and gradually increase its progress. 

You can choose any of the routes mentioned above for your business. However, we highly recommend forming LLC because you won’t be held accountable for any debt or issues induced by your company. 

But, that does not mean you should possess irresponsible behaviors. Even though LLC separates your personal assets from that of your business, you are still obliged to fulfill the ethical as well as professional duties of your business.

Required Paperwork for LLC

If you decided to establish your business as LLC, then you need to start gathering the following three documents:

1. Articles of Organization or Certificate of Organization

To obtain Articles of Organization, you must submit the following information:

  • Your Business Name:
    You need to select a relevant and fun name for your business. Although the name may seem like a simple thing, it may have a significant impact on the success of your business. For example, one of our clients specifically targeted the names, starting with “A.” He says that businesses names with “A” show up in the top spots in business listings as those catalogs usually organize ranks alphabetically.
  • Business Purpose: This document will briefly outline the essential purposes of your business. For example, the purpose of your party rental business will be something like providing and installing party equipment for your community, or it may be something like renting out and installing safe inflatables for children. Basically, the purposes should be compliant with the State rules and regulations.
  • Registered Agent: You should provide the name and the physical address of an agent who would receive and sign paperwork on behalf of your business. For example, if you are doing most administrative and management work yourself, you may submit your name as Registered Agent.
  • Principal Place of Business: As we mentioned in the previous sections, you should have a physical address to your warehouse and office. It is always better to select your warehouse near your service areas to cut the transportation time and costs. 
  • Duration of LLC: This section will require you to input how long you will operate this business. Although it is hard to predict the future of your business, you should include a longer duration (at least ten years) to be compliant with some states’ statutory limits. In other words, some states put a limit to minimal duration. For example, if you are planning to start an LLC and finish it next year, that may seem like a scheme in the eyes of state regulators.
  • Management Structure: To this field, you will input the number of managers supervising the business, and it can be one, two, or more. But we recommend inputting only the top-level managers.

Those are the basic required information for the Articles of Organization. Once you successfully fill out the sections, you can move on to the next document:

2. Operating Agreement

This document includes the following:

  • The number of employees with their roles: (E.g., warehouse manager, delivery truck driver, equipment installer, etc.)
  • Decision-making structure: (E.g. Manager (you) give instructions to your staff as soon as you receive orders or bookings). Reservety’s convenient booking and reservation system will be handy in these tasks.
  • Percentage of Ownership: Who owns the company and what percentage, etc.
  • Distribution of Profits and Losses: Part 2 of our How to Start a Party Rental Business Series will provide more details for this section.
  • Voting rights: Are you going to give your staff the right to vote under certain circumstances? For example, if you want to change the work hours and do not know whether “starting early and ending early” or the other way around would work better, you may decide that by engaging your staff through voting.
  • What will happen if an owner dies and or quite the business: This section requires you to have contingency planning for unexpected events. 
  • How to dismantle the LLC: You must include the procedures for how to dissolve the LLC in the case of bankruptcy or during other issues.

3. Employee Identification Number

The number is commonly known as EIN. In Europe, these numbers are known as TIN (Tax Identification Number) or VAT (Value Added Tax). In the U.S., businesses are recommended to file their paperwork with an EIN instead of a Social Security number.

Generally speaking, forming an LLC is not as difficult as it may seem. However, if you think you will get lost in the process, hiring a local agency or lawyer to file the paperwork for you will be convenient.

Occupancy Permit or Certificate of Occupancy

Usually, the Building Inspection division of the government gives the permit under the Building Act of 2011. This permit is required in most U.S. states, but other countries may require similar permits.

Concisely speaking, the occupancy permit authorizes and classifies the offices, warehouses, and other building types for usage. If you attempt to use a specific warehouse for rental business, you must have an occupancy permit that will indicate that the premises are safe and secure for the intended business purposes.

For example, you can’t store chairs, tables, tents, and other flammable pieces of equipment in the building that have too much wiring hanging out or unsafe gas pipes running across. Basically, government inspectors issue occupancy permits based on the local building codes.

Reseller Permit (Reseller License)

A reseller license is needed if you want to resell some items because the permit exempts you from paying sales taxes when you buy items from wholesale businesses. 

For example, suppose you want to resell single-use decorative items in your party rental business. In that case, you may get bulk items from wholesale locations, and those locations will not charge you any taxes when you prove that you are purchasing them intending to resell them. One way to prove it is to present your reseller permit to the wholesaler.

Certified Event Rental Professional (CERP)

Certified Event Rental Professional (CERP)

The document is not a requirement, but if you get it by taking the courses from American Rental Association (ARA), you will gain a competitive edge over the competitors as CERP will improve qualification and professionalism. Because the program teaches the trainees in the following areas:

– Introduction to Sales

– Delivery Driver Operations

– Tabletop Designs

– Warehouse Operations

– Tenting Operations

To get more information, you can visit the official website of ARA.

Occupational (Worksite) Safety Certificates

Occupational (Worksite) Safety Certificates

States do not usually require this document by law, but it is good to eliminate hazards and risks from the worksite. Taking the worksite safety courses, you and your staff will prevent risks such as fire, falls, and injuries. Additionally, you will learn how to handle the pieces of equipment properly.

The certificate will complement your professionalism and make your business more attractive to potential customers. We all know that most individuals and companies want to work with businesses that follow strict safety and security guidelines.

You may obtain Worksite Safety Certificates online by going through some short internet courses.

You can find them online by searching the “Worksite Safety Certification Program” keyword.

Business Insurance

Business Insurance

We have already talked about the importance of Business Insurances for the party rental business; you may read more about getting your party rental insured here. Plus, we will dedicate a section for Business Insurance in our “How to Start a Party Rental Business” series.

As a quick note, we have to mention that business insurance will save your business from unexpected costs such as lawsuits, accidents, medical bills, and property loss.


Congratulations on completing another part of our series. We hope that this section gave you a general idea of what paperwork and certificates are required or essential to form your business as a legal entity.

In the next section, we will primarily talk about opening a new bank account for your business and how to streamline your party rental business’s payments and invoicing tasks.

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