legal, incorporationI teach martial arts part time, and I am in the process of developing a platform for doing agility and movement training as an ongoing series of seminars and contracted events in various schools and camps. There is also the possibility of being contracted for private individuals on a per sport basis.
I have not gotten any licenses yet, and will be operating in the state of Arizona. I realize that I will need to carry business insurance, but I don’t want to put my personal assets at risk in the case of any lawsuits for what will ultimately be a low scale side business.
When I go to file, is there a preferred type of business structure to help me avoid personal liability for injury?
Given your state, I would look into forming an LLC since its simple, low cost, and low maintenance in terms of annual documentation. You may want to file for S-corp status if you want to leave profits in the company.
Other option is to form a corporation and then still file for an s-corp which allows you to combine your company’s income on your personal returns so you only have to file one return with the IRS.
Like sole proprietorships (one-owner businesses) and partnerships, an LLC is not considered a separate entity from its owners for tax purposes. This means that the LLC does not generally pay any income taxes itself; instead, the LLC owners pay taxes on their allocated share of profits (or deduct their share of business losses) on their personal tax returns. LLC owners can elect to have their LLC taxed like a corporation. This may reduce taxes for LLC owners who need to retain a significant amount of profits in the company.
I should add that only an LLC or Corp will give you the liability protection you are looking for. A sole proprietorships does not provide any legal protection for your personal assets.
Here is a good article from Nolo
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