By now, it’s common knowledge that Delaware is the gold standard when it comes to forming an LLC, LP, or Corporation.
Delaware’s reputation is world-renowned for having the strongest corporate law structure, and this reputation is what solidifies Delaware’s position as the most popular place to incorporate.
People often inquire about running multiple different business ventures under the same Delaware LLC. They want to know if they can operate several real estate properties, retail stores or car dealerships, for example, under one LLC.
Can this be done? Sure, Delaware LLCs can conduct lawful business activity anywhere in the world. However, should this be done?
From a cost perspective, it does make sense, if that’s the only concern. You end up spending less money to set up a single Delaware LLC, as opposed to forming multiple LLCs for each part of your business.
You would also likely incur fewer annual maintenance fees, lower annual Franchise Tax and a single Registered Agent Fee.
However, as far as limiting the liability of the company, which is the whole point of forming an LLC in the first place, then the answer is no, you should not operate multiple parts of a business under one LLC.
Why not? The answer is pretty simple.
If you were to run different businesses within the same LLC, you would possibly increase the liability of the LLC as a whole.
Since the businesses would be tied to one another via the one LLC, you could be risking all the businesses if something were to happen to one of them (such as a lawsuit, fire or fraud).
If one of the pieces of the LLC were to be held liable, then so could the entire LLC.
Although you may want to keep the cost of your multiple businesses down, it is typically not worth the risk, as it could become significantly more problematic than it’s worth.
The stalwart and reliable traditional LLC is still usually a business owner’s best option. Most entrepreneurs opt to set up separate LLCs for each of their business ventures.
This way, the debts and liabilities of each LLC are completely separate from one another.
If you have any questions about forming your Delaware LLC, we can be reached at 1-800-345-2677, Ext 6133 or 302-644-6265.
THE ABOVE ARTICLE IS NOT LEGAL ADVICE AND SHOULD NOT BE CONSTRUED AS LEGAL ADVICE. IT IS NOT AN ATTEMPT TO LIST ALL CONSIDERATIONS THAT MIGHT BE ADVISABLE BY AN ATTORNEY FAMILIAR WITH DELAWARE LLC LAW. IF YOU REQUIRE LEGAL ADVICE, WE RECOMMEND YOU ENGAGE THE SERVICES OF A LICENSED ATTORNEY.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.
There is 1 comment left for How to Structure Multiple Business VenturesMiles Fidelman said: Tuesday, December 27, 2016
Is that not a reason for using a series LLC? Of course, we're still waiting to see what aspects of the structure hold up, in what jurisdictions.HBS Staff replied: Wednesday, December 28, 2016