A lawyer recommended forming a C corporation for the media/publication business to separate it out since I plan to sell it. To establish an LLC, you can expect to pay a higher registration fee and recurring renewal fees. If you already run an LLC and want to branch out, a DBA gives you that opportunity.
A holding company can be expensive to manage. The more LLCs you have, the more complicated your structure becomes. You have a few options when structuring your different business ventures. Each has pros and cons so consult a tax professional or attorney before deciding.
The general rule is: A separate company for each business. Any valuable assets kept separate from a trading business – these are generally held in a trust.
If you want to operate multiple businesses under one LLC, create a “doing business as” (DBA) name. Another common option is to file one LLC or corporation, and then set up multiple DBAs for each of the other ventures.
The most attractive element of owning multiple LLCs in a holding company is the separate limited liability it offers. Structuring multiple businesses this way also offers protection for the LLCs against lawsuits and debts of the other LLCs.
Potential Issues with Multiple DBAs
While DBAs allow your business to operate under multiple names, hosting multiple DBAs at the same time can also present some issues:
- Higher risk by having "arms" of the business in the same company.
- Complicated tax filing.
- Confusion for customers and vendors.
- Added costs for each DBA filed.
You have to prepare for K-1s for all members. Members’ personal returns should be filed with K-1s. The taxation process for LLCs becomes complicated over time.
The concept of operating multiple businesses under one LLC offers a versatile approach to entrepreneurship. All approaches have advantages and complexities. Ultimately, seeking professional guidance and aligning with long-term goals will pave the way for success.