Should I Start an LLC for My Ballroom Dance Lessons Business?

Starting a limited liability company (LLC) for your ballroom dance business can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For a ballroom dance business, lawsuits can arise from things like misrepresentation allegations, dance-related accidents, and general business debt.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your ballroom dance business seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Do I Need an LLC for a Ballroom Dance Lessons Business?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should form an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for a Ballroom Dance Lessons Business

By starting an LLC for your ballroom dance lessons business, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Ballroom dance lessons businesses will benefit from liability protection primarily because of the risk of personal injury.

Example 1: An employee at your ballroom dance business promises a 68-year-old customer that an expensive lifetime membership will help her become a professional dancer. After three years of instruction, the customer has seen no improvement in their dancing ability, and so brings a lawsuit for misrepresentation and fraud against your business. Regardless of the lawsuit’s validity, your personal assets will remain completely protected by limited liability.

Example 2: During the replacement of a new mirror in one of your dance studios, an employee drops the mirror, causing it to shatter. A shard of this glass blinds a nearby customer, who then sues your business for the bodily harm he suffered. In the ensuing case, any compensation you are found liable for can only be imposed upon business assets due to limited liability.

Example 3: In promotional material recently released by your ballroom dance business, an employee derogatorily jokes about the quality of a competitor’s classes. This leads the competitor to sue your business for slander. If found liable to pay damages, your personal assets will be safe as only your business’s assets can be used to pay this compensation.

Example 4: While learning a new routine, one of your students slips and breaks their arm. They claim your teacher’s poor instruction caused their injury and decide to sue you for the damages.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for a Ballroom Dance Lessons Business

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if a ballroom dance lessons business owner can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Ballroom dance lessons businesses rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a professional LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

Yes, your LLC will need insurance. Without it, your personal assets are unprotected.

Remember the protection afforded by limited liability is different from that by business insurance. Limited liability protects your personal assets while the latter protects your business’s.

Common Situations Business Insurance May Cover for a Ballroom Dance Lessons Business

Example 1: When a potential student visits your studio, she slips as she walks to the restroom, breaks a wrist, and demands your business pay for her medical treatment. General liability insurance would cover the cost of her medical care.

Example 2: While demonstrating a dance move, one of your instructors stumbles, steps on a student’s backpack, and breaks the high-end laptop inside. General liability insurance would pay to replace the student’s damaged property.

Example 3: A competing dance studio claims you stole its logo and sues for damages. While you don’t believe the two logos are similar enough to justify legal action, you want to hire an attorney immediately. General liability insurance would cover your legal defense costs.

Other Types of Coverage Ballroom Dance Lessons Businesses Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all ballroom dance lessons businesses should obtain.

Professional Liability Insurance

While you strive to offer lessons that help your students enjoy dancing and maintain a good level of fitness, there’s always a chance someone you teach could claim your instruction caused them harm. If they sue you, professional liability insurance would cover your legal fees and any required settlement.

Commercial Property Insurance

You made a major investment in the equipment and supplies needed to start and maintain your studio. If you own the building in which you operate, commercial property insurance would cover the cost of repairing or replacing your business-related property in the event of a fire, theft, or natural disaster. This includes structural damage to your studio as well as the business materials you store there.

Workers’ Compensation Insurance

Most states require you to carry workers’ compensation insurance for both part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover, but also any disability or death benefits stemming from a work-related accident.

Commercial Umbrella Insurance

While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance and commercial property insurance.

Read our Business Insurance article for more info.

Starting a ballroom dance lessons business is estimated to cost between $50,000-$75,000. The three main costs comprising this figure are the dance studio, employee wages, and insurance.

In addition to this, you should be prepared to pay for dance equipment, facility costs, and advertising.

Visit our How to Start a Ballroom Dance Lessons Business guide to learn more about the costs of starting and maintaining this business.

Ongoing costs include rent or mortgage payments, payroll, insurance, electricity, and internet service.

Learn more about running a ballroom dance lessons business.

A ballroom dance lessons business primarily makes money by charging students for lessons.

Learn more about starting a ballroom dance lessons business.

Ballroom dance lessons businesses provide group and one-on-one ballroom lessons to students of all skill levels. Recreational centers and clubs often partner with ballroom dance lessons businesses, while some maintain their own studio.

The profitability of a ballroom dance lessons business depends on the number of students it has, how much it charges for lessons and events, and its overhead costs.

Learn more about starting a ballroom dance lessons business.