If two people form an LLC for a fitness training business (were previously fitness trainers and each had their own clients), can they keep the old clients separate and not include those in LLC income? The LLC is taxed as an S-Corp. Would they need to report the income/expenses related to the old clients on their personal returns on Schedule C, separate from Schedule E for the LLC income/loss?

Basically, can they have an LLC while also continue training old clients on the side that would not be part of the LLC?

#1; it depedns.As long as the business which is not a corporation( I mean completely separate from the S corp ) includes business tax in the personal tax return of the owner’son Sch C/SE and 1040;as long as you are filing business taxes as a sole proprietor separated from your S corp(which is taxed as a sole proprietorship), you will use Sch C to determine the net income of your business.However,the MMLLC taxed as an S corp needs to file form 1120S as long as the biz is done with the old clients. S corps do more than save their owners income and payroll taxes. S corps also provide some general accounting and legal liability benefits. As compared to a sole proprietorship ,an S corp should limit your business liability because to create an S corp, you'll first have to form a limited liability company or a corporation. The general rule is that a corporation's shareholders are not personally liable for the corporation's debts merely because of their ownership of the business.

#2;as mentioned above. Your MMLLC cannot be a sole proprietor, but you, an individual, can do business as an SMLLC/ sole proprietor with your old clients unless the S corp biz is related to the clietns. If you are a sole proprietor, you own and operate your own business, but it is not a corporation. An S corp and a sole proprietorship both pass tax liability on to the owner or shareholders. However, because the business structures differ greatly, so do the filing processes.