When you are starting a business, there is a large list of things you need to do. It doesn’t matter what kind of business you are starting. We specialize in helping gyms, fitness facility, health and wellness studios, and fitness related businesses. However, this is true even for the coffee shop opening on the corner.
Along with this massive to do list, there is also a hierarchy of necessary expenses. Starting a business, and running a business, can be an expensive adventure. Boutique fitness facilities are among the cheapest brick and mortar businesses you can start, and you are still looking at $15,000-$20,000 just to get the doors open. As such, we fully understand why business owners try to shave as many expenses as possible in the beginning. That said, one expense we never suggest you shave is your corporate filing.
When running a business, you NEVER want to operate as a sole proprietorship. You need to create some kind of legal entity. Every business you are familiar with (Nike, Pepsi, Chrysler, CrossFit) operates as a legal entity. Most commonly, they are known as Corporations or Companies. Just because you are a small business doesn’t mean you aren’t a Company.
The most common Company, and the easiest to form, is a Limited Liability Company (“LLC”). The process is easily, the associated cost of filing your LLC is usually low (like less than $500.00), and there is a ton of help out there (like us). The problem we see is that most new business owners don’t understand why this is so important. We hear business owners say things like, “I don’t think it is necessary for me to be a Corporation yet.” Or, “I’m going to file for my LLC after I’m making money.” Then, three years into business, they’ve never made time for filing their LLC because they are more focused on building their business and putting out fires.
This sentiment is completely wrong. We talk about it more HERE. You need a legal entity to protect you and your money . . . Legally. Without something like a filed LLC, you are leaving your personal money, your back accounts, your house, your savings, possibly even your spouse’s money exposed to legal action. We don’t know about you, but we don’t want a disgruntled client to take our hard earned money.
If you are still in the process of opening your business, please shave your expenses somewhere else. If you are already open for business, please take the time to file your LLC. We cannot emphasize enough how important it is to get this layer of legal protection. Furthermore, if you don’t think you have time, hire someone for a modest fee. That “investment” will pay for itself with the peace of mind that your net profits are YOUR net profits.