Opening a Studio Gym: The Basics to Build On
Opening a studio gym is absolutely not an easy task. To help you get your facts straight, here is a guide on the basics of opening a gym. This article will give you a good starting point on what licenses and certifications your gym and employees will need. Government websites can be pretty unfriendly for navigating. Therefore, you will also find resources to help you locate more information on the regionally specific rules and jargon.
What business structure suits you?
There are 5 business structures that people will use when opening up a business, but there are only three that are beneficial to small business owners.
Sole proprietorship
This business structure is the most common for small businesses or individuals with a business. There are no necessary regulations, licenses, or titles that come with this structure. For example, individual personal trainers are the sole proprietors of their business. Their business is not separate from their personal assets. To achieve a level of status as the sole proprietor of your business, it simply comes from the business’s activities. This is the easiest to establish and has some perks.
- Filing taxes for this business is as simple as doing your own personal taxes. Therefore, there are no separate forms you need to worry about
- You have sole control over your business and all the decision making is up to you. However, on the flip side, you are completely responsible for all of the liabilities that come with owning a business.
Partnership
Partnerships come in two types for owning and running a business with counterparts. You can choose between Limited Partnerships and Limited Liability Partnerships. Each of these types is not subject to being taxed, similar to that of a sole proprietorship. Each person in the partnership will be taxed on their income as usual.
Limited Partnerships – General partners have the most authority in limited partnerships and take on all of the liability of the business. The limited partners, however, have less control over the company, but their investment in the company is protected and usually outlined in a partner agreement.
Limited Liability Partnerships – This is a good option if you want to open a business with fellow fitness fanatics and want to have equal ownership of the business and limited liability for all owners. In this case, there is not a general owner but a team of owners.
Limited Liability Corporation
LLCs are a mix of the corporate business structure and the Limited Partnership structure. States regulate LLCs more than Limited Partnerships. LLC members have limited liability and protection of their personal assets like homes and vehicles. Members have to pay taxes as if they are self-employed, not taxes on the revenue of the company. This is the most commonly chosen business structure for studio gyms and other fitness centers. Take a look at this helpful guide to learn more about forming LLCs.
Once you have an idea of what kind of structure will be best for your business, then start looking into the legalities of owning and running a gym in your state. There are not any federal guidelines for studio gyms or anything of the like, but state regulations vary tremendously and some states may require specific licensing.
IHRSA is a great resource for staying up to date on legislation that affects gyms and health clubs in your area. I recommend becoming a member of this organization before opening a studio gym in order to get the best information on what you will need to be competitive in the industry.
Check your state regulations
First, you must identify what your state recognizes studio gyms as. For example, here in Colorado, all gyms, studios, or health centers are considered “health clubs” and are defined like so: “an establishment which provides health club services or facilities which purport to improve or maintain the user’s physical condition or appearance through exercise . . . the term may include but is not limited to a spa, exercise club, exercise gym, health studio, or playing courts”
Defining your business according to the state helps you to understand what laws and regulations may apply. As an example, there might be more specific safety and emergency regulations required for gyms in California than there are for gyms in Virginia. Also, be sure to check on the local requirements for occupying a business space. You may need to attain a Certificate of Occupancy. There could be other zoning regulations that apply to health clubs.
FindLaw is a website built for legal professionals, but it is quite helpful in finding laws applicable to your needs. Use this tool when noting the regulations your state employs.
A very common regulation among almost all states is that of deceptive trade practices. Everybody knows the common practice of people signing up for a gym membership, they go once or twice then never return. Yet, they signed a contract and must continue paying on it. If still able to use the membership, the person doesn’t have much control over nulling the contract. However, the regulations in place protect people who lose their ability to use their gym membership.
See this example of Colorado’s statute on deceptive trade practices.
Licenses and where to find more info
First, you’re going to need a state business license. Having a business license is important for establishing credibility for your business. It shows that you are well running and trustworthy for the services you provide. You also receive other benefits on taxes and liability protection.
You are probably not going to use your name as the name of your gym, so you will need to register with a DBA (Doing Business As..). On your state government website, there should be a page where you can register your business name with the Secretary of State. It is also important to register your business name with your municipal government too.
The only filing you need to do with the federal government for your new gym is for an Employer Identification Number. You will need this if you hire employees. If you run the whole gym by yourself or with your spouse, then you can skip that! Unless you hire your spouse…?
As for the state level, you will need to check in with your state to find out if you need a state tax ID.
There is no need for a specific license for an LLC, but studio gyms will need an occupational license. Once again, look for the term “health club” to locate laws and licenses specific to studio gyms. Fundera is a great resource for finding out where you need to go for licensing by state.
Certifications for your employees
When first opening a studio gym, paying employees to become certified personal trainers can be costly. Hire trainers that already have their certifications and are well established. This will make life a lot easier for you.
Tip: Hire employees long before the gym is ready to open. This seems like common sense, but amid all the stress of opening a business, time flies. You want your gym to start operating as soon as possible so you can start generating some revenue.
Your employees should have one or many certifications from the following organizations:
- International Sports Sciences Association (ISSA) – Well-known worldwide and offers a wide range of certifications that equip trainers for working as an individual and in the gym.
- American Council on Exercise Certification (ACE) – This certification has the most recognition nationwide and is a popular requirement for trainers looking to work in a gym.
- National Academy of Sports Medicine (NASM) – A common certification organization in the United States.
- International Fitness Professionals Association (IFPA) – This organization offers a variety of certifications that are helpful to have when working in a studio gym.
- American College of Sports Medicine (ACSM) – This is the oldest organization providing fitness certifications. The organization requires trainers to have ongoing education in sports medicine through their certification.
- National Exercise and Sports Training Association (NESTA) – Offers more specialized certifications like mixed martial arts and nutrition for adults and children.
- National Strength and Conditioning Association (NSCA) – Those who have this certification outshine the competition. Getting certified through this organization is significantly more difficult than most.
Make managing the trainers you hire an easy task using FitSW with a studio gym membership. Think of it as creating a family tree with all your trainers and all their clients!
Stay tuned for more articles about opening a studio gym on our blog!
