The short answer is yes! Setting up multiple businesses under one LLC is undoubtedly possible, provided you have a proper vehicle. When we talk about business vehicles, many entities use DBAs, Series LLCs, and LLC holding companies to scale or diversify their business without establishing separate entities. This article explores how you can bring the concept of an LLC with multiple businesses to life. We will also take a closer look at how these structures are different from each other, alongside their merits and demerits.
Viable Structures for Adding Multiple Businesses Under One LLC
The section below discusses different structures that can help establish multiple businesses under one LLC:
Doing Business As (DBA)
Registering subsidiaries as DBAs is one of the most affordable ways of branching out. It is not mandatory for DBAs to set up separate entities. It ensures affordability while scaling or leaping into other industries.
Fundamentally, a DBA is a fictitious business name that enables entities to operate under a name dissimilar to the legal name. It provides an inexpensive way to launch new ventures under the parent company.
The only downside that DBAs offer is the lack of legal distinction, which could endanger the parent company’s assets under testing scenarios, such as paying debts or winding up. Some states, including Florida, require applicants to publish the proposed name in a local newspaper to ensure compliance.
Series LLC
This structure comprises a parent LLC that accommodates independent entities, technically known as “series”. The presence of series LLCs is limited to a few states, mainly those in the USA. Unlike DBAs, series LLCs are more robust and stable, thanks to their ability to reinforce legal distinctions among entities serving identical or different industries. Under series LLCs, each entity has independent registration that ensures limited liability for the members.
LLC Holding Company
Setting up a holding company is another practical way to combine multiple businesses under one LLC. It can ensure increased tax savings and minimal compliance if you choose to register an LLC holding company in offshore jurisdictions like:
The steps below will help you register multiple businesses under one LLC:
Step 1: Choose a Viable Structure
Choose between the DBA, series LLC, or LLC holding company based on the business requirements and expansion goals.
Step 2: Constitute the Main LLC
Depending on the structure you have chosen, register your main LLC by filing a charter document like an Article of Organization with the state-specific authority. This entity will act as either:
The single LLC for all DBAs
The master entity in a Series LLC
The parent in an LLC holding company
Step 3: Set Up Additional Entities or Names
Depending on your structure, perform the following steps:
DBA: File an individual registration for each business name.
Series LLC: Create each series under the parent entity within the purview of the state’s specific norms.
Holding Company: Form independent LLCs for each business and register the parent as the holding entity.
Step 4: Devise Operating Agreement and Apply for EIN
Devise the charter document, such as an operating agreement, to showcase the internal structure. This agreement must detail the members' interest, which is formally documented using the LLC Membership Certificate. Apply for an Employer Identification Number (EIN) via the IRS (if you opt for a series LLC or holding entity).
Step 5: Open a Corporate Account
This step involves filing a separate bank account for each entity to keep liabilities and finances separate. Companies with DBA-backed entities can only have one bank account under their name.
Documentation Requirements for DBA, Series LLCs, and LLC Holding Company
Document Types
DBA
Series LLC
Holding Company
Registration form
DBA registration form
AOA (boasting series clause)
AOA (for each LLC)
Operating agreement
Not required
Operating Agreement for parent and series LLC.
Operating Agreement for parent and subsidiaries LLCs
EIN Application (IRS Form SS-4)
If the workforce is available
Typically, one per series
Mandatory for the parent LLC and its subsidiaries
Business Licenses/Permits
Based on local rules
For each series, as needed
For each LLC, as needed
Bank Account Documentation
Account under DBA name
Separate accounts are recommended per series
Separate accounts for each LLC
Perks of Running Multiple Businesses under one LLC
Companies that wish to operate as independent entities under an LLC can experience the following benefits:
Simplified Management Overhead
Overseeing one company is typically less tedious than supervising multiple. This can lead to:
Low incorporation costs
Streamlined filing with the state, thanks to minimal documentation
Reduced administrative burden compared to managing full-fledged subsidiaries.
Potential Cost Savings
Bringing multiple businesses under one LLC can lead to cost efficiencies, including:
Lower accounting and legal expenses compared to maintaining multiple independent companies
Reduced reporting costs
Minimal state-specific business maintenance expenses.
Access to significant discounts on certain insurance products.
