Multiple Business Ventures Under One LLC
The answer is yes–it is possible and permissible to operate multiple businesses under one LLC. You can use one LLC to provide liability protection and cover both companies even if they are different types of businesses.
Types of Business Owners
Among our readers, we usually see people fall into two groups: The first is those who have little money, perceive their risk to be high, and are testing out business models. They’ll often have multiple business activities under one LLC. The second is a more experienced business person who has established profitability.
Pros and Cons of Single LLC vs Multiple LLCs
Having several businesses under one LLC can protect your personal assets and avail tax benefits. However, combining two businesses means the assets and income of each are no longer isolated.
You can run two or more businesses under one LLC by either running all activities under one name, or registering DBAs.
Another option is to create a holding company LLC that owns the LLCs of your businesses.
Using DBAs allows you to operate another business under a fictitious name.
Starting separate LLCs for each business insulates each from lawsuits and debts but requires registering more entities.
Consider the Liability Risk
If you have one LLC doing multiple different activities, the liability exposure could be increased. An LLC can be structured for variety of businesses to provide flexibility. Examples include professional service firms, retail businesses, and real estate companies.
While operating both businesses under one LLC may offer shortcuts, in the long run, these are probably not worth the increase in potential risk.
If you are in a high-risk business, forming separate business entities for each business is a sound strategy because it shields each from the liability of other ventures.
DBAs vs Multiple LLCs
Is it better to have multiple LLCs or DBAs? Having multiple DBAs will not protect the assets and income of each DBA from the other DBAs. For liability protection purposes, it is better to have multiple LLCs.
Practical Considerations and Costs
In terms of cost, a DBA is more cost-efficient than registering multiple LLCs. There is a registration fee and renewal fee depending on your state.
When Should a Business Use a DBA? DBAs allow business owners to operate under a different name without legally changing the company’s name.
A holding company and multiple LLCs can be expensive and can generate a lot of paperwork.
You don’t have to file a DBA to run multiple businesses under one LLC, but it would be advisable to speak with an attorney about your situation.
However, consider if multiple DBAs are the most strategic way to proceed. Issues can include:
- Higher overall risk
- Complicated tax filing
- Confusion for customers and vendors
- Additional costs for each DBA filed