How to Have Multiple Businesses Under One LLC? (Explained)
Having several businesses under one LLC can be a great way to protect your personal assets and avail yourself of tax benefits under a centralized entity.
Choosing the correct structure will influence your tax liability, so it's important to understand what alternatives exist and weigh the benefits and drawbacks.
As a business consultant for limited liability companies, I gained over a decade of practice helping and addressing clients’ concerns.
After in-depth research and collaboration with our team of attorneys, I’ll provide you with a comprehensive guide about multiple businesses under one LLC. The article is backed with all the legal information you need.
- To have multiple businesses under one LLC, you may employ DBAs, create a series of entities, or establish a Holding Company.
- Multiple businesses under one LLC have the advantage of limited liability and tax benefits.
- Determine the nature of your business to ascertain which type of option is best suited for your company.
3 Ways To Structure Multiple Businesses Under One Roof
There are three ways to structure multiple businesses under one roof. These include the following:
1. Operate One LLC Using DBAs
Using a DBA name allows you to conduct multiple businesses under one limited liability company. DBAs, also known as “Doing Business As,” “Trade Name,” “Assumed Name” or “Fictitious Name” will enable your target market to distinguish the nature of each individual business.
It is important to note that each DBA name must be registered with the appropriate state and/or local agency, depending on your jurisdiction. Failing to comply with the registration requirements can lead to fines and legal complications.
Pay income taxes separately for each business under a single LLC.
Pros and Cons
- This structure is very flexible and can be used to deal with pretty much any situation. It is especially appealing because you don't have to file additional LLCs under the parent LLC, which generally have an associated cost.
- The main drawback here is that there is no limited liability separation. All entities under the parent LLC share liability.
- You have to file taxes using the same LLC for each business under its separate name. This can be cumbersome, especially if you have a lot of different businesses.
- The names also have to match up with your bank accounts and other financial records, which means it could be difficult to keep track of your finances.
2. Series LLCs
Series LLCs operate independently of one another under a parent entity. This means that the LLC is managed separately and its profits and liabilities are handled individually.
Pros and Cons
- Each business operates as an independent entity, allowing for easy tracking of profits generated by each activity.
- The entities are separate and has individual protection.
- Managing multiple entities requires additional effort and resources, including administrative tasks and filing fees.
- Operating businesses under separate LLCs may result in added tax liability if they do not align with a unified fiscal year or adhere to consistent accounting regulations.
3. Create an LLC Holding Company With Separate LLCs Under It
The third option is to create an LLC holding company to hold a separate LLC for each business venture.
An LLC Holding Company provides oversight and manages administrative responsibilities without direct involvement in daily operations .
Pros and Cons
- This structure allows you to keep all of your businesses under one holding company while still making it easy to file taxes.
- It is also an effective way to keep track of the profits and losses from each business since you only report them under a single holding company.
- Although this structure is less expensive than having multiple LLCs for each business, it does cost more money to start up the subsidiary company with its own separate LLC to keep the profits and losses separate.
Why Should I Have More Than One Business Under One LLC?
You should have more than one business under one LLC to protect the separate entities, diversify your business, and maintain privacy and autonomy among subsidiary companies.
There are five primary scenarios where structuring multiple businesses is advantageous for business owners:
- If you are launching a new business that doesn't align with your existing business ventures, creating a separate structure becomes necessary.
- In situations such as divorce or inheritance, splitting an existing related business among family members can maintain privacy for their respective business ventures.
- Whether you have multiple unrelated businesses or need to divide an unprofitable related business for tax purposes, separate structures can offer tax benefits.
- If your business constitutes a small part of a larger entity, such as a corporation, maintaining a separate entity can have its advantages.
LLC is one of the best business structures because it allows you to keep each business separate and distinct from the others (while still keeping your personal assets separate too).
Things To Put Into Consideration
Writing an LLC operating agreement can help you keep things organized when running multiple businesses under an LLC.
You will need to make sure that the operating agreement is tailored to meet the primary purpose of each business based on structure and management.
There are benefits as well as risks of running more than one business under a single LLC. Examine the nature of your business entity to determine which type of structure is most applicable to your company.
In other words:
- Running multiple companies under a DBA can be achieved through a single LLC, which is a straightforward and cost-effective approach. However, note that the LLC assumes legal responsibility for the actions and debts of the DBA firms.
- Establishing individual LLCs for each company can be complex, time-consuming, and costly. This method ensures that each firm is shielded from the liabilities of the other LLCs.
- On the other hand, creating a parent LLC with multiple subsidiary LLCs introduces administrative challenges and requires the registration of multiple entities. However, this approach may offer liability protection and tax advantages depending on the specific circumstances.
How Many DBAs Can an LLC Have?
An LLC can have as many DBAs as it wants as long as they follow state regulations and submit requirements.
Can Two Businesses Under One LLC Have the Same Name?
Two businesses under one LLC can have the same name if they include the master name of the LLC.
Is It Smart To Operate Multiple Businesses Under One Main LLC?
It is smart to operate multiple businesses under one main LLC if you intend to centralize management, limit expenses, and avail of tax benefits.
How to Start Operating Multiple Businesses Under One LLC
Operating multiple businesses under one LLC means creating a Series LLC, using a DBA option, or establishing a Holding Company.
Running multiple businesses under a single LLC instead of having multiple LLCs can be advantageous for your company if the structure is suited to the purpose and nature of the entity.
If you intend to establish multiple businesses under one LLC, you can seek a premium online legal service to address your concerns and guide you through the process.