Inter-business resource sharing
From office space, IT systems, and customer bases to capital, companies operating under a single LLC share a range of resources to achieve economies of scale.
Potential of Fostering New Brands
This arrangement makes it easier for a company to roll out multiple brands without needing to establish separate entities, ensuring affordability while expanding. This serves as a boon for companies experiencing budget constraints in meeting their expansion goals.
Unhindered liability protection
Liability protection stays intact no matter how many entities a parent company has. It signifies that the business owner will continue to enjoy limited liability regardless of the expansion potential.
Cons of Establishing Multiple Businesses under one LLC
Setting up multiple businesses under one LLC also has some demerits, as discussed below:
Complex management
Adding too many entities can backfire on your decision to run multiple businesses under one LLC, especially if you lack adequate operational and financial resources.
Fragile asset protection
The lack of legal distinction brings all the entities to the same page, exposing them to the risk of losing their assets in legal proceedings. This drawback is more prominent in DBA-backed entities. It indicates that the parent company’s assets would be at risk if any of the subsidiaries fail to maintain compliance.
Accounting and financial complexity
Keeping tabs on cash flow, assets, and liabilities for each distinct business can become complex for the parent company. Seldom, the accumulation of funds and transactions can lead to:
Inaccurate bookkeeping
Clerical error during tax preparation
Miscalculation of individual profitability and company performance
Complications in obtaining credit or selling a specific entity
Operational issues
Handling different businesses with distinct operational requirements, customer bases, and conflicting interests can create operational inefficiencies. Decisions made to benefit one business may adversely affect another.
Is it better to have multiple businesses under one LLC?
The decision to club various entities under one LLC is beneficial as long as:
It does not hinder your ability to focus on primary activities.
You have ample resources to oversee the operation of every entity.
Your decision-making power stays intact.
You have an adequate workforce to cater to various requirements posed by different entities.
You are aware of tax liabilities and asset protection.
You know how to withstand threats against the company’s assets if one of the entities goes non-compliant.
Key Takeaways
Choosing Doing Business As (DBA) is a viable and the most affordable option to club multiple entities under one LLC. The lack of legal distinction is the only downside it has.
Series LLCs can accommodate as many entities as possible with an independent legal identity. It is more robust and stable than DBAs.
The cost of setting up an LLC holding company would be considerably higher than that of series LLCs and DBAs.
The sustainability of overseeing such an arrangement depends on the owner’s ability to manage diverse operations and tax obligations.
Conclusion
From business diversification, increased sales, and branch launch to enhanced market reach, there could be a number of reasons an entity seeks to branch out. While there are different ways to do it, most businesses prefer to run multiple companies under one umbrella. It not only helps with risk fencing but also provides growth opportunities. However, these perks can get exhausted if proper planning is missing. That’s why we recommend researching everything concerning this arrangement. You can also team up with a certified agent or a reliable service provider like BSW.
Business Setup Worldwide's (BSW) expertise in incorporation endeavors and local laws is second to none. Our unwavering commitment to yielding assured results has helped us boost our client count to over 7000. With 8+ years of experience, BSW stands tall as one of the finest service providers, specializing in LLC vs. LLP formation, offshore setup, taxes, accounting, and business consultancy, among others. Contact us today to make your business thrive like never before.
Aaron Richards is a seasoned expert with over six years of
experience who specializes in offshore company formation, trust
and foundation setup, and corporate services. Through his blogs,
Aaron shares valuable insights to guide clients in making informed
decisions about their global business needs.
Frequently Asked Questions
1. How do I put multiple businesses under one LLC?
You can do so either via registering entities as DBAs, setting up series LLCs, or establishing an LLC holding company.
2. Is it possible to operate two businesses under one LLC?
Yes, as mentioned above, you can choose one of the above structures to serve such a purpose.
3. How can I register an entity as a DBA?
You can apply with the concerned authority or team up with a service provider like BSW to serve such a purpose.
4. What documents do I need to arrange to register a series LLC?
Some standard documents include the operating agreement, AoA, certified agent consent form, Employer Identification Number (EIN), and bank account documents.
5. How can I set up an LLC holding company?
Holding company formation involves filing an incorporation application with the state-specific authority and securing an EIN. Consult your agent or service provider, like BSW, to gain more clarity on the requirements.
