Considering getting incorporated? We asked legal expert Trippe Fried to give us the skinny on several types of corporations that may work well for gym owners:
Subchapter S-corporations (“S-corp”): Profits and losses flow through to the owners. There are some requirements to qualify, the key one being that all of the owners must be U.S. citizens or have U.S. residency. LLCs function very much like subchapter-S corporations, but the nomenclature is different. (For instance, LLCs have members instead of shareholders).
Subchapter C-corporations: These are subject to double taxation (i.e. on both profits and dividends). For start-up businesses, that often does not matter or only has marginal consequences.
Close corporations: Some states recognize what are called “close corporations.” These will have a small number of shareholders and the filing/paperwork requirements are often less stringent.