Should I Start an LLC for My Pilates Studio?

Starting a limited liability company (LLC) for your pilates studio 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 pilates studio, lawsuits can arise from things like customers injuring themselves in a class due to a lack of supervision and contractual disagreements between a client and the business.

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

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

Do I Need an LLC for a Pilates Studio?

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 Pilates Studio

By starting an LLC for your Pilates studio, 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.

Pilates studios will benefit from liability protection because exercise classes and studio owners face a variety of risks associated with the health and safety of guests when visiting and participating in classes at your business location.

Example 1: A client is injured during a class. Following this, the client sues the business for medical expenses and damages. In this scenario, limited liability protection would ensure that the owner's personal assets are protected from the lawsuit if the business is found liable.

Example 2: A customer’s item is stolen from the studio. The customer is annoyed at the incident and sues the business for compensation for the stolen item. If found liable, only the business’s assets will be used to cover any compensation and not the owner’s personal assets.

Example 3: An instructor trips over an object and falls, sustaining an injury as a result. Following this, the employee sues the business for damages. Regardless of the court’s ruling, the owner’s personal assets will not be affected by the lawsuit.

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 Pilates Studio

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 Pilates studio 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

Pilates studios 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?

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.

A Pilates studio needs insurance to protect against risks such as injuries to employees or customers, damage to equipment, and liability for accidents or incidents that may occur on the property.

Common Situations Business Insurance May Cover for a Pilates Studio

Example 1: While entering your restroom, a student slips on wet flooring, breaks an arm in the fall, and decides to sue your business for damages. General liability insurance would pay for your legal defense and any required settlement.

Example 2: A competitor files a lawsuit against your business, claiming you libeled her company in your last advertisement. While you disagree with the claim, you know you need a lawyer right away. General liability insurance would pay for your legal defense and any required settlement.

Example 3: As a student walks into your studio from the parking lot, he trips over some broken pavement, breaks an ankle, and demands you pay for his medical treatment. General liability insurance would cover his medical expenses.

Other Types of Coverage Pilates Studios 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 Pilates studios should obtain:

Professional Liability Insurance

While you strive to help students improve their lives and health through your Pilates classes, there’s always a chance someone might decide you made a mistake that caused them harm. If a student sues your business for negligence, professional liability insurance would cover your legal fees and any required settlement.

Commercial Property Insurance

You made a major investment in the equipment, supplies, furnishings, and real estate needed to establish your studio. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes structural damage to your building as well as the business materials stored there.

Workers’ Compensation Insurance

If you have any employees, most states will require you to carry workers’ compensation insurance for your part-time and full-time workers. 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 workplace 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 for Pilates Studios article for more info.

To open a Pilates studio, you will first need a space to conduct classes. You will also need Pilates mats, a computer, and an internet connection. The cost of rent for a studio space can range from $500 to $1,000 or more per month, depending on the size and location.

Visit our How to Start a Pilates Studio guide to learn more about the costs of starting and maintaining this business.

Ongoing expenses will include those costs associated with studio equipment replacement and maintenance, rent, utilities, and employee wages.

Learn more about running a Pilates studio.

Profit is generated by charging students various rates for the attendance of different Pilates classes.

Learn more about starting a Pilates studio.

Pilates studios offer various Pilates classes to students, typically as group classes. Some studios may also provide online-based instruction to supplement their in-person classes.

High-quality studios with a variety of class offerings have the ability to profit as much as six figures in a year.

Learn more about starting a Pilates studio.