Opening A Gym Requirement #1) LICENSING

Documents, documents, documents. Opening a gym is not as simple as bankrolling the fitness equipment and renting space. You need permission from the government to open a gym, and this can cost you thousands of dollars in license fees initially (depending on the corporate structure you choose).

Most legal requirements happen on the state level, and you’ll have to research the individual requirements in your state to determine the local and state licenses you need.

Consider seeking out legal help before you get established, or get in touch with a gym owner in your city and ask them what they had to file to get approved. Doing this is the fastest way to find out about individual state requirements in the state where you reside.

The following are the top four things you need to cover when applying for approval with your state:

  1. Licenses

  2. Establishing your business as a legal entity

  3. Insurance

  4. Certifications (Optional)

Licenses

Licensing is mandatory to operate a gym. If a gym runs without a permit, the government can shut it down during an inspection, and similar to other commercial enterprises, you need permission to operate on a legal basis. 

State Licensing

Gym licensing is a complicated matter, as it’s not uniform across all US states.

Gyms do not require any permission at the Federal level, as there is no Federal regulation regarding gym licenses. However, all states require specific licensing procedures. 

If you want to look up the individual requirements for your state, this is made easy by accessing your state’s licensing page. There are two things to remember when it comes to licensing:

  • The Federal government does NOT regulate licenses for gyms and other fitness enterprises; it only regulates heavy industries such as alcohol, pharmaceuticals, and firearms. Gyms only have to apply for state licenses.

  • Individual states require dual licenses. Example: In California, you will need a state and a local business license to open a gym. Consult with your local government business regulatory bodies to find out more about the requirements. If in doubt, consult with local gym owners and ask them about local licensing.

EIN

Once you’ve sorted the licensing on the state level, you have to cover your duties to the Federal government. If you want to incorporate your gym or pay taxes, the first step is to obtain an EIN. The EIN, short for “Employer Identification Number” is a number the IRS will issue to identify your gym.

Although you only need permission from your state and municipality to open a gym, you’ll still have to pay taxes on the profits and register employees. 

EINs are required for all IRS tax administration purposes as well as to get insurance. If you don’t have an EIN, you’ll won’t get the insurance coverage that is vital for running a gym.

The EIN application is straight-forward and easy. Gym owners can fill out the application online, and this usually takes 10-20 minutes. There are no wait times, and upon completion, the business owner gets an EIN for their business.

Once you’ve successfully obtained the EIN, you can register to pay taxes with the IRS. You can register for all Federal, state, and local taxes at the same time by applying. However, you will require an EIN before you can file for taxes. 

Tax regulations for gyms vary by the state too, and sometimes the location of your gym within that state. Example: In large cities such as NYC and LA, you might have to pay higher local taxes depending on where your gym is.

Certain states mandate that gym owners register for multiple state-tax numbers, including state tax and state unemployment insurance tax (if you have people on the payroll).

Music License

Furthermore, gyms require a music license if they play music in the background. Although your Spotify account grants you the right to stream music, it does not give you the right to use it for commercial activity. 

To obtain a music license, you must register with copyright-holding agencies such as ASCAP. Here’s their Gym Music Licensing page.

Establish your business as a legal entity

Establishing your business is the final step of the way. You need to have a state-issued certificate as evidence your business is registered legally. 

It’s up to the business owner to decide the kind of business they want to have. The most common business types are S Corp, C Corp, and LLC. In the U.K., the most common formation type for gyms is a Limited Company.

Many agencies can legally establish your business for a low fee and save you the paperwork you’ll have to do. For most business types, the government filing fees are as low as $50-200. However, the agency handling your filing might charge an additional amount. 

In most cases, you will have to decide on a business name. Certain business types, such as sole proprietorships, do not require names, but most do. Use the name of your gym for incorporation to be safe. However, your incorporation name can be completely different from your gym’s name. 

There might be some local regulation you’ll have to comply with during incorporation. Example: Gyms in California are required to register as “DBA” + Name of the gym with the local county clerk’s office where they intend to operate their gym.

Insurance

The final necessary step, and the most crucial one in terms of protection, is to buy insurance for your gym. 

You always have to take care of your members. If one of them injures themselves at your gym, you could face lawsuits that cause you to go bankrupt and send you into permanent debt.

You have no option to bypass this, and insurance can cost thousands of dollars a year. Gyms have to purchase liability insurance that protects them against lawsuits, and in some states having this kind of insurance is a requirement before you can obtain a license.

Most injuries at the gym are self-caused, as the users frequently over-work themselves during high-intensity exercises. Even if you’re not at fault, you could get sued and have to pay hefty legal fees for a defensive case.

