Is it Possible to Run 2 or 3 Businesses From One LLC?
One day you can add a new area of focus to your company, be more productive or move your online operation into a physical location (or vice versa).
Due to these fluctuating operations, business owners ask if they can operate more than one LLC. The short answer is that you can run many businesses under a single LLC.
You have a variety of things to think about before diving in.
It’s crucial to complete your research and assess the benefits and drawbacks because your path might influence you in some ways (including your liabilities and tax requirements).
What Options Do You Have If You Want to Run Multiple Businesses?
Let’s examine three standard methods for structuring multiple firms and explore each case.
1. Establish an LLC Holding Company to Hold Different LLCs
Another choice for managing many enterprises is to set up a separate LLC in Delaware for each business and combine them under a parent LLC that serves as a holding company.
A holding LLC often won’t be directly involved in any operations, but it will be important administratively.
We benefit from a few things in this situation:
- An existing business that wishes to fund the launch of a new venture can also find it advantageous.
- By structuring several businesses in this fashion, liability protection for parent LLC owners and security for individual LLCs from lawsuits and debts of other LLCs are provided.
We also face the following drawbacks in this situation:
- When structuring firms as parent companies and subsidiaries, seeking legal or tax advice is essential because this choice’s tax and economic effects might be somewhat complicated.
- Creating and managing several LLCs requires filing distinct Articles of Organization and establishing unique LLC operating agreements.
- Each LLC is responsible for keeping its books, payroll, bank accounts, and tax records.
2. Run Both Businesses From One LLC
One typical strategy entails creating one LLC (often called for the original or principal firm) and then establishing one or more DBAs (short for Doing Business As) for the new endeavor (s).
Both businesses can accept checks written out in their respective names.
Because there is just one business entity (and one EIN) to maintain, the business owner benefits from streamlined business compliance obligations. Tax season is still generally simple.
The business owner files a single tax return under the primary LLC to report income from the LLC and any DBAs that are a part of it.
The original LLC and any DBAs registered for it are protected from personal liability for the business owner.
But remember that the LLC and DBA are treated as single entities.
As a result, if one of the business lines experiences legal or financial difficulties, the assets of the other could also be at risk.