It is possible to operate multiple businesses under one LLC. Use "Fictitious Name Statement" or "DBA" to operate additional business under different names.
Tax Implications and Professional Advice
Tax implications vary. Consider income allocation, tax brackets, deductions or credits. Consult a tax professional.
Pros and Cons
Having multiple businesses under one LLC can offer potential cost savings, simplified paperwork, enhanced liability protection, streamlined management, brand cohesion. However, carefully consider the challenges.
You can structure multiple businesses under one LLC. Consider circumstances and goals. Options include:
- One LLC
- Multiple LLCs
- Holding company structure
Pros and cons for each. Speak with an attorney.
Using existing LLC and DBAs is simple and low-cost. However, the LLC is liable for lawsuits or debts of DBA businesses. Separate LLCs insulate each from others but require registering entities.
Battle-tested practice is creating individual LLCs for each business. Recommended by professionals to limit risk.
Separate LLCs are better if an experienced owner wants financial separation to track profits, losses, and expenses. More paperwork but a registered agent can help. Set up an accounting system for each.
Considerations for Multiple Businesses Under One LLC
You can use "Doing Business As" (DBA) names to have multiple brands under your LLC. For example, a trucking LLC can also offer real estate services under separate DBA names. This allows centralized management and branding while avoiding extra LLC costs.
Come tax time, report income from each DBA on the LLC’s single tax return. Another option is a holding company structure where separate LLCs are "held" under the main parent LLC. This offers financial separation but requires added administration.
A key benefit of one LLC is liability protection extending to all DBAs. But, if one DBA faces legal or financial issues, it risks the entire LLC. Separate entities are ideal for isolating each business.
Deciding on Business Structure
Should you put multiple businesses under one LLC? Yes, but consider liability risks, tax implications, and other factors.
If selling a business later, having multiple companies under one LLC can complicate reporting for buyers. Still, operating multiple small businesses under one LLC lets owners test ideas while benefiting from centralized management.
Inexperienced, low-revenue owners may use one LLC to start. Advanced owners might prefer separate entities for financial separation, despite the additional administrative work. Consult an attorney to tailor the best structure for your situation and goals.
Downside of Multiple LLCs
Is there a downside to having multiple LLCs? Separate LLCs better isolate each business’ operations and finances, but this comes at a cost of increased complexity. Consider all factors before deciding on your business structure.