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
Dance Teachers Trending
Photo by Quinn Wharton, courtesy of Forance

While Teddy Forance admits that performing with commercial artists like Lady Gaga and Madonna, and in front of 30,000 people, is exhilarating, he is personally drawn to more abstract music when he choreographs. It's a preference that sometimes confounds his contemporaries. "Some of my friends will ask, 'How do you choreograph to music that sounds like silverware fighting?'" he says. "I just tell them one sound at a time," he says.

Keep reading... Show less
Sponsored by Dance Teacher Web
Courtesy Dance Teacher Web

Dance students aren't the only ones who get to spend their summers learning new skills and refining their dance practice. Studio owners and administrators can also use the summer months to scope out new curriculum ideas, learn the latest business strategies and even earn a certification or two.

At Dance Teacher Web's Conference and Expo, attendees will spend July 29–August 1 in Las Vegas, Nevada learning everything from new teaching methods to studio management software. And as if the dance and business seminars weren't enough, participants can also choose from three certifications to earn during the conference to help expand their expertise, generate new revenue and set their studios apart:

Keep reading... Show less
Dance Teachers Trending
Via YouTube

The celebration of tap dance legend Bill "Bojangles" Robinson's birthday comes each year May 25, and the dance world goes wild for it! Since 1989 the day has been celebrated by tap lovers everywhere through music, movement and festivals.

Interested in joining the party this year? Here's one special way to celebrate NTDD in 2019.

Keep reading... Show less
David Galindo Photography

New York City is a dream destination for many dancers. However aspiring Broadway stars don't have to wait until they're pros to experience all the city has to offer. With Dance the World Broadway, students can get a taste of the Big Apple—plus hone their dance skills and make lasting memories.

Here's why Dance the World Broadway is the best way for students to experience NYC:

Keep reading... Show less
To Share With Students

Dance Teacher 2014 K–12 public-school education award recipient, Joan Sheary, is starring in a new documentary, Toe the Line: Arts Education for Life. The film, which is currently wrapping 10 years of filming, follows a group of high school students as they participate in a public arts magnet middle school program in Worcester, Massachusetts, under the direction of dance teacher and former Rockette, Sheary.

Through the eyes of the students, the audience has the opportunity to see the value of arts education in action. The film shows students as they navigate daily practice, grueling workouts, competition, bullying, peer pressure and complex home dynamics, all culminating in the school's year-end performances.

"We have filmed for a total of 450 hours over a 10-year period," director Barbara Copithorne says. "The result is Toe the Line: Arts Education for Life—a 76-minute documentary about Joan Sheary, the origin and breadth of the program she created, the students' lives she's touched and a city that supports the arts."

As the film creeps toward festival submissions, the creators are reaching out to the dance community to raise funds for its release. You can contribute here.

Sheary's success as a teacher was celebrated at our yearly Dance Teacher Award presentation in 2014. To participate in this year's DT Awards, join us at The Dance Teacher Summit in Long Beach, California. Follow the link to get more information on registration, class schedules and events.

Dance Teachers Trending
Photo by Julianna D. Photography, courtesy of Abreu

Although Rudy Abreu is currently JLo's backup dancer and an award-winning choreographer—his piece "Pray" tied for second runner-up at the 2018 Capezio A.C.E. Awards, and a variation of the piece made it to the finals on NBC's "World of Dance"—he still finds time to teach. Especially about how he hears music.

Keep reading... Show less
Getty Images

Q: Our dancers' parents want to observe class, but students won't focus if I let them in the room. I've tried having them observe the last 10 minutes of class, but even that can be disruptive and bring the dancers' progress to a halt. Do you have any advice on how to handle this?

Keep reading... Show less
Dance Teacher Tips
Getty Images

James Payne, director of The School of Pennsylvania Ballet, starts class each day by asking students how they feel. "If they're collectively hurting, and I know that the day before they were working hard on something new, I might lessen the intensity of the class," he says. "I won't slow it down, though. Sometimes it's better to move through the aches and get to the other side."

A productive class depends, in part, on how well it is paced. If you move too slow, you risk losing students' interest and creating unwanted heaviness. Move too fast and dancers might not fully benefit from combinations or get sufficiently warm, increasing their risk of injury. But even these guidelines may differ depending on the students' age and level. Good pacing is a delicate balance that can facilitate mental and physical growth, but it requires good planning, close observation and the ability to adapt mid-class.

Keep reading... Show less
Studio Owners
Getty Images

Running your own studio often comes with a pull-yourself-up-by-your-bootstraps mentality. After all, you're the one who teaches class, creates choreography, collects tuition, plans a recital, calls parents, answers e-mails, orders costumes—plus a host of other tasks, some of which you probably don't even think about. But what if you had someone to help you, someone who could take certain routine or clerical tasks off your hands, freeing you up to focus on what you love?

Keep reading... Show less
Dance Teachers Trending
Derek and Julianne Hough via @juleshough on Instagram

Here at Dance Teacher, we LOVE a talented dance family. Something about parents and siblings passing their passion for dance down to those who come after them just warms our hearts.

While there are many sets of talented siblings across all genres of dance, ballroom seems to be particularly booming with them.

Don't believe us? Check out these four sets of ballrooms siblings we can't take our eyes off of. Their parents have raised them right!

This is far from a comprehensive list, so feel free to share your favorite sets of dance siblings over in our comments!

Keep reading... Show less
Courtesy of Roxey Ballet

This weekend, Roxey Ballet presented a sensory-friendly production of Cinderella at the Kendell Main Stage Theater in Ewing, New Jersey, with sound adjustments, a relaxed house environment and volunteers present to assist audience members with special needs. The production came on the heels of three educational residencies held at New Jersey–based elementary schools in honor of Autism Awareness Month in April.

Keep reading... Show less

mailbox

Get DanceTeacher in your inbox