We’ll be delving into legal structure for your business in this edition of “It Must Be Great Making Your Own Hours”. Most people start their business off as a Sole Proprietorship, by far the easiest way to get up and running, not to mention the least expensive. This is how I personally started my company, Optimum Condition, back in 1999. There are other options that may offer more legal protection, depending on what business and industry you are in.Forming a Limited Liability Company, or LLC is another option. This is the legal structure I changed to when I opened my fitness studio. I knew I would be bringing on instructors and wanted the legal protection provided by the LLC. However, this comes with a cost. Not only did I need to file the appropriate paperwork in order to form the company, which you can do through an attorney or through an online legal service, there are other fees that we’ll go into a little further down in this article. You should be able to get all the forms filed for the new structure for around $500.
While Partnerships and Non-profits may be an option, usually the other two choices aside from a Sole Proprietorship will be an S Corporation or a C Corporation, both of which come with pros and cons depending on your business and on your industry. Again, this can be done with the assistance of an attorney or online. You should be able to file this for approximately the same cost a LLC, but the ongoing paperwork and board meetings may be a little more complex, so it’s more than just initially filing the forms and then just forgetting about it. A corporate structure is what form a business is in when you see the “inc” behind a company name.
The biggest difference aside from the protection provided with forming an LLC, S Corp or C Corp vs. a Sole Proprietorship, is the cost. Bother LLCs and Corporations costs $800/ year here in California. I think we are the only state that charges that much and it’s payable to the Secretary of State. I’ve heard of business owners trying to save money and cut corners by filing in another state like Arizona, but now this really doesn’t make sense unless your located in AZ, now does it? May suggestion is just to suck it up and do it the right way to avoid future problems on down the line. Hope this helps if you are thinking about starting your own business.
Be sure to check back soon for new info!
Your friendly health & fitness expert,
Melissa
OptimumCondition.com
(619) 252-4993
Optimum Condition empowers people to live life to the optimum through physical training, education, and coaching
