Do I Need a Separate LLC for my Online Course?

When you are building online courses, you come to the eventual question: “Do I need a separate Limited Liability Company (LLC) for my online courses?” PDF tools and other softwares can guide you in creating your online courses; however, the legalities of an LLC can be tricky. I get this question surrounding online courses all the time inside our Functional Lawyer membership.  (I am pulling this one directly from there, and if you also want to directly share and ask your own questions with me, then go check it out at FuntionalLawyer.com/Membership.)

Why Build Online Courses?

There are many good reasons to build online courses or info-products for patients or for people all over the world.  Perhaps you are tired of telling people the same thing over and over again, or you might want to just leverage your time by creating an online course. Maybe you want to help people that you can’t otherwise see because you are unavailable for one reason or another, so you want to build an online course to help them, giving them something of value from you. Also, some people in your state might need a course before they come to you individually. It could be a lower cost intro into who you are and the style of your practice, and they might get a lot of value out of it. For those who need individual support, they can come to you as well. So if you are heading in this direction, there are right ways and wrong ways to structure it, which includes that you want to make sure you are not practicing medicine in your online courses.

Structuring Your LLC

If your course includes one-on-one visits and/or if it includes group visits, which is a little hairy as well, you want to make sure you are doing those in a way that does not complicate the practice of medicine. The practice of medicine is a broad definition, so I tend to veer people away from one-on-one visits if they are doing education products, and then with group Q & A’s, they have to stir clear and be careful on how they handle restrictions, which is a little more allowable than one-to-one consultations. My personal opinion (talking to other attorneys you may get different answers) is that one of the visits should be reserved for patients. That’s my opinion. You can charge them more for it, and you won’t have to worry about licensing issues in places where you are not licensed. So with all that out of the way, let’s talk about whether you need a separate LLC for your online course. Remember it’s totally up to you.

Do I Need a Separate LLC for my Online Courses?

Again, if you talk to other attorneys, you might get different answers. So let’s go through the pros and cons of starting a separate LLC.  

LLC Pros

Why you might want a separate LLC is so you can divide up any liability between companies. You have your medical practice, and then you have an education and publishing LLC over here. If there are any issues with the LLC, then the liability is limited to that company alone, and it won’t cross over and attach to the sister company. That’s not bulletproof, as long as you don’t commingle funds and you treat them as a separate entities or they are unlikely to reach through, although it can happen with either of those two things. So, that’s one reason to separate liability between your practice and your education company.  If you do it that way, there are clear dividing lines both for you legally, but also for clients and patients. So, clients/students, going through education courses, would go through Rattiganeducation.com, and patients will go to Rattiganfunctionalmedicine.com, and there the two shall meet, unless a client becomes a patient and signs a patient agreement review with the HIPA form and all that stuff. And that’s why there are clear dividing lines. 

If you have an education company, you might look into licensing materials to other providers who may not have the time or the inclination to build an online course but want to pay you a royalty or a licensing fee for those services. 

Also, the education company can look into a fuller relationship, whereas medical practices have many more restrictions on commitments, kickbacks, all of those things. 

These are all reasons why you might want a separate LLC. 

LLC Cons

Why you may not want a separate LLC?  This doesn’t have to be 100% black and white. 

You can start with it under your umbrella and then move it to a separate LLC once you’ve established that. There’s a product there, people like it, and people are willing to give you money for it. Then you can assign that asset, all of that IP, over to your new LLC later. 

However, you might not want a separate one if you are not willing to setup a new set of bank accounts. Earlier, I talked about how you are not allowed to reach over and grab assets from your medical practice, but that’s only if you do not comingle your funds, both personally and between the two businesses. So, setting up a separate LLC means, setting up a new set of business bank accounts, a new Employer Identification Number (EIN) with the Internal Revenue Service (IRS), and a new tax filing with your tax return. So, now you would have your personal tax return, your medical practice tax return, and your education company tax return.  You know when I say tax return sometimes that takes the form of Schedule C, or sometimes it takes the form of 1120F. It just depends upon the entity structure and how you’ve elected to be taxed. Refer to another video here on Functional Lawyer about S-Corps vs. LLCs, and then you’d work with your CPA or other tax professional, on how to actually file those, but it’s an additional cost and an additional set of books to keep as well. These are the primary reasons why you may not want to initially start with a separate LLC. 

Conclusion

Which one you choose is totally up to you, based on your tax situation and your ability to handle the administrative roles.  Perhaps you have a partner, spouse, or employee who can help you with all that. Then you may look into separate LLCs. If you need help deciding or if you need help getting those set up, reach out to me at Functional Lawyer, or look up other videos on the topic on our Functional Lawyer YouTube Channel.