The way to avert lawsuits is to hire law experts who can draft up a legal agreement that you ask all new members to sign upon starting their membership at your gym.

To be fully protected, each gym requires “Liability Insurance” to the tune of millions of dollars. Insurance of this kind is quite expensive and can cost $5000-10,000 a year, depending on the gym. 

Start by looking up “Gym Liability Insurance” in your state and consult with multiple insurance agencies to get a quote for your gym. 

Read the reviews as you might discover the insurance company is not reliable, and they bail on clients in the event of a claim.

If you can’t find Gym Liability Insurance, you will need Commercial Liability Insurance that covers all businesses. The insurance agency will require your EIN and other creation documents to prove you’re a business entity.

They will then sign you up for liability insurance that protects you from all accidents at your gym. 

Certifications

Certificates are optional for gym owners, although they can increase the appeal of the gym once members learn that the owner is a certified fitness expert. 

Certifications are only mandatory for personal trainers who want to train people and charge them for training. If you’re running a gym, you’re primarily a business owner and an entrepreneur; however, you can still obtain certificates in a matter of months.

If you’re passionate about fitness, you’ve likely considered getting a certificate at some point. Most certifications can be obtained online by taking classes for a few months, paying the fee (usually $100-300 for beginner certificates), and passing an exam. 

While you’re carrying out administrative tasks at your gym, many people will ask you questions related to fitness. The certificate course will give you the foundational knowledge you need to answer their fitness questions. You can obtain basic fitness knowledge in a matter of months using a training program.

There are also options to upgrade your certificate to more dedicated “Masters” programs, which can cost as much as $2,000, but most beginner certificates will do. 

You should also consider getting a CPR course for first-aid/emergency, which costs as little as $100.

Many states mandate that your employees have CPR courses and certificates before you hire them, so keep that in mind. If you have one yourself, you’ll find it easier to connect with your instructors.

You can get certificates from several certifying institutions. Their classes and prices vary; however, most are modern and comprehensive. 

Fitness Certification Resources

You can easily learn online through each one of these:

1. NASM/National Academy of Sports Medicine

Certificate Cost: $200 (lowest).

NASM, short for the National Academy of Sports Medicine, is the largest fitness certifying institution in the United States. NASM offers beginner courses that take nine weeks, including a test money-back guarantee. So, if you fail the test, they will fully refund you the cost of the certificate course.

They have courses ranging from $200 up to $1000, depending on the expert level. NASM also offers a “CPR bundle,” which teaches you about emergency procedures and saving members at your gym. They have a test pass rate of more than 95% for the beginner course, which means you’re almost guaranteed to pass the test on the first try. 

Getting a NASM certificate will give you immediate credibility.

2. ACE/American Council on Exercise

Certificate Cost: $500 (lowest).

ACE, short for the American Council on Exercise, offers the second-largest certificate program in the United States. 

Their courses are the most modern and easy to follow out of all fitness courses; however, they’re more expensive and start at $500 for the beginner program. 

They have other more expensive programs for masters, and their study bundles and tests tend to add to the total cost of the certificate.

ACE courses are for fitness instructors who want to specialize in a certain fitness niche and don’t mind paying a premium. They offer many advanced Masters courses, including specialization courses for different groups such as elderly, children, people with medical conditions, etc.

3. ISSA/International Sports Sciences Association

Certificate Cost: $500 (lowest).

ISSA, short for the International Sports Sciences Associations, is a widely popular international organization that services fitness trainers around the world. ISSA offers similar comprehensive courses to ACE and NASM, starting at $500; however, the main difference is that their courses are available to fitness trainers worldwide.

While the organizations mentioned above only service gyms in the US, ISSA certificates are available to all via online learning. The course also includes study materials/books for free, saving on total certificate costs.

4. NSCA/National Strength and Conditioning Association

Certificate Cost: $285 + $200-400 for the test.

NSCA, short for the National Strength and Conditioning Association, offers comprehensive membership courses that can be quite affordable. They start at only $177 for beginner classes for members of the association and $285 for non-members. 

There are also additional fees for the exam, which range from $200 and $400 depending on how you take the test (paper testing costs less than online testing with NSCA).

5. ASCSM/American College of Sports Medicine

Certificate Cost: $500-1000.

ACSM, short for the American College Of Sports Medicine, offers a certificate course for personal trainers. ACSM provides test-preparation bundles for $135, and different workshops ranging from short 1-day workshops up to 3-day workshops. There are also online webinars, and the certification test costs $300.