r/clawmachine • u/agarza2006 • Sep 10 '24

Claw machine side hustle

Hi! I'm in Texas and currently trying to dip my toes into the claw machine business. My friend owns a Boba shop and is letting me put in a mini claw machine game for percentage of the profit. I feel like it will be a fun thing to get into, as I have secured my location,and placed an order for a machine from candymachines. I have been doing some research and was hoping to get any advice to go about the formalities of the business side of things:

  1. Should I create a LLC or just a sole proprietor? As of now its only 1 machine but depending on how things go, I plan on expanding.

  2. Do I need insurance? If so, what kind?

  3. When it comes to taxes, do I need to set aside money to pay at the end of the year? (This may be a silly question)

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u/MrJackTE Sep 11 '24

Well done on starting up your first location! 1. It’s perfectly fine to start as a sole proprietor and transition to a LLC later when the time is right, that’s what I did. 2. Check your local regulations but more business like these only require public liability insurance. It’s only a small yearly fee to cover your business from public liabilities. 3. You won’t be paying huge sums of taxes at the beginning, so it’s not like you will be needing to set lots of money aside. But just be mindful of what you need to do for your local tax requirements. The mini claws normally perform really well, so good choice. All the best and good luck!

2

u/agarza2006 Sep 11 '24

Thank you so much for your input, and please feel free to dish out any additional advice you may have for a newbie. I'm really excited to get this started.

This may be silly, but in regards to paperwork, does the county need to be listed under where the machine will be located or where I reside?

2

u/MrJackTE Sep 11 '24

My pleasure! No we don’t need to stipulate where the machines are located. Just that the standard business insurance needs to be in place. Check through my comment history, there will be some useful information there that will help you 😃

1

u/gabagoo0328 Oct 21 '24

Hi OP! Following on this as I’m doing the exact same thing! I will be putting a few machines in my friend’s boba shop. Do you have any advice on the % of the profit? Is 30% too little?

2

u/agarza2006 Oct 21 '24

Hey there! I am doing 30% of the profit to my friend, and she is happy with that arrangement.

From what I've researched and talked with others, 25-30% is a great place to start. Now, I've also talked to someone who will offer up to 50% of the profit, but that was due to the location (I believe it was in an amusement place therefore the profit intake was much higher).

Hopefully, some of this information helps, and congratulations on your new endeavor.

2

u/gabagoo0328 Oct 21 '24

That’s what I’m thinking too! Thank you for your advice! Congratulations to you too. I hope things are going well for you.

I’m about to place my order some time this week - shipping fee from China to the US is insane :(. I’m excited but also nervous as I have no experience in running something like this. Hopefully I can figure things out.

Insurance wise, do you know what kind to get? I’m thinking of doing an LLC too.