BY: Renee H. Martin Spa owners are among the most successful entrepreneurs in business today. Ensuring business success and protecting you personally, as well as your spa business, begins by forming the right legal entity through which you conduct your spa business. Business incorporation is dictated by state laws that govern professional licensure and or business formation. So how do you what kind of corporation or legal entity to form? While there is no such thing as a “perfect” entity, the go to option for most businesses today is the “LLC” or limited liability corporation. An LLC is attractive to many spa business owners because it provides personal liability protection, as well as ease in maintenance and broad flexibility in terms of taxation and structure.
Forming an LLC generally means registering your LLC with your state’s corporation bureau. Your filing will cost a nominal fee and likely require the filing an “operating agreement” or its articles of organization. I recommend the use of an operating agreement-especially if you will be forming the LLC with another person or member- to set forth the governance of the LLC, such as with voting, allocation of profits/losses, compensation, and management of the LLC.
For tax purposes, an LLC is treated as a “pass through entity” — that is, the profits and losses go directly to the owners. The LLC allows you to elect to be taxed as a C-Corporation or an S-Corporation. An accountant can help decide which tax election to make. After your corporation or LLC is formed, the next step is to file an application for a federal tax ID number with the IRS.
Liability protection may be the biggest attraction in forming an LLC because it generally protects your personal assets if there is litigation or bankruptcy of your company. This immunity is not absolute. If you are grossly negligent, engage in a fraud or commit a crime, then you will likely not get that limited liability protection.
For the most part, limited liability protection is very powerful. Creating an LLC, especially in the early stage of business formation, can provide you with greater confidence moving forward. Just remember to do your homework first and get the help you need to form the LLC.
Renee H. Martin, JD, MSN, RN
Health Care Attorney
With a strong foundation of medical knowledge due to her advanced nursing degree, Renee H. Martin, JD, RN, MSN specializes in protecting medical and aesthetic spas and helping them navigate the vast array of federal and state regulations they are required to follow. Medical spas present a unique challenge in the practice of law because they combine both multidisciplinary clinical practices with the traditional non-medical aspects of a day spa. Each has their own set of strong regulations, and when combined, medical spa owners can accidentally put themselves in dangerous legal territory if they’re not careful.
Renee aims to help her clients properly follow legal requirements and keep their businesses operating so they can give their customers the high-quality treatments they deserve. She has worked with many medical and aesthetic spas, healthcare entrepreneurs, allied health providers, behavioral health specialists, life coaches, substance use professionals, alternative-energy providers, and organizations that work to address obesity and functional movement. Renee also has an extensive background is licensure, HIPAA compliance, and risk management for medical providers–a vital asset to any medical business, both new and well-established. A seasoned professional with over __ years of experience in healthcare and corporate law, Renee channels her experience and in-depth knowledge to solve some of the toughest problems her clients face.
The medical spa field is under careful scrutiny by various agencies of government and if business owners aren’t careful, they can dive directly into legal trouble which could cost them thousands of dollars and shut down their business. With Renee Martin in their corner, businesses can confidently be sure that she will fight for them to keep their doors open and continue serving customers that need their help.
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Renee’s Professional Biography: https://www.dilworthlaw.com/Lawyers/ReneeHMartin
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