Truth be told, the possibilities for a dance studio are endless, especially in this modern age of varieties and new concepts. According to detailed reports, the US dance studio industry is worth close to $4 billion. As such, regardless of the niche you choose to focus on, you have a good shot at taking control of a share of that very massive market.
Keep in mind that only a handful of states mandate licensing specifically for a dance studio. For instance, Illinois has in place a whole lot of regulations, such as making available written contracts to all customers and being bonded if they get advance payment from any customer in excess of $50 or more per month.
Although a good number of states and towns/cities barely possess any specific licensing for a dance studio, keep in mind there might be general licensing requirements for starting a dance studio business. Below are vital ones to consider;
Licenses Needed to Start a Dance Studio
General Business License or Permit
Although this will most often depend on the location of your business, keep in mind that a general business license or permit is a must in most places. A good number of states require a business license for just about any business enterprise within its jurisprudence; nevertheless, they are more commonly found at the city level.
Business Name Registration
Although this may not be considered a business license, it’s very necessary to ensure that you can use a name for a business. Keep in mind that a good number of states require the registration of that name. One thing to note is that the process of name registration varies from one state to another and the type of business entity.
Federal Employer Identification Number
The Federal Employer Identification Number (also referred to as a FEIN, Employer Identification Number, EIN, or Federal Tax ID Number) is a special nine-digit number that is used to identify a business with the Internal Revenue Service (IRS).
In the United States, every business with employees or those that are established as a partnership, Corporation, and in several instances an LLC, will need to obtain an EIN. It is possible however to use the owner’s social security number especially if you are a Sole proprietor or a single-owner LLC without employees.
Sales Tax Permit or Business Tax Number
Note that to sell products and/or provide specific services in the United States, a state sales tax permit (business tax number or tax ID number) might very well be necessary. This permit establishes an account number with the state’s Department of Revenue or a similarly named state taxing agency. Aside from that, recruiting workers will also necessitate a state tax number.
If you intend to inculcate a merchandise store into your studio, a place where you can sell outfits and other accessories to customers, then you have to leverage this license to ensure that your business can purchase these items tax-free. A resale certificate (also known as a seller’s permit) makes it possible for a business to acquire inventory, and rather than paying the sales tax to their vendor, they charge the sales tax to the end-user of the product.
Certificate of Occupancy
In most places in the United States, a dance studio is expected to obtain a Certificate of Occupancy (CO) prior to operating in a commercial building.
Note that this authorization will be obtained from the city, or county, and gives permission to a business to occupy and operate from a building as long as the building falls in line with zoning regulations, building codes, and any other local requirements.
You might even have to obtain a home occupation permit if you intend to start and manage a home-based business. Prior to choosing a facility to start your dance studio, ensure to verify with the local zoning department to guarantee the business can legally operate out of the chosen location.
Dance studios will need to own a public performance license, as they’re not permitted to make profits using the music they’re playing until they get a license. Even though you own the music privately when you purchase it on iTunes or Spotify, the license does not grant the right to utilize the music for commercial purposes.
If you play a song for commercial gain or publicly, ASCAP and other licensing agencies will deem this a “performance” and penalties for playing unlicensed music can be quite high.
If you’re a dancer, it is very possible to share your gifts and expertise with both old and young by establishing your own studio. You’ll be expected to obtain certain valid business licenses and authorizations. Consider these licenses mentioned above and endeavor to ask questions to get clarifications on the right licenses to obtain.