If you've gone through the effort to become a certified personal trainer, it's likely that your intention is to go into business for yourself. You might be wondering what type of corporate structure is most ideal for this industry though. For the purpose of this analysis, we're going to compare the pros and cons of setting up a Limited Liability Company (LLC) versus a Sole Proprietorship (SP).
While you may find think that incorporating yourself as an SP is ideal, it opens you up to significant liability for the debts your company amasses.
What's more, all debts an SP may have are canceled if that individual files for bankruptcy or dies. This can be both a blessing and a curse, depending on whether you had intentions of passing down the business to your heirs.
Setting up your company as an SP, however, is easy to do.. It involves a simple process whereby you select a doing business as (DBA) name for your company and set up shop.
Like SPs, an LLC can be formed by just a single member as well. It, however, involves you having to file Articles of Incorporation and an operation agreement with the Secretary of State to set it up.
Perhaps one of the biggest benefits to setting up an LLC, though, is that it protects you from being held personally liable for debt that your company may accrue. This is particularly important in the personal training industry where clients may not have been cleared by a doctor before working out. Then there's the always the risk of a client dropping a piece of heavy exercise equipment on them.
In the absence of an LLC, clients can get injured or die and there's no guarantee that liability insurance will be enough to cover that event. If that occurs and all you have is an SP, then a client or their loved one file a lawsuit against you in your personal capacity for their death. That's why the protections an LLC offers in terms of protecting you from being sued for negligence may make sense.
While you can set up an LLC on your own, there are significant legal consequences and strong penalties associated with not doing it correctly.
If you're looking to incorporate your personal training business, then having a Pennsylvania business formations attorney guide you though the process may best protect your interests.
Source: Idea Health & Fitness Association, "Determining your corporate structure," accessed Sep. 22, 2017