Some business owners may have their fill with just one business. (Let’s face it, running a business can be demanding.) But what about going above and beyond and starting two or more businesses. How can that be done? Can these other businesses fall under the original Limited Liability Company (LLC)? Is it even allowed? Are there options in structuring these new businesses? And what happens during tax time?
If you’re already running a company but are itching to expand with a new service, product line, or get into an entirely different industry, then you’re in the right place. We will not only help you understand what you can do, but also how to best achieve your goals in running multiple businesses.
Can You Have Multiple Businesses Under One LLC?
We will save you from suspense and let you know right off the bat that, yes, you can have multiple businesses under one LLC. In fact, you can have as many businesses as you like. But the real question that needs to be asked is should you establish additional companies under the umbrella of your LLC? Ultimately, that will all depend on your needs and what you are looking to achieve.
Options for Running Multiple Businesses Under One LLC
When it comes to running multiple LLCs, business owners and entrepreneurs have a few options to consider as far as the structure of their organization goes. Here’s the breakdown.
Single Limited Liability Company (LLC) with Multiple DBAs
Many business owners may opt to create a DBA — or “Doing Business As” — under their original formation to cover the operation of a new business. This would make the most sense if your businesses are somehow related. In some states, a DBA is called a trade name, fictitious name or assumed business name.
For example, you own a butcher shop, ABC Butchers, but now what to create a restaurant where you specialize in BBQ food: DEF BBQ Eatery. Your BBQ business picks up, and now you’re expanding and creating a catering business GHI Butcher Bros. Soon after, you have a food truck called JKL Spanky’s BBQ Food Truck.
Under this model, all three subsidiary businesses are organized on the primary LLC, ABC Butchers. Contracts are signed under ABC Butchers and all invoices and payments are made under the one LLC operating in this model. Following this model, you can add more DBAs as you go. Who knows? Spanky’s BBQ Sauce may be the next hot item at your local grocery store!
Multiple LLCs
In this model, separate LLCs are set up, each independent of the other. This means that all the requirements for running one LLC are multiplied and now apply to the other LLCs. This would include filing annual reports, assigning a Registered Agent, getting an EIN and paying taxes separately for each individual LLC.
Setting up multiple LLCs is a strategy that business owners can use to expand and grow their business. This can either entail a branch connected to their current operation or an attempt to try something completely different,
Series LLC
Having a Series LLC means there is one LLC at the top of the structure acting as a “parent” company and managing all the subsidiary LLCs. This parent company, which many states also consider a holding company, is the main LLC. Under this structure, the main LLC does not conduct any business of its own.
Under a Series LLC structure, the parent LLC just organizes and oversees the other "mini" LLCs. This is also referred to as an “umbrella” company. Many real estate developers opt to use this structure. It basically allows them to create an LLC for each property, or "mini" LLC, protecting each company/property from the liabilities and debts of the other properties.
Note, however, that not all states recognize Series LLCs. In that case, creating a holding company may be the best alternative. Just as in a Series LLC, a holding company does not conduct any business on its own. Rather, it "holds" the assets, whether its stock, real estate or other forms of investment of the subsidiary LLCs.
Advantages and Disadvantages of Running Multiple Businesses
Following on the three different models used above, there are a number of considerations a business owner should take when deciding which multiple businesses strategy to implement.
Single Limited Liability Company (LLC) with Multiple DBAs
Advantages:
- Lower administrative costs since you are operating under one LLC
- Tax filing is less complicated and all reporting falls under the single LLC
Disadvantages:
- Additional costs to file for each DBA
- Higher risk and loss due to debt and liability since each DBA is under the one LLC
- Potential confusion with vendors and customers since invoices and payments will be under the LLC and not the DBA
Multiple LLCs
Advantages:
- Each LLC’s liabilities and debts are kept separate from the other businesses
- No risk of confusion with vendors and customers as each LLC has its own separate banking, billing and invoicing connected to the individual LLC
Disadvantages:
- Higher costs (filing fees for each LLC, annual fees, Registered Agent, etc.)
- Separate tax filings for each LLC
Series LLC
Advantages:
- Centralized control with a dedicated management structure in place to run the separate LLCs
- Each LLC’s liabilities and debts are kept separate from the other businesses
Disadvantages:
- Not viable for many businesses and works best for spin-offs of the original company
- Same costs and requirements as having multiple LLCs
How Do I File Taxes If I Have Two Businesses?
The least complicated approach is to use the single LLC structure with DBAs. The accounting under this model is simplified since all the DBAs fall under the LLC and you will report income on the same Schedule C.
For the multiple LLCs, each individual LLC must operate as its own entity and file taxes separately. As highlighted under the disadvantages of having multiple LLCs, this can be expensive and create a more complicated picture when it comes to filing taxes.
Series LLCs file under the parent LLC at the federal level, avoiding the need for each LLC to file separately. Although this may be considered an advantage, each state that allows a Series LLC may have different tax filing rules at the state level, and some require each LLC in the series to file separately, creating a lot of extra work.
Start Your Multiple Businesses with Ease
Whether you're just starting and about to launch your businesses or are a seasoned pro and are looking to form your latest LLC, Incfile can help you jumpstart your entrepreneurial goals or bring your latest business ideas to the next level. You can get started with a $0 + state fee LLC.
Peter Mavrikis
Peter Mavrikis is an author and editor with over 25 years of experience in publishing. He has worked as the Editorial Director for Barron’s Educational Series, as well as Kaplan Test Prep, where he ran the test prep, foreign language, and study guide divisions. Peter has also written several books on history, exploration, science, and technology.
