Should I Start an LLC for My Boxing Club?
Starting a limited liability company (LLC) for your boxing club 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 boxing club, lawsuits can arise from things like a boxer getting seriously injured during a competition, one of your coaches acting recklessly, or a physical altercation occurring between the boxers in your club.
LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your boxing club seem more credible.
Recommended: Use Northwest to form an LLC for $29 (plus state fees).
Do I Need an LLC for a Boxing Club?
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 Boxing Club
By starting an LLC for your boxing club, 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.
Boxing clubs will benefit from liability protection because of the relatively high risk involved with participating in combat sports.
Example 1: When your boxing club’s head coach gets frustrated at a novice’s inability to spar, they snap and give them a hard slap, which leads to a fractured jaw. If the novice decides to sue your boxing club, you will not have any civil liability if you are registered as an LLC and will thus not be required to compensate the claimant.
Example 2: After a brutal inter-club sparring, one of your club’s boxers sustains heavy head injuries and is later placed in the ICU. When the athlete’s parents threaten to sue you for medical damages, you remember that your boxing club is registered as an LLC, meaning that you will not be held personally liable for any liability that arises in court.
Example 3: You apply for two business loans which you plan to use to purchase a competition-sized boxing ring, as well as a variety of new boxing bags and training gloves. If your business is registered as an LLC and you did not personally guarantee the two loans, the loaners will not be able to sue you if you are unable to pay them back in the future.
Example 4: A member of your club sustains a severe head injury during a sparring session. His family sues your business, claiming that he was not adequately trained to spar with an opponent of that level.
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 Boxing Club
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 boxing club 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
Boxing clubs 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).
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
- Alabama LLC
- Alaska LLC
- Arizona LLC
- Arkansas LLC
- California LLC
- Colorado LLC
- Connecticut LLC
- Delaware LLC
- Florida LLC
- Georgia LLC
- Hawaii LLC
- Idaho LLC
- Illinois LLC
- Indiana LLC
- Iowa LLC
- Kansas LLC
- Kentucky LLC
- Louisiana LLC
- Maine LLC
- Maryland LLC
- Massachusetts LLC
- Michigan LLC
- Minnesota LLC
- Mississippi LLC
- Missouri LLC
- Montana LLC
- Nebraska LLC
- Nevada LLC
- New Hampshire LLC
- New Jersey LLC
- New Mexico LLC
- New York LLC
- North Carolina LLC
- North Dakota LLC
- Ohio LLC
- Oklahoma LLC
- Oregon LLC
- Pennsylvania LLC
- Rhode Island LLC
- South Carolina LLC
- South Dakota LLC
- Tennessee LLC
- Texas LLC
- Utah LLC
- Vermont LLC
- Virginia LLC
- Washington LLC
- Washington D.C. LLC
- West Virginia LLC
- Wisconsin LLC
- Wyoming LLC
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?
LLCs need insurance in order to protect their business’s assets. For a boxing club, such assets could include a commercial boxing ring, heavy and speed bags, and transportation vehicles.
Note: The limited liability offered by an LLC protects the owners’ assets only, not the business’s.
Common Situations Business Insurance May Cover for a Boxing Club
Example 1: A friend of one of your students is visiting your boxing club and starts climbing into the ring. He gets entangled while trying to slide through the ropes and falls to the ground, and breaks some ribs. Your general liability insurance policy will likely cover the cost of treating his injuries.
Example 2: You are putting on a small boxing demonstration to attract attention to your club. One of the audience members slips and falls in the bathroom and decides to file a lawsuit against your business. Your general liability insurance policy would pay for your legal costs, including the cost of a settlement if you settle out of court.
Example 3: You are proud of your new boxing logo and have been using it in all your new marketing material. However, one of your competitors claims that your logo is too similar to his and sues you. The general liability insurance policy you carry will pay for your legal fees, including any payouts or settlements that are required.
Other Types of Coverage Boxing Clubs 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 boxing clubs should obtain:
Commercial Property Insurance
All of the boxing equipment you have in your club, including bags, gloves, training materials, rings, ropes, etc., would be expensive to replace. A commercial property insurance policy would help to cover the costs of replacement were you to lose your commercial property in a covered event like a fire.
Professional Liability Insurance
If one of your customers were to sue you based on the training and advice you gave, it could put your business in a precarious financial position. Professional liability insurance is designed to protect you from such risks. As long as your policy is designed specifically for you as a boxing instructor, it will pay for your legal fees if you are sued in relation to the training you provide.
Commercial Umbrella Insurance
Your general liability policy is good coverage for most situations, but its policy limits can be exceeded in certain situations—like if you lose a big lawsuit. With commercial umbrella insurance, your umbrella policy will kick in when your general liability limits are reached.
Workers’ Compensation Insurance
If you have employees, your state most likely requires you to carry workers’ compensation insurance. This insurance will pay for treating work-related injuries for your employees. It will also help to cover lost wages while they are out of work.
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 Boxing Club Business Insurance article for more info.
In order to start a boxing club, you will need to purchase a variety of different boxing equipment, including:
- A boxing ring
- Boxing gloves, shoes, and mitts
- Heavy and speed bags
- Other training tools (e.g., jump ropes, parallettes, etc.).
When it comes to maintenance, your largest cost will likely be insurance, monthly rent, and labor (assuming you have to hire additional boxing coaches).
Visit our How to Start a Boxing Club guide to learn more about the costs of starting and maintaining this business.
Ongoing expenses include equipment maintenance and replacement, insurance, advertising, administrative supplies, and employee salaries.
Learn more about running a boxing club.
Boxing clubs make money by charging for memberships and boxing classes.
Learn more about starting a boxing club.
Boxing clubs provide equipment, instruction, and tournaments for both veteran boxers and beginners.
A boxing club’s profits depend on how many members pay fees and take lessons.
Learn more about starting a boxing club.
