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  1. #1
    fttfbass is offline Senior Member
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    Default Sole proprietorship or LLC?

    I'm in the planning stage of starting my own personal training business. I plan on providing private, small group, in home, and outdoor training. I'll be using kettlebells, sandbags, bodyweight, clubbells, sledgehammers, and other unconventional tools as training devices. Eventually I want my own studio outfitted with a power rack, barbells and dumbells, too. I'll also hold small group classes for kettlebells at a few local gyms. I don't ever plan on hiring other trainers or getting a partner.

    What's better for me, a sole proprietorship or LLC? And why?

    I've been doing a lot of research lately on starting my own business and this one has me stumped. Any help from knowledgable people would be much appreciated. Feel free to ask me any other relevant questions of information that I may have missed mentioning to help aid in an answer to my question. Thanks in advance!
    Luke-ISSA CFT & IKFF CKT

  2. #2
    jkd1 is offline Senior Member
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    Default

    I am not a lawyer... That being said, the single biggest reason you should choose an LLC versus a sole proprietorship: personal liability. Under an LLC, your personal and business assets are separate, and in the case of a lawsuit against your business, only your business assets are at risk due to the "corporate veil". This is also very simplified.

    There are many financial reasons as well, but given that your business involves swinging heavy objects overhead... you need to limit liability as much as possible.

    Btw, key requirements for starting a business: a good lawyer and a good accountant.

  3. #3
    Marc_NY is offline Senior Member
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    Nov 2008
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    Default

    Definitely an LLC for liability protection. An attorney will be able to explain the the the types of liability you are protected from in your state. In some states a personal service provider can't hide behind the limited liability umbrella for acts of negligence.

    For Federal income tax purposes a single member LLC will be treated the same as a sole propietorship and reported on your From 1040 so no additional Federal income tax filings will be required. The state that you reside in may impose an annual registration fee. An accountant will be able to help you navigate those waters.

  4. #4
    DTris is offline Senior Member
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    Default

    Yup LLC is a limited liability corporation. The main reason for incorporating is the separation of assets. A sole proprietorship treats the business as your personal property. If sued for anything you personal property and money is able to be taken. Given the risk of personal training I would go the LLC route.

  5. #5
    MikeTheBear is offline Senior Member
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    Default

    Tax advantages: You can choose to have an LLC taxed either as a sole proprietorship or an S corporation. There are certain advantages to S status, but these come into play mainly when and if the business starts to grow. Initially, just treat yourself as a sole proprietor.

    Liability: This is tricky because as a trainer, you are personally providing a service and someone can still sue you personally if you mess up. An LLC won't protect you or your personal assets from your own personal mistakes. However, if you decide to hire employees or other trainers and they mess up, then the LLC will shield you from personal liability from the mistakes of others who work for the LLC. People can still sue the LLC, but not you personally, if an LLC employee messes up.

    But that's mainly what liability insurance is for, anyway.

    So, what if you don't plan on hiring anyone or plan on making big money, at least not yet? Form the LLC anyway. In most states it's inexpensive to do, you will have an LLC in place if your business takes off and you do expand, and it makes you look more professional. Having "Inc." or "LLC" at the end of a business name makes you look like a "real business" to potential clients, so there's a small marketing benefit in getting an LLC.

    One thing to consider is state tax laws. Most states just follow the federal rule and will tax you as a sole proprietor, i.e., there is no tax at the entity level, but some states (Illinois, for example) impose a separate tax on entities even if the entity has one member or shareholder. In such states, this may negate the advantage of having an LLC.

    Yes, I'm a tax attorney licensed in Colorado, but not PA. Otherwise I'd help you. I still may be able to help you in a limited way. No charge. I'm trying to show folks that not all lawyers are bad.

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