by Norm Abrahamson » Wed Sep 06, 2006 6:14 pm
Hi Dana:
I'm not a dojo owner, but I represent many small businesses. You raised some good questions regarding liability. As for lisencing, I am going to assume that your state does not require a special license to teach martial arts.
"I'd be curious to hear from other dojo owners how or if they are incorporated,"
Conducting business as a corporation or llc (limited liability company) does provide some protection from personal liability if someone is hurt in your dojo. The general rule is that only corporate assets could be used to satisfy a judgment against you. There is an exception however if you personally cause an injury to a student. If you seriously hurt a student by "demonstrating" an eye strike, your personal assets will be on the line. If two students of equal rank and ability are sparring, and one is seriously hurt, your personal assets will probably be protected.
". . . how much liability they carry, if any, (hmmm...may not want to say that one on an open forum)"
Liability insurance is much better protection than the use of a corporate form. A good liability policy should not only provide coverage of up to $1,000,000.00 (less a deductible), it should pay for your legal defense. A dojo owner that uses other instructors should make sure that the policy covers them as well.
"If you run a club out of your home do you have to incorporate?"
The place you run the business has no bearing on whether incorporation makes sense for you. If you are truly running a business, then incorporation could make sense to provide some personal protection. Also, if you are running a business in your home and someone gets hurt, your homeowner's insurance may not cover it. Check your policy and buy a rider if necessary.
"Does it matter if you charge monthly tuition or not?"
If you don't charge any fees, then you aren't really running a business. That is more in line with a hobby unless you are running a non-profit organization. If you are just working out with friends, even if they are your students, then incorporation wouldn't make sense. An umbrella policy on your homeowner's policy would likely cover you for causing an unintentional injury.
"What about testing fees? Can you charge those if you're not a business?"
If you start charging fees, that makes you a business. It doesn't matter if you are incorporated or not.
Hope that is helpful.
Sincerely,
Norm Abrahamson