For some of us, is almost like an addiction. Once you get a taste of launching one business, you’ll start itching to launch another. Sooner or later, that will lead you to some complicated questions about how to structure your different enterprises. entrepreneurship For instance, should you establish each business as its own separate ? Or would it make more sense to place each of your businesses under the same big umbrella? Come to think of it, is having multiple businesses under one LLC even possible? Limited Liability Corporation (LLC) For serial entrepreneurs, these are among the most pressing LLC-related questions (right up there with questions about the to form an LLC). Here’s everything you need to know about the prospects of starting multiple companies under the same LLC. best state Can it Be Done? First of all, it’s certainly possible to house multiple companies under the same LLC. In fact, if you want to run multiple businesses under the same LLC, you have two basic ways to go about it: You can run each of your companies under the same . LLC name You can register DBAs (“doing business as”), also known as fictitious names, for each business that’s part of your LLC. Wait… What’s a DBA? Basically, a DBA is just an assumed name, or a name other than the official, proper, legal name of your company. You may also hear the term trade name, which means the same thing as DBA. When you file an LLC, you can have as many DBAs as you want. You may choose to create a number of alter egos for your various companies, or you may choose to have none at all. It’s totally up to you. What are the Pros and Cons of Running Multiple Businesses Under One LLC? We’ve established that running multiple businesses under one LLC is something you can do. The question now is whether it’s something you should do. As ever, it’s helpful to weigh both the pros and the cons. The Upsides of Running Multiple Businesses Under One LLC We’ll start with some positives: Running multiple businesses under the same LLC is a really easy way to test different business models, products, and brand presentations. Initially, keeping everything under one LLC umbrella is probably easiest, though this might change if the businesses start to grow. With just one article of organization and one LLC annual report to worry about, this route is also pretty inexpensive. The Downsides of Running Multiple Businesses Under One LLC Naturally, there are also some drawbacks to consider, including: Because all of your liability is concentrated in one place, your liability risk will likely be a lot bigger. Maintaining non-separate books and other financial records may be a little bit confusing… and the more distinct businesses you have, the more confusing it will get. So Which Option is Right for Me? Based on these bullet points, it may seem like the pros slightly outweigh the cons. But really, it’s going to be different for every business owner. As a general rule, most entrepreneurs are going to fall into one of two categories. First, there are those with minimal money but lots of ideas. They want to test different approaches, and decide the best way to do so is to keep everything under one LLC. Nice, clean, and simple. Second, there are more experienced business owners, who have established their profitability and have a pretty clear sense of what they’re doing. For them, it makes more sense to operate each business as its own LLC, keeping the books and financial records totally separate. Will This Affect Taxes? Generally speaking, having multiple businesses under one LLC vs. having a number of LLCs won’t affect the amount you pay in taxes. However, it may affect how you file those taxes. If you have one LLC, you’ll be reporting all profits and losses together, no matter how many businesses or DBAs you have under that LLC. If you have two or more LLCs, you will file your income and losses separately, which might make a little bit more time-consuming. tax season And What About Bank Accounts? It’s also worth noting that if you choose to establish multiple LLCs, you’ll need to set up a separate LLC bank account for each one. And of course, that means having an entirely separate set of books for each of your businesses. Online spreadsheet and make this a pretty simple task, but still, it will require some organizational skills to keep everything properly managed. bookkeeping software Let’s Get Back to DBAs You may have some further questions about those DBAs we referenced earlier. For instance: Can you sign a contract or other legal document using the name of your DBA? The short answer is no, or at least, it’s not a very smart idea. It’s almost always appropriate to sign contracts using the actual, legal name of your company. Customers, vendors, and partners deserve to know who they are working with. This doesn’t mean you have to go out of your way to advertise the fact that your company is an LLC. For example, when signing a contract or even marketing your business, you don’t always have to put “LLC” after it. It’s good to include a note somewhere on your business website, explaining that it is an LLC, however. Keeping All Your Businesses Under One Roof The bottom line: An LLC structure provides a number of options for serial entrepreneurs. You can have several distinct businesses under one LLC umbrella, or you can decide to develop multiple LLCs. There are pros and cons to each method, and it’s really a decision for individual business owners to consider. If you do choose to have multiple businesses under one LLC, keep some of these important practical, legal, and logistical guidelines in mind. Author Bio Amanda E. Clark is a contributing writer to LLC University. She is a graduate of Eastern Michigan University and holds degrees in Journalism, Political Science, and English. She became a professional writer in 2008 and has led marketing and advertising initiatives for several Fortune 500 companies. She has appeared as a subject matter expert on panels about content and social media marketing. She regularly leads seminars and training sessions on trends and tactics in professional writing.
