We are here to help gym owners eliminate legal exposure. Gym owners create a lot of that legal exposure when they don’t follow formal processes in running a company (like an LLC). Generally speaking, these formal legal processes require business owners to treat a company separate from themselves. This is the bedrock of protecting your individual assets. The whole reason business owners form LLCs, Corporations, Partnerships, etc. is to protect their personal assets, i.e. homes, vehicles, and bank accounts.
A Basic Overview of Business Banking
Directly after you file/create a company (like an LLC or Corporation), you should head to the bank. You need to open a business bank account. Then, you must deposit every dollar that comes into the business into that account. You pay expenses (like rent and staff) from that same account. You set aside taxes on the net revenue and you are left with net profit. At this point, (very generally speaking) you can then “get paid” by the LLC and move some of the net profits into your personal bank account. This is a bit oversimplified, but the point is to illustrate the process.
Co-Mingling of Funds
One of the most common types of legal exposure for gym owners is called co-mingling of funds. This is where the gym owner mixes business money with personal money. A really common form of co-mingling funds is when you deposit business revenue directly into your personal bank account. If a client sues your company, and you are co-mingling, you run a serious risk of exposing all of your personal assets.
Now, Use It!
Opening a business bank account is an easy step in the process. But, opening it isn’t enough. You need to use it. Here, we talked about the importance of using your LLC. Similarly, after you open the business bank account, use it for every dollar that goes into and out of the business.
