Generally speaking, studio owners are artistic geniuses. You people know your stuff when it comes to quality training, correct technique, effective teaching styles, healthy parent relations, current movement trends, best business practices and so much more.

But when it comes to the minute legal details that come with opening and running a studio, there tend to be a few important tips and tricks that many aren't aware of.

To keep you as informed and prepared as possible, we spoke to lawyer and dance enthusiast Sean Monson. He works at a firm in Salt Lake City, Parsons Behle and Latimer, and is the husband of renowned studio owner Jana Monson, of Creative Arts Academy in Bountiful, Utah.

Whether you're a longtime studio owner or just getting started, check out these best practices to make sure you stay on top of potential legal headaches in the future.


1. Legal Entities

When you start a dance studio, you can choose to do it as a sole proprietorship or as a corporate entity. Feeling a little confused about what that means? Don't worry—Monson gives his take.

"A sole proprietorship means you don't form a legal entity at all," he says. "So, if I were to start my own dance studio, I would get paid personally, and then pay my employees out of my own pocket. The downside to this is, if a student gets hurt, I am personally liable, and my personal assets can be sued by someone to satisfy a judgment. If one of your teachers injures or harms a child, and you don't have a corporate entity, they can collect on your bank accounts, houses or cars. Everything is on the line."

That doesn't sound great, right? Yeah, Monson doesn't think so either. So, he recommends you create a corporate entity. There are three main types of corporate entities: a C Corp, an S Corp and an LLC. Companies like Apple or Microsoft are C corps, and according to Monson, because of complexities, formalities and taxes, there's really no reason dance studios need to be. So, let's just go ahead and cross that one off our list of options.

"A dance studio should want to be an S Corp or an LLC," he says. "There are advantages and disadvantages to both. An S Corp has some formalities and administrative headaches to it, but it's single taxation. Meaning, when money comes in, it's only taxed once. LLCs don't have a lot of formality to them, but the downside is you have to pay self-employment tax. For example, if your dance studio makes $100,000 you will be taxed on that as income tax, and then all of that will also be subject to self-employment tax. I recommend that if people have an LLC, they do an S-election. If you do this, you can be taxed as though you're an S Corp, meaning you pay yourself a salary, and only pay self-employment taxes on that salary rather than the full $100,000. Bottom line and most importantly, if you register as one of those, if someone sues you, your investment in the company will be at stake, but none of your personal assets."


2. Owning Your Own Studio Space

If you own or are planning to buy the space your studio is in, make sure you have the real estate in a separate legal entity than your dance studio.

"I cannot underscore this enough: For liability protection, studio owners have to buy the building with a different legal entity than the dance studio entity," Monson says. "If someone gets hurt or a teacher is inappropriate, and the dance studio owns the building, someone who sues can collect on the judgement through the building. If the dance studio doesn't own the building, there is nothing to collect against."

Monson recommends you set up your dance studio as an LLC or an S Corp, then set up a separate company to buy the real estate and have the studio rent from that other company.

Confused? Let's clarify: You own both businesses, so when the studio pays rent to the company that owns the building, it's actually just you paying money to yourself each month. This way if, say, a teacher sues for wrongful termination, they can't collect against the building.


3. Independent Contractors Versus W2 Employees

A lot of dance studios want to pay their teachers as 1099 contractors in order to save on taxes. If they pay teachers as 1099 contractors, the teacher has to pay all of their social security and medicare taxes on their own, and the employer isn't responsible for them. If they pay their teachers as W2 employees, the studio pays for half of their social security and Medicare taxes, while the employee pays the other half.

"The problem with that is there are limitations and guidelines about when you can pay someone as a 1099 contractor and when you can pay someones as a W2 employee," Monson says. "If you have regular teachers at your dance studio, the IRS will likely disagree with you and see them as W2 employees. If that's the case, you will have to pay penalties and back taxes for everyone you misclassified. It can be a huge financial headache. I know of three or four studios who were audited by the IRS and had to shut down or sell their business because of this."


4. Noncompete, Nonsolicitation and Confidentiality Agreements

This subject can get a little touchy—and rightly so. Check out Monson's recommendations and see if they might be a good fit for your studio.

"Have a confidentiality agreement in which employees agree not to share things like marketing strategies, business plans, how much you pay people, client contact information or other confidential information that could be used to your detriment," Monson says. "Include a nonsolicitation agreement in that same document. This agreement means that, if they leave your studio for whatever reason, they won't solicit your clients or other employees to leave with them and go to another studio. A noncompete agreement can be included in this as well, but you will have a hard time convincing a court to enforce it. At our studio, we don't stop people from starting a competing business, but we try to stop them from contacting our clients. We pay them to establish a relationship with our students, so it's only fair that we have an amount of time to protect our relationship with them."

