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.
How in the world do you make an LLC happen?
Bottom 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.
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