How to Have Multiple Businesses Under One LLC? (Explained)

Delina Chantel Yasmeh
Published by Delina Chantel Yasmeh | Author
Last updated: June 21, 2024
Methodology
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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.

Are you leveraging the full potential of your business structure?

Stay tuned as we uncover the key strategies and considerations that could dramatically reshape your approach.

Quick Summary

  • To operate multiple businesses under one LLC, utilize strategies like DBAs (Doing Business As), creating a Series LLC, or setting up a parent LLC.
  • Implementing these structures can streamline operations and consolidate tax filings.
  • Approximately 78% of small business owners initiate their ventures using their personal funds, with an average start-up cost of around $30,000, reinforcing the practicality of managing multiple ventures under a singular LLC framework to streamline financial oversight.
  • Based on professional experience, consolidating businesses under a single LLC can significantly streamline management and enhance asset protection, although careful planning and legal advice are recommended to navigate the complexities involved.


3 Ways To Structure Multiple Businesses Under One Roof

Top view of a busy workstation

There are three ways to structure multiple businesses under one roof, including:

1. Operate One LLC Using DBAs

Using a DBA name allows you to conduct multiple businesses under one limited liability company.

The reality underscores this flexibility, considering that from 2019 to 2020, according to the U.S. Census Bureau, there was a 24% increase in applications for new businesses, significantly highlighting entrepreneurial growth [1].

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.

"This setup is ideal for individuals seeking to grow their enterprise into a secondary brand while maintaining a single corporate structure. Remember, registering your 'Doing Business As' (DBA) does not inherently grant extra legal protections."

-Jon Morgan, Co-Founder & Chief Editor of Venture Smarter

Pros and Cons

Pros
  • This structure is versatile and cost-effective, eliminating the need for filing multiple LLCs, thus saving on associated costs.
Cons
  • 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

Pros
  • 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.
Cons
  • Managing multiple entities requires additional effort and resources, including administrative tasks and filing fees.
  • Separate LLCs may increase tax burdens due to misaligned fiscal years and inconsistent accounting practices.

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.

According to Wolter Kluwers, an LLC Holding Company provides oversight and manages administrative responsibilities without direct involvement in daily operations [2].

Pros and Cons

Pros
  • 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.
Cons
  • This structure, while cheaper than multiple LLCs, incurs higher initial costs due to separate LLC setup for subsidiary companies to isolate finances.

Why Should I Have More Than One Business Under One LLC?

A man studying how to have more than one business under one LLC

Consolidating multiple businesses under one LLC can enhance asset protection, diversify business interests, and ensure privacy among subsidiaries, drawing from my experience.

This approach simplifies management while maintaining distinct operational activities within each entity.

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. However, considering that, according to the U.S. Chamber of Commerce, approximately 78% of small business owners utilize their own funds to commence their operations, with the average seed money around $30,000, merging under a single LLC could offer financial pragmatism and streamlined management [3].
  • 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 is 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).

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Things To Put Into Consideration

Concentrated individuals while at work

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.

In my line of work, assessing the benefits and risks of operating multiple businesses under one LLC is crucial.

It's important to evaluate the specific needs and structure of your business to determine the best approach for your company's unique situation.

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.

FAQs

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.


References:

  1. https://www.census.gov/econ/bfs/index.html
  2. https://www.wolterskluwer.com/en/expert-insights/using-a-holding-company-operating-company-structure-to-help-mitigate-risk
  3. https://www.chamberofcommerce.org/small-business-statistics/

About The Author

Author
Delina Chantel Yasmeh, J.D./Tax LL.M, specializes in Mergers and Acquisitions at Deloitte and PwC, managing billion-dollar transactions. Educated in Accountancy at California State University and holding advanced degrees from Loyola Law School, she is highly skilled in tax law. Delina also dedicates time to pro bono work for women and children.
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Growth & Transition Advisor
LJ Viveros has 40 years of experience in founding and scaling businesses, including a significant sale to Logitech. He has led Market Solutions LLC since 1999, focusing on strategic transitions for global brands. A graduate of Saint Mary’s College in Communications, LJ is also a distinguished Matsushita Executive alumnus.
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