How to Start a Party Rental Business

A party rental service helps people add a little more spice to their events. Children’s birthday parties are made more fun with a bouncy house, fundraisers make more of a splash with a dunk tank, and weddings get more elegant with a styled tent. Party rental businesses help hosts and hostesses everywhere create lasting memories for themselves and their guests.

Ready to turn your business idea into a reality? We recommend forming an LLC as it is the most affordable way to protect your personal assets. You can do this yourself or with our trusted partner for a small fee.

Northwest ($29 + State Fees)

DIY: How to Start an LLC

Start a party rental business by following these 10 steps:

  1. Plan your Party Rental Business
  2. Form your Party Rental Business into a Legal Entity
  3. Register your Party Rental Business for Taxes
  4. Open a Business Bank Account & Credit Card
  5. Set up Accounting for your Party Rental Business
  6. Get the Necessary Permits & Licenses for your Party Rental Business
  7. Get Party Rental Business Insurance
  8. Define your Party Rental Business Brand
  9. Create your Party Rental Business Website
  10. Set up your Business Phone System

We have put together this simple guide to starting your party rental business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Party Rental Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

  • Your state’s business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability

It’s very important to secure your domain name before someone else does.

What are the costs involved in opening a party rental business?

Costs can be quite high. You’ll need to buy all of the equipment to start, and then find a place to house it. Just a single tent can cost thousands of dollars. Party rentals don’t necessarily need a retail space, but you may need one to establish credibility to would-be customers. If you can’t afford to rent a retail space, you can store the equipment in a storage facility, and then have appointment-only showings to potential renters.

What are the ongoing expenses for a party rental business?

You can expect the following ongoing expenses if you own a party rental business:

  • Equipment maintenance/replacement costs
  • Rent/storage fees
  • Employee salaries
  • Website maintenance/advertising costs

Who is the target market?

The target market depends on where you’re located. If you’re operating in or near a high-income neighborhood, then your clients will likely be homeowners who throw elaborate events for themselves and their loved ones. If you’re in a middle-class neighborhood, you may find that your clientele are the larger organizations (e.g., schools, the VA, community boards, etc.) holding major gatherings from fundraisers to festivals.

How does a party rental business make money?

Party rentals make money by purchasing equipment at wholesale prices and then renting that equipment out for a set fee. Renters will normally pay a deposit or leave their credit card information to cover any accidental or intentional damage the equipment may suffer while the renter has it in their possession.

How much can you charge customers?

This is heavily dependent on where you work. Check rates in your area to see what other businesses are charging before you set your fees in stone. In Michigan, a 20 x 20 foot wedding tent costs $3500 dollars to start and rents for about $225 per weekend. In a wealthier city, you may be able to charge double this amount.

How much profit can a party rental business make?

Your profit is determined by how long your equipment lasts, and how much you charge for each rental. In the case of the wedding tent, you would need to rent a $3500 tent (at $225 a weekend) for at least 16 weekends before you started seeing a profit. However, seeing as how a wedding tent can handle far more than 17 weekends, then you enjoy practically unlimited profit after that.

How can you make your business more profitable?

Party rental businesses can consider branching out into everything that an outdoor event may need. From portable toilets to caterers/bartenders, there’s a lot of needs to be met for the many party throwers of the world.

Want a more guided approach? Access TRUiC’s free Small Business Startup Guide – a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

One crucial aspect that cannot be overlooked when starting your party rental business is the importance of establishing a solid business foundation. While sole proprietorships and partnerships are the most common entity types for small businesses, they’re a far less stable and advantageous option than LLCs.

This is because unincorporated business structures (i.e., sole proprietorships and partnerships) expose you as an owner to personal liability for your business’s debts and legal actions, while LLCs protect you by keeping your personal assets separate from your business’s liabilities.

In practice, this means that if your party rental business were to face a lawsuit or incur any debts, your savings, home, and other personal assets could not be used to cover these costs. On top of this, forming your business as an LLC also helps it to appear more legitimate and trustworthy.

More than 84% of our readers opt to collaborate with a professional LLC formation service to kickstart their venture. We’ve negotiated a tailored discount for our readers, bringing the total down to just $29.

FORM YOUR LLC

Note: If you’re interested in more information before getting started, we recommend having a look at our state-specific How to Start an LLC guide (DIY) or our in-depth Best LLC Services review (for those opting for a professional service).

