To LLC or Not to LLC

I've come a looong way from having just a reformer in my dining room!

I’ve come a looong way from having just a reformer in my dining room!

When I started my business 8 years ago in the dining room of my one bedroom bungalow-I knew diddly-squat about handling a business. All I had was one reformer, an empty room, and a desire to set my own schedule. Not even one client. As my business grew, I did as well.  I discovered that to have a legit business I needed to become legit. I got a separate checking account, and my DBA (aka Doing Business As). That first year I progressed from using the cash I got from clients on gas and cocktails to depositing $500 checks in my FORM Pilates business account. I was official.

Fast forward years later and BAM! I own an actual brick and mortar studio! While it is super exciting, more growth means more responsibility…AND more liability. This time I learned I needed to make the transition into the big time and form an LLC.

Here are some of the questions I asked and my findings- so you too can bone up on business legalities 101:

What the heck is an LLC?

A limited liability company or LLC is a business structure that combines the taxation of a partnership or sole proprietor with the limited liability of a corporation.In English that means that while you can still report your business income on your personal tax return, you’ll get the benefit of being like a corporation, meaning if your business owes money or faces a lawsuit, only the assets of the biz are at risk. Basically, if your Pilates client decides to sue your butt, they can’t take everything you own, including the Lululemon clothes off your back.

Do I need to form an LLC?
In general, you would benefit from an LLC if you are worried about personal exposure to lawsuits or racking up debts with your biz. When I started mine in my home, I could sleep at night with just having liability insurance. Later on, when I went big time and signed the lease on my studio space in NYC, I was advised to have an LLC to help protect myself. Bigger risk= Bigger loss.

How in the world do you make an LLC happen?

First, you need to name your company. Pick something you want to identify your empire with and then check and see if your choice has not already been taken. Once you’ve settled on your handle, you’re ready to file. In most states you can simply file an “articles of operation” with your states LLC filing office and pay a filing fee. My bank’s business associate was kind enough to go online and do it for me here (http://www.dos.ny.gov/corps/llccorp.html), but if you’re not as spoiled as me you can simply google it up and find your state’s office online. The final piece of this puzzle is an expensive one- publishing. To make your LLC legal you have to publish it in a local newspaper. In NYC you’ll pay $1000 to publish on the low end, but if you’re lucky enough to live in the very popular state of say…Delaware, it will be less costly. You have 120 days after you file to publish that puppy and then you’re official.

IMG_2207Bottom line: if your operation is small and you stay that way, just stick with a DBA. If you plan to launch a line of workout equipment, teach hundreds of bodies, or partner up with your ex-boyfriend you may want to look into the investment of forming an LLC so you can rest easier.

Now’s your chance to take action. Leave a comment below and if you like this post make sure to share it on your social networks or forward it to a friend.

Need more help figuring out how to structure, brand, or market your business? I have just what you need! Schedule your 30 min complimentary consult with yours truly. Let’s make a plan that works!

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