This article is written by Jolly Tiwari who is pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from LawSikho.
Table of Contents
Introduction
Being a dance instructor you not only need experience and knowledge but also a good place to start with your dancing classes and impart your skills. What a studio gives is space to provide public and private sessions of Dance classes.
What you need to do is to identify your niche and that will put you in the right mindset to start your own studio and adhere to Legal Compliances (Legal compliance is the process by which a company adheres to the complex rules, policies and processes that regulate business practice in a particular jurisdiction.)
If you’re starting a dance studio, you must obtain the paperwork necessary to operate as a commercial enterprise legally. If you are wondering what licenses are needed to start a dance studio, then this article will be your in-depth guide as it will deal with all the necessary requirements needed to start the studio.
Before starting paperwork needs to be done, to operate as a commercialised entity. Let’s delve into various licenses needed to start your own studio.
So, what licenses are needed to start a dance studio?
- A Certificate of Incorporation and a Certificate of Occupancy–
Certificate of Incorporation
It means that if you register your dance studio as corporation, you will receive a certificate of Corporation.
Certificate of Occupancy
It means that you pass all legal inspections to see that you are ready to operate legally or not, generally landowner is responsible for this.
- Music licenses by organizations in this industry such as public performances licenses( For playing background music or in events including special events like concerts, dance floor, stage, and even for brand promotion activities, shows, etc.).
- Incorporation of Dance business as a legal entity, registrations, legal compliance with local zoning regulations and annual payment of taxes will also be needed.
- Bank Accounts for the company.
Costs to Start a Dance Studio
The cost of starting a dance studio will mainly depend on the facility available to the business owner. If a business owner is able to rent or lease an existing studio, this can help to keep costs down so that startup costs may be only $10,000 or $20,000. If an owner needs to renovate a space into a studio, then major expenses like mirrors and flooring can drive that price up to $40,000 or $50,000. If you are aiming to launch a Music or Dance academy in India, startup costs can go upto INR 5 Lakhs, including the price of the music instruments, renting out an office space, hiring other talented dancers/musicians, marketing costs, and so on.
Common startup costs for a dance studio include:
- Studio renovation expenses, like flooring and mirrors.
- Furniture for waiting areas and changing rooms.
- Equipment bars and mats.
- Studio management/calendar software.
- Signage.
- Working capital to cover the first 3 to 6 months of salary, utilities, internet, rent, etc.
Common costs for Start-ups
- Consistent renovations of studio-like flooring, mirrors etc.
- Furniture expenses.
- Expenses of equipment such as Mats, bars etc.
- Signage.
- Capital for working for initial months.
Important licenses required to start a dance class
1) Register a Company
Okay so why do we register? Registration makes it easy for applying taxes, licenses and music organizations dealings and in case of direct liability in event of lawsuit you can be exempted after registering.
For Example- In case of a suit filed by the student due to some injury or other, the suit will be against the company and not you.
Of everything, LLC is the most feasible option that is Limited Liability Partnership in starting for small businesses
But registering as a Sole proprietor can also be a good option if you yourself is a dance teacher in your studio.
2) Choose Your State Of Incorporation
For foreign dance studio owners/investors, it’s always better to stick to one of the top 3 states. In case you want to operate as a single branch then you need to register in your home state only.
Minor things have to be taken into consideration like a business name and it does not need to be the same as Dance Studio. Make sure the name you choose is available as there are more registered companies than citizens.
3) Assign a Registered Agent
The last step is to appoint an agent after incorporation on your behalf (An Agent represents you) This agent needs to be from the state in which the dance studio is registered and he needs to be a real person.
Pro Tip: The Registered Agent could be you if you register your dance studio in your home state.
However, if you choose to register your studio in a more business-friendly state, you can hire services that have agents who work on your behalf. These services tend to be cheap.
4) Get Your Certificate of Incorporation
You will receive a Certificate of Incorporation if you register your dance studio and if you register as a LLC then you will get a Certificate of Authentication.
Once you get a certificate you get the proof of your dance studio registration, which you can use to file your taxes and it will also help in local State regulation dealings while applying for permits.
5) Open a Business Bank Account
Once you obtain your certificates you can easily open business accounts as the bank will ask for your certificates.
The Business account is type of Asset protection as you will separate your personal assets.
6) Obtain a Certificate of Occupancy
The most important certificate is the Certificate of Occupancy, which you need to have if you operate as a Dance Studio legally. Once you have rented the place, furnished and passed every inspection, then you can obtain this certificate.
Once you have passed all the zoning laws, inspections of safety, codes of local buildings, you get the permit to operate as a studio and you can start your own business legally.
But this certificate of Occupancy only works for one branch, if you want to open another branch you need to have another certificate, and also in case of some major renovations, a different Certificate of Occupancy that will have to go through inspections again.
Example: If you’re applying to open a dance studio in New York City, the city will send inspectors from all branches such as the fire department, police, health, public/labor departments. They will issue you a CO once you’ve passed all inspections.
At Least an hour takes for inspection can extend to 5 hours maximum, and 4-5 weeks time is taken for all correlated inspections. Additional information such as source of income and dance instructors whereabouts are also asked.
Landlords Should Provide COs
Well, a landlord owes you the certificate of Occupancy, so in case you are leasing a space for your studio, then you should ask or consult your landlord on the same to make sure that you get your CO through your landlord.
If later on you plan for major renovations as you progress then you’ll have to consult for new inspections and permissions. They will then update your CO with the new design or layout of Studio.
However, in case you have not leased but are the owner of the Studio then you will need to consult yourself to the local city administration and they’ll send inspectors .
7) Comply With State Regulations
Once all the formalities are done for Certificate for Occupancy, everytime you make changes you will need to consult and follow-up for licensing and permission.
Pro Tip: Small changes don’t require CO just as painting, carpenter work etc.
8) Obtain Music Licenses
Dance Studios are hubs for dance and music, so using such proprietary music you have to pay royalties to the one who owns the music that is the Music Rights Organisation.
It’s not only for Dance Studios but all other businesses that play Music as well.
Let’s take an example of Malls and Bars, they play music for making profits so they also need to pay to the Music Rights Organization though you may be playing to uplift the atmosphere.
Public Performance License is also needed for a Dance Studio.
The cost may vary as it depends on Student size and various other factors.
Conclusion
So Here we now know how a Dance Studio can be started from scratch that too legally, hence by following the above guidelines one can think of opening the Dance Studio.
A great way to start one’s own business but in a legal way so that later there are no harsh consequences should the person be well aware of terms and conditions. As we saw that the person who owns the place has to go through different legal terms and the person who is at lease has to go through different set of conditions. Expenditures are also to be thought of while creating a studio so that in future no money problem arises.
References
- https://www.thestudiodirector.com/blog/do-you-have-what-it-takes-to-open-a-dance-studio/
- https://studiogrowth.com/licenses-needed-to-start-a-dance-studio/
- https://lawrato.com/startup-legal-advice/what-documentation-is-required-to-start-a-dance-studio-in-delhi-11311
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