Business Structure for Independent DM

[Jonnyola87]

Yeah, I tend to agree. It might be possible to eke out a small profit, but it's really going to depend on the individual circumstances. If you have to drive far to get to dive sites or have to pay for lodging for open water weekends, that definitely eats into profits. Pools destroy neoprene, so that's another expense. Liability insurance is expensive, but some shops cover that. But at least with an LLC it is possible to claim legitimate expenses, shifting the balance a bit.

OP: I just thought of this - and you might already know it - but if your shop covers your insurance but you also take on extracurricular dive pro jobs that aren't sponsored by your shop, their insurance won't cover you. In that case you will need to have your own liability policy.

Also good to know. I had planned on having coverage from both the shop and my own PLI in all likelihood. Luckily I live in the smallest state so care mileage and fuel is pretty tepid at most. And there are only a few games in town as far as dive shops go (down to 2 for the state now) and within those, only a few instructors/DMs but a solid flow of requests for OW class assistants and requests for local dive leaders at local sites. And since we have more marinas than schools (probably) I can maybe supplement with dive services. I'm learning a lot of nuances I wouldn't have otherwise thought of.

 

[VikingDives]

There's a lot of mistaken info on LLCs here. I'd recommend starting with Limited Liability Company (LLC) | Internal Revenue Service to educate yourself on now LLCs work, and how the tax filings work.

Regarding protecting your personal assets, and avoiding liability, I'd recommend talking to an attorney specializing in this area.

As far as taxes go, I've run LLCs that were pass through (disregarded entity) and LLCs treated as corporations. The disregarded entities are much simpler to run, and the tax filings are much easier. LLCs that are treated as corporations require a separate tax return which can be a real PITA for a small business person.

 

[Jonnyola87]

There's a lot of mistaken info on LLCs here. I'd recommend starting with Limited Liability Company (LLC) | Internal Revenue Service to educate yourself on now LLCs work, and how the tax filings work.

Regarding protecting your personal assets, and avoiding liability, I'd recommend talking to an attorney specializing in this area.

As far as taxes go, I've run LLCs that were pass through (disregarded entity) and LLCs treated as corporations. The disregarded entities are much simpler to run, and the tax filings are much easier. LLCs that are treated as corporations require a separate tax return which can be a real PITA for a small business person.

That's a great resource, thank you. Being a disregarded entity seems to make more sense. Also, love your subtitle "Mostly Harmless". Always great to see another Douglas Adams fan.

 

[JohnN]

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As far as taxes go, I've run LLCs that were pass through (disregarded entity) and LLCs treated as corporations. The disregarded entities are much simpler to run, and the tax filings are much easier. LLCs that are treated as corporations require a separate tax return which can be a real PITA for a small business person.

One of the "advantages" of incorporating an LLC is that your "customers" are not obliged to file Form 1099, not that I would ever recommend underreporting your actual income