Lease Agreements?

[Nyuck3X]

This is probably a stupid question, but with so many small buisnesses
going out of buisness, I was wondering how do you go about ending
a lease agreement. My fear is this, if I enter into an agreement
for a year and my place goes chapter 11 in 6 months, how do I handle
the balance of my obligation? Does chapter 11 allow me to end my
commitment to the property owner? Or will they come after my house?
I'm in California by the way.

Thanks in advance...

[Allie]

In regards to a lease question. First you should always contact an attorney. Now that is out of the way.

My recommendation is to never, ever, ever sign anything personally especially a lease. There are many reasons.
1)Lawsuits. What if someone sues you for damages.
2)If you do go out of business, the only thing you lose is your deposits, security and so on.
3)You should never attach yourself or your personal property to the dojo. Big mistake.

Lets forget the negative. Why would you fail. If you follow what I tell you and listen to other professionals then you are destined for success. You can't fail. I can help you. Soon my website will be released for school owners and up and running making you life easy.

In spirit;
Renshi
Allie
Lininja.com

[Allie]

It is always my pleasure. I am happy to help. Keep in touch.

In spirit;
Allie Alberigo
Lininja.com

[geosync]

Originally posted by Allie

My recommendation is to never, ever, ever sign anything personally especially a lease.

Who then does the actual signing of the lease? I haven't read all the threads in here but I'm assuming that you are doing this through a corporation. Is the another official representative of the corporation who does the signing or do you sign in your capacity as a representative of the corporation?

[Allie]

The corporation is an entity by itself. There is a great book that I recommend that all of your read if your are interested in running your business as a corporation. It is by Rob Kiosaki and it is called "loopholes of the Rich and Famous".

Also, to answer your question as the corporate officer you should always sign your name then followed by your official title. Never, ever, ever sign personally on anything if you can get away with it. Sometimes landlords demand you to sign personally. So that you are liable. That is smart. I am a landlord as well. So that is what I prefer. A corporation could easily go in and out of business.

In spirit;
Allie Alberigo
Lininja.com

[Exorcist_Fist]

When you incorporate, there are a lot of benefits. First of all being tax related. Second being liability related.

In both cases I recommend going with a C corporation because it offers maximum protection.

As for insurance, I got my taiji instructor 1 million dollars in coverage to teach at a high class hotel in SF. The total cost was somewhere around 400 dollars a year, which is entirely reasonable.

Now, back to the tax issues.

As a C corp, any of your personal money you invest in the corporation is pre-tax. Which is to say, you pay 10K into the biz out of your 50K a year, and you are only taxed as if you earned 40K. Downside of this is managing payroll, getting a federal tax id, and a few other little details that might seem like to much to start with.

Liability wise, if something happens, you personally are not liable, it is the responsibility of the corporation. As an investor, or officer of the company, your liability is generally limited to breach of fiduciary duty. Since you will, theoretically be the sole investor, the odds of that are limited.

The downside of a C corporation is that if you decide to expand into Mcdojo format, then getting a small business loan may be difficult.

Other options are to look into registering your organization as an NPO, such as "The society for the development of little kids in Martial arts".

Whatever you do, always talk to a lawyer and an accountant first, and do not rely on books or the internet. It may be pricey at first, but if you are serious about making a business out of MA, do it.

[Allie]

Daniel is correct in many of the areas he talked about in regards to the C corp and tax savings. The issue you should mostly be concerned with is the direction that you wish your dojo to go. If you are going to run a MCdojo as Daniel said then you want to be a professional operation. The fact that people run schools that are out of the norm or rather large - however you want to put it, is more reason to incorporate. The C corp is great, but the style of your corporation is better discussed with your accountant and how you want to set up your business.

All in all back to the beginning. Don't ever sign your life away. Corporations were set up for this exact reason. To protect the company and not involve the officials of the corporation - personally.

In spirit;
Allie Alberigo
Lininja.com