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It’s really easy and free!

You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

  • Separates your personal assets from your company’s assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a party rental business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

Certificate of Occupancy

Businesses operating out of a physical location typically require a Certificate of Occupancy (CO).  A CO confirms that all building codes, zoning laws and government regulations have been met.

  • If you plan to lease a location:
    • It is generally the landlord’s responsibility to obtain a CO.
    • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a party rental business.
    • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
  • If you plan to purchase or build a location:
    • You will be responsible for obtaining a valid CO from a local government authority.
    • Review all building codes and zoning requirements for your business’ location to ensure your party rental business will be in compliance and able to obtain a CO.

Services Contract

Party rental businesses should require clients to sign a services agreement before starting a new project.  This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers’ Compensation Coverage.

Find out what types of insurance your Party Rental Business needs and how much it will cost you by reading our guide Business Insurance for Party Rental Business.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a party rental business

The best way to promote yourself is to start networking with the major organizations—even if your primary market is personal parties. The more you make yourself well known to the party planners of the major events, the more likely it is your name will start to trickle down to the home planners in the area. In addition to forming personal relationships, create a professional website built with the most popular search terms in mind. Once you know what the big draws are in your area (e.g., sporting equipment, luxury toys, etc.), then you can feature those items prominently on your website to hook more people to your services.

How to keep customers coming back

Excellent customer service and quality equipment will attract people back to you. Ensure all deliveries are on time, and that each item is delivered as promised.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

  • All legitimate businesses have websites – full stop. The size or industry of your business does not matter when it comes to getting your business online.
  • Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
  • Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPressWIXWeeblySquarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2024 to find the best phone service for your small business.

Recommended Business Phone Service: Phone.com

Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it’s fair pricing.

Is this Business Right For You?

This business is excellent for people who enjoy event planning, and who have an appreciation for and understanding of the party equipment that’s on the market today.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

What happens during a typical day at a party rental business?

Party rental owner can expect the following to-do list on any given day.

  • Researching equipment
  • Preparing rental contracts
  • Selling rentals to customers
  • Repairing and replacing equipment
  • Advertising and marketing the business

What are some skills and experiences that will help you build a successful party rental business?

It helps to have some experience with party planning before you go into this business. You’ll also need to be detail-oriented and highly organized. Party rentals can get messy when equipment is damaged, so your verbal communication and written contracts need to address potential problems before they have a chance to become full-blown catastrophes.

What is the growth potential for a party rental business?

Growth is highly dependent on the area you serve. If you’re catering more to larger organizations in your area, there may be only a few events they throw a year around the holidays. On the other hand, birthdays, retirement parties, and promotions are everyday occurrences, meaning you’ll have a larger business if you service the full neighborhood.

Take the Next Step

Find a business mentor

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

  • Funding
  • Events
  • Guides
  • Support

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting a party rental business?

The best advice for party rentals is to start thinking outside the box. Maybe the people in your area can’t afford to spend $100 an hour on an expensive jet ski for a water-themed birthday party, but they can afford to pool their money together to rent a boat to go tubing on the lake. You can rent the boat to party goers, and safety equipment to each person attending. If you live near a ski resort, consider renting skis at group rates for ski parties.

Write up your customer contracts very carefully before you start renting, and ensure they’re iron-clad in case of any legal disputes. And while it may be difficult to do, you’ll need to invest in quality equipment. The only way you’ll become profitable is to get durable goods that can last you through party after party. If you don’t have a lot of start-up capital, you can even consider ‘renting out’ party characters rather than physical equipment. Hire a few talented actors in your area to dress up for children’s birthday parties, and then use the profits to start saving money for more physical equipment. Just remember that there are plenty of things that people love to do for the day, but won’t necessarily do again for another year.

Everyone knows what it’s like to buy something expensive and then never use it. Your job is to show potential customers that it makes far mores sense to rent equipment for parties than to buy. Being flexible and persuasive are two of the best ways you’ll get your business off the ground.

How and when to build a team

You’ll likely only need a team if you’re planning on being open 7 days a week in a big rental space. Generally, you can consider doing limited hours or appointment-only rentals to start, so you can save yourself the cost of employees salaries. Just ensure that if you do appointment only, your customers can count on you to get back to them quickly and to schedule an appointment on their schedule and not yours.

Useful Links

Industry Opportunities

Real World Examples

Further Reading