Monson recommends you set up an agreement that says they can't contact the customers of your studio for one to two years after they leave your business.

"I know it's money to talk to an attorney, but if you do it up front and make sure you have this stuff covered, you will save yourself from heartache and headaches in the future."

The Conversation
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Facebook. Twitter. Instagram. Snapchat. The list goes on—and you have to decide not only what type of presence you'll have on each platform, but also whether you and your faculty will network with students and family members. How can you set boundaries for yourself and your faculty on social media?

The easiest option may be to prohibit these interactions entirely. At the Harid Conservatory in Boca Raton, Florida, staff and faculty may not "friend" or otherwise connect with current students or those under the age of 18 on social media, explains Gordon Wright, Harid's executive vice president and director.

At the Dance Zone in Henderson, Nevada, the handbook states that social media should be handled "in a professional manner." Owner Jami Artiga encourages students and faculty to share photos and tag the studio, but prefers not to "friend" kids from her personal account. "Of course, my son dances at the studio, and we have teachers with kids who go here, so sometimes the line gets blurry," she says.

Robin Dawn Ryan of the Robin Dawn Academy in Cape Coral, FL, also has a few students on her Facebook friend list, "but I don't put a lot about my personal life on the site," she says. She uses the platform more to keep track of what dancers and their parents are posting about the studio. "If they put up something they shouldn't," she says, whether that's a bullying post or an unflattering image, "I'll ask them to take it down."

Ryan tends to keep her social-media shout-outs generic: "So proud of this year's graduates!" and "Our dancers looked beautiful at prom!" That way, she can show support without spending hours online or worrying about missing any one student's achievement.

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When ballet star David Hallberg sought out the medical team at The Australian Ballet to help him recover from his ankle surgeries, one of the things rehabilitation specialist Megan Connelly had him learn was to jump from his hips. By doing so, he learned to put less stress on his lower legs and feet and access the powerhouse group of muscles surrounding the hips, most commonly referred to as the glutes. While many parts of his rehab were particular to him, understanding how to properly engage the glutes is something many professional and pre-professional dancers can stand to gain from.

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Many a studio owner might agree that the idea of maternity leave is laughable. "So many people say, 'I was back after two weeks—we had a competition,'" says Meagan Ziebarth, a former owner who sold her studio two years ago. "If that works for you, and you feel great, wonderful. But I feel passionately that having a baby is one of the most transformational life events, and you don't need to put that kind of pressure on yourself and accept that that's the norm."

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Be OK With Crazy

Suzana Stankovic and Natalia.

Suzana Stankovic
Wild Heart Performing Arts Studio
Astoria, New York
Enrollment: 500 (drop-in)
2 years in business

Suzana Stankovic signed the lease on her New York studio a mere 10 days before she gave birth to her first child. The space she'd been renting hourly for private and group lessons unexpectedly became available for a lease takeover, and, despite the timing, it felt like the right decision. "I said, 'This is happening for a reason,'" she says.

For the first two months after her baby was born, Stankovic recovered (she'd had a C-section). She held a soft opening in mid-November (2 1/2 months postdelivery) for existing students and officially opened her studio—with a drop-in class format—to the public the following January (4 months postdelivery).

  • Figure out your childcare. "It's the most important thing. You've got to figure that out, whether that means visiting daycare centers and finding one you're comfortable with or involving your entire family," she says. Stankovic's parents are retired and live near her, luckily, so they became her nannies. "That's the major reason I was able to do this," she says.
  • Expect to feel different after giving birth. "When I had my baby, and it came time to leave her and go to work, it was very, very difficult," says Stankovic. "I wasn't prepared for that. I was texting my mother constantly: 'Is she OK? Did she have her milk? Is she colicky?' It was hard to be fully present, initially. Be prepared for the effects of sleep deprivation and not eating well and the postpartum blues."
  • Have a support system in place. That's how Stankovic got through the roughest times, postbirth. "Have a friend or your husband or partner," she says. "And know that the very difficult times are temporary. They do abate. And if they don't, there are resources. There's help out there."
  • Be OK with crazy. "I would plan my lesson and do my combos in the shower," she says. "On my way to the studio, I'd finish up my grand allégro in my head. I'd send e-mails in the middle of changing her diaper—I'd write two sentences, change the diaper, write two more, then hit send." The result of so much multitasking? "I realized, 'Wow, I can do so much more than I thought I could,'" says Stankovic. "I'm ready for anything."
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