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Running a CrossFit Facility Tips and guidance on how to open and operate a CrossFit gym.

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Old 08-18-2006, 02:53 AM   #1
Joe Celso
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I'm trying to get myself started in doing some training and becoming an affiliate in the near future. I'm uncertain as to what form my business should be. Should I incorporate to help protect myself, or am I just as secure as a sole proprietor with a lot of insurance?

Any help/insight would be greatly appreciated.
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Old 08-20-2006, 07:57 AM   #2
Zach Davis
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Definitely look at the "S Corp" election.

It is VERY important to protect yourslef, from the beginning, from all sorts of potential mishaps: Lawsuits, bankruptcy, etc... Recent changes in our nation's bankruptcy laws make it important to be dialed from the beginning.

Plus, a good acountant can sho you how to pay yourself out of the corporation without paying any payroll taxes.

Zach
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Old 08-28-2006, 04:32 PM   #3
Dutch Lowy
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Joe,
Glad to see you are pursuing this. Atlanta was awesome, it really go tme going too.
As far as the business goes, i have been doing well as a sole propreitor with plenty of insurance. Make sure the insurance covers Crossfit certs. I think it is important to start as small as possible and use your surroundings as training tools. Meaning don't go rent a space and buy equipment without clients. I have also been compiling my gym slowly so new equipment seems like a luxury and makes training easier. I started with dumbbells and a 10 dollar med ball.
Good Luck and if you have any more questions please let me know.
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Old 08-30-2006, 05:18 AM   #4
Dolph Geurds
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Joe
I am starting a CF and I created an LLC on line for around $500. The more protection the better. Sole proprietor is dangerous because if you get sued they get your personel stuff. LLC protects you personally, spend the money know or pay allot tomorrow!!!
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Old 08-30-2006, 07:44 AM   #5
Bill Russell
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IMO, the decision to incorporate, form an LLC, or remain a sole prop. is primarily based on financial reasons like how to handle profits and losses, dividing ownership, and personal protection from certain types of debt.

If someone gets hurt at your facility, they will most likely sue you personally. The "corporate veil" will not protect you in this case, unless you are a shareholder not active in the business. I'd get plenty of liability insurance!

Ask around to find a good CPA in your area who works with small business owners. He/she can give you the correct advice after reviewing your personal situation.


Best of luck to you with your new venture!
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Old 08-30-2006, 06:27 PM   #6
Joe Celso
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Thanks for the input everyone.

Dutch - Atlanta WAS awesome. I'm ready for level 2! I am at a bit of a loss as to "where" to start. I don't have a garage. I've been training a couple people at the local "big box" I currently belong to, but it's a bit uncomfortable when I get that "WTF" look from the trainers that actually work there.
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Old 08-31-2006, 11:10 AM   #7
Craig Howard
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LLC/LP and S Corp structures can provide you protection from some potential business liabilities, i.e. debts, creditors, customer financial issues, etc. However, most banks and other creditors require a personal guarantee which allows them to come after you if the business does not pay.

Incorporating or establishing an LP or LLC will NOT protect you financially from lawsuits stemming from gross negligence. If your client is injured and sues you (claiming gross negligence), you, as the trainer or manager may be held personally responsible despite the veil of a corporate structure.

Insurance can provide you some financial protection if you are sued for personal injury matters. There are a number of postings here for capable insurance carriers.

Finally, Corp S and LLC/LPs are not cheap. You must pay fees to establish both - and an attorney, if they set up and file for you. You must also file income tax returns for each, plus your personal income tax every year. For a corp, you are required to keep formal books, which is time consuming. Furthermore, many states charge additional annual "franchise taxes" to LP & LLCs (e.g.,TX & CA). And, banks will not lend to your entity until you have many years under your belt.

If you are just starting, go as a sole proprietor with a "dba." Spend your money on a good general liability insurance policy. You can still save money on taxes by deducting most relevant expenses: gas, car lease, home office, supplies, etc.

Good luck.
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Old 08-31-2006, 11:14 AM   #8
Craig Howard
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Ha! Just read Bill Russell's response. Sorry Bill, I did not plagerize, I swear. Bill says the same thing I did, except, he said it first with more brevity.

Cheers.
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