As a business owner, you may have decided to expand your business into additional areas of focus and you’re now operating multiple businesses. Perhaps you have decided to take your online business into a retail storefront or vice versa. Can you have multiple businesses under one LLC?
The answer is yes, you can do that. We recommend considering all of your options before jumping in and handling things that way, however.
The route you choose can impact you in several ways including their tax obligations and potential liability, so it is important to weigh the pros and cons and discuss your options with an experienced business attorney.
Form a Separate LLC for Each Business Activity
If you would like to form a separate LLC for each business activity, you will need to file separate forms for each of your LLCs. There are some advantages that come with this method, but it also involves filing multiple formations and annual reports, which can be time-consuming.
For many businesses, this method is the most obvious and straightforward way to operate multiple businesses. However, it can be burned some in the early stages of your business when your profits may not be justified by all of the additional costs and time commitments.
Form the Main LLC as a Holding Company
Your next option is to form the parent LLC as a holding company. You can also form a corporation as a holding company. You will need to file a fictitious business name, also called DBAs. For each additional business entity, you operate. When you use this method, each business has a different business name for their respective market.
However, you can still enjoy the legal protection of the main holding company. Filing doing business as under one business entity allows you to file taxes under the same tax ID number. However, the mingling of your businesses in this way could potentially put your businesses at risk if there is liability action involved.
Create One LLC and Then Create Additional LLCs Owned by the Initial Company
Another option is to create one LLC and then create additional LLCs to be owned by the initial company. The main LLC will act as a holding company, a company created for the sole purpose of owning and controlling assets, and management of the other LLC is within its possession. The company that acts as a holding company does not have any operations and exists only to own the other LLC companies.
This is the most legally complex way to have one LLC on other LLCs. However, it also offers businesses the most protection from liability. The holding company itself provides limited liability to you as the business owner and to the other LLCs, it manages.
Additionally, the operating LLC provides the business owner with limited liability protection. As a result, the liability protection of the entire structure is two-fold.
Create a Series LLC
Finally, you could create a series LLC. This process allows for separate companies under one LLC. The master LLC has one or more individual LLCs within its umbrella company. The individual series are protected from liabilities and losses suffered by the other individual series.
Many people use this type of structure to hold their real estate Investments. Investors will put each house or business into a separate series. If the tenant gets hurt in investment property A, then investment properties B, C, and D, are safe. Using a series LLC is usually less expensive than forming an LLC for each individual property.
The Pros and Cons of Each Method
With so many options available, you may be wondering which one is right for you. There are several advantages to running multiple businesses under one LLC, including the following:
- You will be able to run your new venture under an existing LLC which will simplify the process
- Using this method allows you to test products, business models,
- Off you will not have to pay additional filing expenses for a second LLC formation and annual report
- Operating multiple LLC’s could complicate how you file your taxes and could require you to submit additional tax filings
- Having multiple companies could require separate bank accounts for each LLC
On the other hand, there are disadvantages to operating under the same LLC, such as:
- The liability risk could be greater. The assets and income of each business are no longer isolated from each other. As a result, each is at risk of any of the legal claims that could arise and be directed against the owner of all of the LLCs.
- As your business grows in general, it can be more difficult to keep track of record-keeping and finances for each business.
Does Each Business Need to Have its Own DBA?
Filing a “doing business as” will officially record an alternate name used for your business operations. Sometimes a “doing business as” is called an assumed name or a fictitious name. You are not required to file a DBA for each additional business owned by your LLC, but you may prefer to register them for your different business activities.
Doing so can help your customers, accountant, and everyone else involved in your businesses keep them straight.
Is Running Multiple Businesses Under One LLC Better Than a Series LLC?
A series LLC provides the shape of benefits as a master LLC with several LLC organized underneath it. However, series LLCs enjoy greater flexibility and simplified administration.
Having one LLC to house multiple separate business entities as a series LLC will result in the holding company and operating entities being formed within a single LLC. Each unit in the series can have separate owners, filing fees, and have its own liabilities and assets.
Discuss Your Business With a Georgia Attorney
If you have questions about operating multiple LLCs under a single LLC, the experienced Marietta, Georgia, attorneys InPrime Legal are here to help with legal or tax advice. Contact us today to learn more about our Affordable Legal Services and how we can help you understand your legal options.