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By now, it’s common knowledge that Delaware is the gold standard when it comes to forming an LLC, LP, or Corporation. The Delaware LLC is by far the most popular entity type for most entrepreneurs building a startup.
As a result, people often wonder if they can operate multiple LLCs under one umbrella LLC.
These are two completely different types of businesses, so it raises the question of whether or not the owner can provide both services under one LLC. Part of the consideration is, naturally, wanting to avoid additional costs for maintaining another LLC.
The answer is yes--it is possible and permissible to operate multiple businesses under one LLC. Many entrepreneurs who opt to do this use what is called a "Fictitious Name Statement" or a "DBA" (also known as a "Doing Business As") to operate an additional business under a different name.
However, just because it’s permissible and possible to operate several different types of businesses under one company (LLC or corporation) doesn't mean you should, as there can be downsides.
For example, if a lawsuit is filed against any one of the businesses, the assets of the others could be at stake. The result is that you put yourself at a higher degree of liability risk. In other words, if one of the pieces (businesses) within the LLC were to be held liable, then so could the entire LLC.
Instead, many people opt to file a new LLC for each of their start-up ventures. This isolates the risk by separating each business's debts and liabilities. There are, of course, additional maintenance fees, but these can be well worth it in order to protect your businesses.
If you would like more information or have any questions about forming your own companies, please contact us by phone (800-345-2677), Skype (DelawareInc), email or live chat. One of our knowledgeable business startup specialists will be happy to assist you.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such source’s content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.
There are 14 comments left for Can I Operate Multiple Businesses Under One LLC?Brandon Santee said: Thursday, May 17, 2018
Does a LLC and A DBA require two separate EIN numbers?HBS Staff replied: Monday, May 21, 2018
When you apply for an EIN, there is a line on the application for a DBA, so you can name your DBA and your LLC on the same form, thereby only needing one EIN number.www.overseas-medical.com/surrogacy said: Thursday, May 10, 2018
Excellent site you have got here.. It's hard to find quality writing like yours nowadays. I seriously appreciate people like you! Take care!!HBS Staff replied: Thursday, May 10, 2018
Thank you so much! We appreciate the compliment!Mokgohlwa said: Monday, March 12, 2018
Hi, what is the procedure of combining two or three different businesses?HBS Staff replied: Monday, March 12, 2018
Typically, a DBA is set up with the state and/or county that you are operating out of. Before setting up the DBA, your home jurisdiction may require you to foreign qualify there, if you have not done so already. We are not able to file the DBA, but we are more than happy to assist with the foreign qualification.
Your business is considered domestic to the state where formed, and foreign in all other States. To take advantage of the strong corporate law structure, Delaware is by far the most popular domestic choice.
If your business will have a physical presence by operating, hiring employees, banking or even holding an asset in a state other than its state of incorporation, clients will often qualify the business to operate in that state.
The foreign qualification process enables a company to transact business in a jurisdiction other than where it was formed. By failing to comply with local compliance issues, you may be putting the protection of your company at risk.
For further information on the DBA visit https://www.delawareinc.com/blog/dba-or-doing-business-as/
For more information on the foreign qualification process https://www.delawareinc.com/blog/what-is-foreign-qualification/
R said: Saturday, December 2, 2017
I own parts of 4 restaurants, all S-Corps. Core partners are the same but a couple have additional ones. I am not listed as an officer in any of them. Should I force the issue? Does it impact my tax benefits? Or is my tax status affected for my umbrella LLC just formed now by me as only member affected at all? I will likely add equity positions in other industries over time under the umbrella LLC.HBS Staff replied: Monday, December 4, 2017
Thanks for reading our blog. Unfortunately, we can't answer your questions as they are out of our realm of experience. A tax professional and/or a lawyer would be better suited to help you.Miles Fidelman said: Wednesday, November 1, 2017
Is this not the whole point of Series LLCs? Has the status been clarified at all when it comes to tax treatment, and filing requirements when operating in other states notably MA?HBS Staff replied: Thursday, November 2, 2017
The Series LLC is treated as a single entity that can have different series or classes internally in the LLC. Each series can hold its own assets, have its own members and conduct its own operations yet remain insulated from claims of members, creditors or litigants pursuing the assets of, or asserting claims against, another series. Typically, each series is considered a separate entity for the purposes concerning the federal taxation of the entity. Many accountants or tax professionals are still not familiar with the structure adding to the many uncertainties that make it difficult to actually utilize a series LLC
If physically operating the Delaware Series LLC in MA, people typically qualify the entity there as a foreign LLC. The entire process to qualify the Delaware Series LLC there only takes a couple of business days on average.