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Which business entity is best suited for my business?

Anaheim, CA |

I am certified massage therapist seeking to write up a business plan to teaching massage therapy for couples in a creative and fun atmosphere. Workshops will be 3 to 4 hours. They will take place in hotel conference rooms, yoga studios or anyplace where I will receive permission from the owner to use their space. I may hire independent massage instructors to teach so I can focus on operating the business. I'd like to keep my personal & business finance separate and prevent double taxation. Which form of business entity is best suitable for my business interest? Thank You.

Attorney Answers 6

Posted

LLC or S-Corp. Will work. Other than being passthrough entities that avoids the double tax concern they are very different animals. How you are financing the operations, whether you will be bringing in partners or a share of proftits only and whether you will be seeking investors are but three big items that would factor into the ultimate decision to choose one over the other.

My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a licensed attorney in your State should be obtained. Please click "helpful" or "best answer" if my answer added any value or add a "comment" if you have more info for me to help you get a better answer.

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Zaher Fallahi

Zaher Fallahi

Posted

Excellent point. I always consider these before establishing an entity for a client.

John P Corrigan

John P Corrigan

Posted

Thank you Zaher.

Zaher Fallahi

Zaher Fallahi

Posted

My pleasure, John.

Posted

I would visit with an attorney or CPA to look at everything to make the determination. However based on your facts you should like a single member LLC. Just my thought but this is not advice, merely an idea based on what you said.

This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature. Visit Steve Zelinger's website: http://www.stevenzelinger.com/

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Posted

I would consult with a CPA firt to determine what corporate entity would be better suited for you from a tax basis. Once you have that an answer, you shoud then see a lawyer, who can help prepare the papers for your new entity. I would think that a S corporation would do the trick, but I always rely on my client's CPA for the utlimate decision.

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Posted

I agree with my colleagues. You will need to consult with a couple different people to start with: 1) a business attorney and 2) an accountant. Most business attorneys will be able to set you up with the latter and also provide (non-tax related) guidance on this subject. The reason it is difficult for us to answer this question here is that we will need a lot more information about the business you plan to set up.

Answers provided do not constitute legal advice, should not be considered as legal authority, and do not create an attorney-client relationship. You should not act or rely upon these materials without seeking professional counsel. Feel free to contact ALG (www.antoinelaw.com) so we may evaluate the specific needs and discuss the facts and issues you may be experiencing. Sending e-mail also does not establish an attorney-client relationship. An attorney-client relationship can only be established by mutual written consent with an attorney.

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Posted

I agree with all my colleagues above. I would like to add though that if you are required to be licensed by the State of California , you may not be able to form an LLC. Certain licensed professionals are prohibited from providing services through a limited liability company, even though that rule is changing slowly. However, like my colleagues stated, you should consult an attorney and a CPA and make them part of your team. Forming the wrong entity or forming it poorly can cost you a lot more later on. Starting a business is one of the most important decisions a person will make in his or her lifetime. I would not want to give a massage to myself. Similarly, you should not try to form an entity on your own. A few hours of consultation with a professional will go a long way.

This answer does not create an attorney client relationship. Further, as the answer is going to be posted in public domain, this communication is not protected by the attorney/client privilege.

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Posted

Everybody advised you to seek advice of a CPA, here I am; Attorney & CPA. Based on the limited information you gave;

An S corporation may be suitable to your purposes. However, make sure about classifying the instructors you mentioned as to employees or independent contractors. In the last many years, this has become a huge issue and I have defended so many employers who mis-classified their employees as contractors. In addition, do not rely on the advice of a non-professionals in the field or internet services about incorporation. Make sure it is incorporated by a business/tax attorney, and comply with all corporate laws. Have all contracts in the name of the corporation, pay yourself a reasonable amount of salary, do not commingle, have a reasonable amount of capital, record the capital with the commissioner of corporations, issue stock, etc. Good luck.

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