Do I need an LLC for my coaching business?

Written by Wesley Henderson

December 19, 2021

We recommend that you get an LLC for your coaching business, but I do think you could justify waiting longer in a coaching business than some other higher-risk businesses. For example, if you were a personal trainer or anything related to physical and health, the risk of injury is higher. Here, as a coach your risks to injury are low so you would be most worried about a client coming after you, a vendor, or a competitor with a cease and desist. We’ve seen it all – people will sue for just about anything (eh lawyers, right!). It mostly comes down to your risk tolerance.

Getting an LLC for your coaching business is one of the best values you can get in terms of legal protection and peace of mind. Here are some of the factors that can help you make your decision.

Liability Protection

This means that if someone is suing your business, they are actually suing your LLC and not you personally. For example, a lawsuit against Drafted Legal would be “v. Drafted Legal, LLC” and not “v. Wesley Henderson.” That can give you peace of mind.

So, what types of lawsuits are you worried about? You could be sued by your clients for lost profits, you could be sued by competitors for infringement or other damages, you could be sued by independent contractors or employees. Really, anything.

Coaching is not a terribly high-risk (liability-wise) business but if you’re taking your business seriously and ready for growth, we highly recommend that you consider getting an LLC in your home state.

Professionalism

Along with liability protection, an LLC signals to your clients how seriously you take your business. It shows them you are professional in how your run your business. This can be comforting for would-be clients as it can help separate you from other coaches.

Business Practices

When you get an LLC with Drafted Legal, we walk you through the best practices. That includes setting up a separate business bank account. This helps with establishing that the business is a separate entity but it’s also a very healthy business practice so that you can track all of your business expenses and income. It’ll also make your life a lot easier when you file taxes.

Register Your Coaching LLC Here

 

Alternatives to an LLC

Nothing really replaces the entity protection of an LLC (or corporation or other entity that gives you liability protection), but there are things you could do to mitigate damages. What we recommend would be using attorney-drafted agreements. Here, you can protect yourself with clear and protective terms with your clients.

 

Download Attorney Drafted Business Coaching Templates Here

 

You can also get quotes from several insurance companies to help protect you against a lawsuit. I would not recommend spending too much on this but it’s an option.

 

 

 

 

 

 

Wesley Henderson

Hi, I'm Wesley! A business attorney turned entrepreneur devoted to simplifying how you protect your business and your assets. Like you, I'm an business owner so I get it and I started Drafted Legal to help you put in place simple and sound legal strategies so you can focus on your business and not worry about getting lost in legal nuances.

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