Many yoga studios incorporate primarily for tax and liability reasons. Note that incorporating is not a reason to not get liability insurance.
If you run a yoga studio that is not incorporated, but are considering doing so, then consider 5 options you have to incorporate your yoga studio.
5 Ways to Incorporate a Yoga Studio
- Do it yourself
- Hire an attorney or a law firm
- Use an incorporation service
- Hire an attorney and use an incorporation service
- Hire an attorney and do it yourself
1. Incorporate on your own – pros and cons
- It costs less than hiring an attorney and/or using an incorporation service. However, you’ll still have to pay State incorporation fees.
- You’ll learn the incorporation process. It never hurts to learn more business processes. However, this may not be the best use of your time (and you may not be inclined to go this route).
- You’ll need to spend time locating the paperwork and deciding on the company structure you wish to create (i.e. Corporation or LLC. If a corporation, which type).
- You may set up your company wrong or in a way that’s not best for you. This is not to say that hiring an attorney and/or incorporation service will not make a mistake. However, the possiblility of making a mistake doing it on your own is higher.
- You must ensure you take care of any ongoing filing requirements such as annual filings.
2. Hire an attorney or a law firm
- Very little hassle on your part. You simply explain to the attorney what you like (more likely answer questions) and then let your attorney advise you of the best incorporation structure.
- You can create a customized company. In other words, you don’t need to use boilerplate forms. The attorney may advise you to structure your company in a way that best serves you as an incorporator and your business.
- You have recourse if a mistake is made. Attorneys are insured. If a mistake is made, you have recourse. However, claiming for professional negligence is not always easy and not a sure thing even if a mistake was made. Attorneys act on what you instruct them, and so these situations can be complicated.
- An attorney will remind you about any annual filings you must prepare and file in order to keep your incorporation in effect with the State or Province.
- You need to spend time finding the right attorney.
- It’s the most expensive option for incorporating your yoga studio.
- You may spend time visiting and consulting your attorney during the process.
3. Use an online incorporation service
There are services that will prepare all the incorporation paperwork and then file it for you. The paperwork is completed based on the answers you provide them either via questionnaire and/or telephone.
- Generally costs less than hiring an attorney.
- Less hassle than doing it yourself. You don’t have to worry about finding up-to-date forms or whether you completed the forms properly. However, the substance of the paperwork is based on your answers and information you provide. If that information is wrong, then the paperwork may not be correct. An incorporation service will ensure the paperwork is completed technically correct, but with respect to the structure of your company, that is decided by you. Incorporation services do not provide legal or financial advice.
- Speed: incorporation services are generally the fastest method of getting your yoga studio incorporated. You can opt for expedited service if you like (it costs more).
- An incorporation service will remind you and assist you with any ongoing incorporation requirements such as annual filings.
- Costs more than if you do it yourself.
- You must invest time answering questions put to you by the incorporation service.
- Limited recourse if something goes wrong. Incorporation services don’t have professional liability insurance because they don’t provide legal advice.
- Incorporation services do not provide legal and/or financial advice.
Which incorporation service should you check out?
If you’re in the USA, take a look at LegalZoom.
If you’re in Canada, take a look at the Corporation Centre.
4. Hybrid #1: Hire an attorney and use an incorporation service
This method includes getting legal advice about how you should set up your company, and then saving costs by taking that advice and using an incorporation service. I would, however, ask the attorney how much, once you have legal advice, it will cost to complete and file the paperwork. It may not be much more (or may be less) than using an incorporation service.
The pros and cons are the same as hiring an attorney and using an incorporation service set out above.
5. Hybrid #2: Hire an attorney and do the paperwork yourself
This approach includes getting legal advice, and then completing and filing the paperwork yourself to save on the paperwork preparation cost. The pros and cons are similar to both the pros and cons of hiring an attorney and doing it yourself above.
If you’re not sure about the structure of company (i.e. LLC, S Corp, or C Corp) that is best for you then, then either get legal advice or check out the following resource:
LegalZoom offers a huge library of incorporation resources which are well-written and up-to-date for the USA.
If you’re in Canada, the Corporation Centre offers plenty of information for Canadian incorporations.
If you’re interested in other online incorporation services serving the USA, check out my chart comparing several prominent incorporation services (in another website I publish).
If you’re in any doubt with how to proceed, then please seek legal advice. You may also wish to discuss this matter with your accountant who are also knowledgeable about setting up incorporations.
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