Do I Need an LLC for My Gymnastics Classes Business?

Starting a limited liability company (LLC) for your gymnastic classes 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 gymnastic classes business, lawsuits can arise from things like medical damages claims (e.g., an instructor gets injured during a class, a client attempts a complex technique and gets severe muscle pain, etc.).

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

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

Should I Start an LLC for My Gymnastics Classes Business?

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

You should start 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 Gymnastics Classes Business

By starting an LLC for your gymnastics classes 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.

Gymnastics classes businesses will benefit from liability protection because of the high risk of liability for physical injury in addition to general business liabilities.

Example 1: An electrical fire breaks out during a class, causing significant damage to the building and equipment. Following this, the landlord sues the gymnastics business for the cost of repairs. With limited liability protection, the damages from the lawsuit will only affect the business's assets and not the owner's personal assets.

Example 2: One of the gymnastics instructors fails to properly spot a student during a tumbling pass, resulting in the student falling and breaking their arm. The student's family then sues the gymnastics business for medical expenses. Regardless of the court’s ruling, the damages from the lawsuit will only be covered by the business's assets and not the owner's personal assets.

Example 3: A gymnastics coach is accused of inappropriate conduct with a student. Following this, the student's family sues the business. Limited liability protection will ensure that the damages from the lawsuit will only affect the gymnastics business's assets and not the owner's personal assets.

Example 4: A new student decides to get up on the balance beam while unattended by staff. The student slips, falls, and breaks their leg. Their parents sue your business to cover medical expenses.

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 Gymnastics Classes 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 gymnastics classes 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

Gymnastics classes 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 dependable 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?

All businesses need insurance to protect their business assets — even LLCs. This is because the limited liability protection from an LLC protects your personal assets, not your business assets. This is especially important for gymnastic class businesses that may be at risk of causing injuries to students during sessions.

Common Situations Business Insurance May Cover for a Gymnastics Class Business

Example 1: A new student is practicing when she over-rotates and falls, breaking her wrist. Her mother decides to sue your business. While your company may ultimately be exonerated because participants assume a certain amount of risk, you still need to defend yourself with an attorney. Your general liability insurance will pay for your legal fees, including the cost of a settlement if one is necessary.

Example 2: The competing gymnastic business across town has sent you a letter telling you that they are suing you for libel. The general liability insurance you have will cover your legal defense fees.

Example 3: You are throwing a welcoming party for a group of new students. One of the parents decides to get up on the balance beam and demonstrate his skills. He slips, falls, and breaks his leg. He asks that you pay for his medical treatment. Your general liability insurance will likely cover this expense.

Other Types of Coverage Gymnastics Classes 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 gymnastics classes should obtain:

Commercial Property Insurance

It took a considerable financial investment for you to acquire all of the gymnastic equipment and supplies necessary to open your studio. If you were to lose most or all of that equipment in an unexpected event like a fire, you might struggle to replace it all. But if you have commercial property insurance, you can file a claim with your insurer and likely get compensation for replacements if a covered event caused the damage.

Professional Liability Insurance

Professional liability insurance is designed specifically for businesses to protect against liability based on mistakes or failure to perform. For example, if one of your students hurts herself performing gymnastics at school and claims that your instruction was responsible for her injuries, your professional liability insurance will cover your legal fees. It will also pay for a settlement if you need to settle out of court.

Workers’ Compensation Insurance

Most states require businesses with employees to carry workers’ compensation insurance. Workers’ comp is designed to protect employees when they are hurt on the job. If an employee sustains an injury that requires medical care while performing work-related duties, the policy will pay for their medical treatment. It will also help to pay for lost wages while the employee is recovering.

Commercial Umbrella Insurance

An umbrella policy is designed to protect your business if your general liability insurance policy limits are exceeded—like if you were to lose a major lawsuit. Once the limits of your general liability insurance are reached, the umbrella policy kicks in to pay damages.

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 Gymnastics Class Business Insurance article for more info.

To start a gymnastics business, you will need to rent space at a local gym and have access to gymnastics equipment. This will cost several hundred to several thousand dollars per month at a minimum. You will also need to create a website, which will cost at least $500.

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

The ongoing expenses of running a gymnastics classes business include rent, marketing, gymnastics equipment, insurance, and fees for instructors and other professional services.

Learn more about running a gymnastics classes business.

Gymnastics classes businesses make money by charging customers fees for their classes. They can increase their revenue by increasing the number of locations where they offer classes and employing other tutors to meet demand.

Learn more about starting a gymnastics classes business.

A gymnastics classes business trains students in gymnastics skills, whether in a group setting or via one-on-one lessons. Most gymnastics classes businesses offer lessons to all ages.

Profits for a gymnastics classes business will depend on the location of the business and the number of competitors offering similar services.

Learn more about starting a gymnastics classes business.