| The Business Center: Operations |
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| First thing to note is that no business form or documentation
will protect you from being sued or prosecuted for conduct. It may assist
you in your defense, but it will not protect you from being sued or prosecuted.
Just so you know, people as a practical rule, do go after the person with money. If they know you have it and they feel wronged they are more likely to try to get after it. In lawsuits, the business will be named, but the individual responsible for the harm will also be named as a defendant. The type of business you operate could help you or hurt you as well. You need to understand how they operate in order to know what you may be held liable for. Even if you don't own the school, you could be sued personally for something you did or did not do in any class you taught. Below are the three main types of businesses and what each means to you and the future of your studio. Sole Proprietorship Essentially, this is a business owned by one person, be it the head instructor or not. This is also the most common form of business out there. That one person who owns the business is responsible for everything at the school. I any instructors, students, or staff under the authority of that one person cause any harm to justify a lawsuit, he will be one of the personal targets of the lawsuit. This is a rather simple business type: one that gives you complete control and responsibility over whether your business survives or fails. If you make bad choices, you will be held responsible. If yo umake good choices, you and your school get to reap the benefits. Partnership These are businesses owned by more than one person. All partners in the business are liable for the conduct of all instructors, students, and staff under their authority. Take care in becoming a partner since it could make you liable for everything in the school. There are many stories of partners emptying bank accounts and disappearing while leaving the other partners to pay the bills. You should also have all partnerships in writing and you should consult
with an attorney as well. This protects the partners a bit more and lays
out the groundwork for the various responsibilties of the partners. This
is an advantage for partners over sole proprietors, but does carry some
risk.
Limited Partnerships: In the partnership (above) all partners are liable for conduct of all under their authority. This is is not the case in a limited partnership; but a limited partnership must be created under the law.Corporation A corporation is a separate legal entity, or a "person" if you must, under the law. They are traditionally made to shield the owners from liability. A corporation will do this only if it follows the proper procedures. If the procedures are not followed, the "corporate veil" will be "pierced." There are specific legal requirements to forming and maintaining a corporation; there may be a minimum state tax, and the owner is listed as an employee. Definitely consult with an attorney before you even attempt to form a corporation. Works Consulted
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