There are many ways to set up your massage business structure. The best information will come from your accountant and business advisers. The Small Business Administration (SBA) has a lot of information to assist you in setting up your massage business structure.
The most common for massage businesses are being a sole proprietor of forming an LLC (Limited Liability Company). If you don’t set up a LLC or Corporation you will just be automatically considered to be a sole proprietorship.
In a sole proprietorship you own the business. You can also be a sole proprietorship when you are an independent contractor for another business. You are responsible for the profits and losses as well as the success or failure of the business. You can choose a business name of just have it be under your own name. In general, you will just keep track of income and expenses and have a separate business bank account. When you file taxes you will use a Schedule C – Profit and Loss from Business. With this type of business you are personally liable if anyone gets hurt or makes a claim against your business. That will include your home and personal assets too. If you want to get loans from banks it will depend on your personal credit as compared to the value of a business. You will need a business license in your city or county. You will also have to pay Self employment tax. You usually will make quarterly tax payments.
LLC’s provide some liability protection. You don’t pay income tax but it will help protect your personal assets. You will have to file the appropriate articles and paperwork with your secretary of state and set up an operating agreement outlining the details of the business. There will be variations in each state.
A Sole proprietorship is easier to set up and deal with but don’t offer any personal protection. The thing though for massage therapists is that it is easy to get caught up in the business and start thinking that you and you alone are the business. You start working in the business instead of on the business and it is hard to separate you from the actual business. In that way it can bring up more challenges on the path to success. While many do just start a sole proprietorship because of the ease of setting it up, doing it with awareness can help you to separate yourself from the business.
Some of the things that you can do right from the start is to begin with the goal of selling your business in the end or at some time. The policies and procedures that you set up for your massage business will also help to keep you separate from the business enough to help keep it successful yet fulfilling.
Be sure to contact an attorney to help you set up the appropriate massage business structure. In WA State, massage practitioners will need to be a PLLC and can’t be a LLC. (according to AMTA WA attorney John Peick)