Should I Start an LLC for My Zumba Studio?

Starting a limited liability company (LLC) for your Zumba 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 Zumba studio, lawsuits can arise from things like customers injuring themselves during a class, inability to repay large bank loans, and discrimination.

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

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

Do I Need an LLC for a Zumba Studio?

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 Zumba Studio

By starting an LLC for your Zumba 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.

Zumba studios will benefit from liability protection because of the risk of being sued for personal injuries as well as other general business risks like libel claims.

Example 1: One of the instructors at your Zumba studio fails to properly supervise the class, which results in a participant being seriously injured. As a result, the participant filed a personal injury lawsuit against your business in search of compensation. If this is awarded to him by the court, it is only enforceable against the value of the assets belonging to your business.

Example 2: In order to help finance a studio for your Zumba class in an expensive area of town, you decide to take out a significant bank loan. However, after your business underperforms, it becomes clear this loan will not be able to be repaid. As such, the creditors file a lawsuit against your Zumba class for defaulting on this debt. Limited liability protects your personal assets from being used to satisfy any business obligations.

Example 3: An instructor at your Zumba studio is reported to have denied a client entry to one of your business’s classes as a result of their gender. This prompted the client to bring a discrimination lawsuit against your business. In the ensuing litigation, any liability to pay damages to the plaintiff is limited to your business’s assets and cannot extend to you personally.

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 Zumba 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 Zumba 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

Zumba 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.

Due to the physical nature of the activity that clients engage in at your Zumba studio, your business is exposed to a large number of liabilities arising from the high risk of clients injuring themselves on your premises. Insurance is thus invaluable for such businesses as it provides a shield to protect your assets from this increased risk.

Common Situations Business Insurance May Cover for a Zumba Studio

Example 1: During a class, one of your instructors turns right when they should have turned left. This mistake leads to two class members accidentally crashing into one another. General liability insurance will likely cover any medical injuries that resulted from the collision.

Example 2: You want your Zumba studio to be a part of a national franchise so you can enjoy better name recognition. You will likely need a strong level of general liability coverage to qualify for franchise status.

Example 3: Your Zumba studio has a logo similar to another fitness business in an adjacent town. General liability insurance will typically cover any legal costs should the other company sue for trademark infringement.

Other Types of Coverage Zumba 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 Zumba studios should obtain.

Commercial Property Insurance

If you own the space used for your Zumba studio, you’ll need commercial property insurance to protect it in case of damage from events such as major storms, vandalism, or criminal activity. If a fire burns the studio down, commercial property insurance will provide the means to rebuild it.

Business Interruption Insurance

This insurance provides you with an income in case you cannot operate your studio space for an extended period of time. If your building is under reconstruction due to a natural disaster, you’ll still have cash flow if you have this insurance.

Professional Liability Insurance

This insurance covers you in case an instructor provides misleading or incorrect information to your clients. Because Zumba studio instructors will give advice to people about how to move and position their bodies, your business may be held liable for injuries if this professional advice is found to be negligent or otherwise misleading.

Workers’ Compensation Insurance

If you have any part-time or full-time workers, workers' comp insurance is typically required to cover accidents and injuries sustained on the job. Workers are allowed to take advantage of this insurance for sudden events, such as a pulled muscle during class or chronic problems, such as severe shoulder pain from repetitive exercises.

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, workers’ compensation insurance, and commercial property insurance.

Read our Business Insurance article for more info.

The cost of starting your Zumba studio can vary from $30,000-$500,000 depending on the scale of the operation you are intending to run.

This figure should be enough to cover the costs of acquiring your license to teach Zumba, first-aid certification, insurance, purchasing a business space, and a website.

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

Ongoing expenses will include facility expenses, utilities, insurance, travel and educational expenses, and potential payroll expenses are some of the more common expenses.

Learn more about running a Zumba studio.

A Zumba studio will generally be paid a flat rate per class per participant. Studios can also set up membership fees to inspire more consistent visits and more consistent income.

Learn more about starting a Zumba studio.

Approximately 15 million people take Zumba classes, making it the biggest branded fitness program in the world. There is a great opportunity to create a fun and safe place for individuals to get fit.

Zumba studios have reported making a profit of $350,000 when they have expanded to two or three locations.

Learn more about starting a Zumba studio.