How Many DBAs Can an LLC Have? (What You Need to Know)
An LLC (Limited Liability Company) structure provides the limited liability features of corporations and tax efficiencies. But one common query usually regards the number of DBAs (Doing Business As) an LLC can have.
With an extensive knowledge of corporate law and practical experience working with numerous LLCs, I will explore the guidelines and limitations surrounding using DBAs for LLCs.
This article will focus on the pros and cons of single-LLC membership versus multi-member LLCs, particularly regarding how many DBAs your holding company can have. We’ll also discuss the factors that may influence this decision.
Quick Summary
- An LLC can have multiple DBAs by adhering to state-specific rules for registering additional DBAs.
- Registering various DBAs allows LLC owners to maintain separate brand identities and conduct distinct business activities.
- According to IRS data, in 2021, Limited Liability Companies (LLCs) represented 71.7% of all partnership returns, which underscores the flexibility of multi-member LLCs that can choose between partnership or corporate tax structures.
- Over the years of working in the LLC sector, I've learned that multiple DBAs offer flexibility and enable targeting different customer segments or markets under the legal structure of the LLC.
How Many DBAs Can My LLC Have?
Your LLC can have many DBAs. Although the default rule for an LLC is that it has one DBA (its owner if it's a single-member LLC).
If you want to have more than one DBA for your own LLC, we recommend following your state's rules for registering additional DBAs.
Other states only require registration of those members who will be engaged in or managing the business.
Drawing from our experience, registering as many DBAs as possible is always a good idea as it ensures that all LLC owners are on the same page regarding their rights and responsibilities.
Multiple DBAs also allow you to conduct various business activities or create separate brand identities while maintaining the legal structure of your LLC.
They also provide flexibility and help you effectively target different customer segments or markets.
“If you can run one business well, you can run any business well.”
Single Member LLC with One DBA
The biggest advantage of a single-member LLC with one fictitious business name is that it is quick and easy to set up.
As of the latest data, there are over 30 million businesses in the United States, with roughly 21.6 million of these being structured as Limited Liability Companies (LLCs), partly due to the minimal formalities and often nonexistent filing or registration fees required to establish an LLC.
In most states, you only need to file Articles of Organization with the Secretary of State's office.
In addition, a single-member LLC is a "disregarded entity," meaning its tax implications are for a sole proprietor business line [1].
Multi-Member LLC with One DBA
In 2021, Limited Liability Companies (LLCs) in the U.S. accounted for the majority (71.7%) of all partnership returns, marking the 20th consecutive year that LLCs have dominated the number of partnership returns filed.
This prevalence highlights the attractiveness of LLCs, particularly multi-member LLC, which offer considerable flexibility compared to single-member LLCs.
Notably, multi-member LLCs can choose to be taxed like a partnership or like a corporation, allowing for tailored financial and tax strategies.
However, to avoid taxation as an S corporation, the LLC must have more than two members and meet other requirements.
Multi-Member LLC with Multiple DBAs
A multi-member LLC with multiple DBA application filings can be structured in several ways, depending on the business's needs.
Based on our experience, this arrangement enables each member to manage their own legal entity while having access to a variety of financial documents, including tax returns and other financial records. This advantage is also applicable to LLC businesses operating internationally.
In addition, the multi-member LLC with multiple DBA names may be able to choose to be taxed as a partnership or a corporation.
This will allow you to use multiple DBA names instead of creating separate LLCs.
Benefits of Having Multiple DBAs
These are some of the advantages we noticed from having more than one DBA:
- You can separate LLC businesses from the parent LLC business entity with different branding.
- You can limit the personal liability of the members of the LLC since the LLC's assets are separate.
- You can take advantage of different tax treatments for multiple businesses.
Ultimately, whether or not you should register more DBAs depends on the specific situation and goals of your LLC. Therefore, we recommend consulting a law firm for legal or tax advice.
It ensures you're working toward your best interests with multiple businesses, especially with separate bank accounts.
Steps To Set Up a DBA For an LLC
Setting up a DBA for the new business entities is relatively easy whether you have multiple businesses under one LLC or multiple LLCs.
Here are the basic steps:
- Check your state or local government requirements
- Decide how many members will be registered as DBAs
- Form your limited liability company
- Register your DBA with the state
- Check local requirements and legal documents
However, it can take some time to get all of your documentation in order and prepare the necessary forms for separate legal entities.
FAQs
Can You Have More Than One DBA Under Single-Member LLC?
You can have multiple DBAs under single-member LLC and separate legal entities. Each DBA is separate and distinct from the other DBA/sole proprietor.
How Does Having Multiple DBAs Affect a Multi-Member LLC?
A multi-member LLC with multiple DBAs can structure itself in various ways to allow each member to operate their legal entity but access multiple financial records and tax returns, enhancing flexibility and tax options.
References:
- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3090538
