Q: I am an independent personal trainer in the Seattle area and wondering if I need an LLC.
Thank you to a customer from Washington State for that great question! Starting an LLC is a way to protect your personal assets in case your business gets sued or goes into debt. Since training people in physical exercise involves potential risks—barbells are heavy—forming an LLC for a personal training business is often a smart move.
Why start an LLC for a personal training business?
There are a few benefits to structuring a personal training business as an LLC, including:
Liability protection
The most important reason to form an LLC is to protect yourself from personal liability. LLCs have liability protection because the state considers the business to be a separate legal entity from its owners. That means that if an LLC is sued or defaults on a debt, the business owner’s personal assets are protected.
For example, imagine you have a client who injures himself during a workout session and sues you. If you have an LLC, you are only at risk of losing your business assets in the lawsuit, not your personal savings, car, or house.
However, it’s important to remember that liability protection is not bullet-proof and that LLCs need maintain their limited liability status by keeping their business finances separate and following consistent internal policies.
Credibility
Having the letters “LLC” after your business name makes your business look more professional and can help you win the trust of potential clients and investors. Having an LLC can also make it easier to get small business loans and grants.
More tax options
While LLCs are taxed as disregarded entities or partnerships by default, they also have the option to be taxed as an S-corp or C-corp. Depending on how much revenue your personal training business is raking in, being taxed as a corporation could save you money on taxes. However, it’s a good idea to consult a CPA or business attorney before taking this step.
How do I start an LLC?
Starting an LLC is a slightly different process in each state, but it involves these basic steps:
1. Choose a business name
2. Appoint a registered agent
3. File formation documents—commonly LLC Articles of Organization—with the state
4. Create an LLC operating agreement
5. Obtain an EIN
6. Open a business bank account
7. Fund the LLC
8. File state reports and pay taxes
Read our complete guide to Starting an LLC.
Want to take your business digital? Read How to Start a Virtual Personal Training Business.