Already have a successful business running and want to start a new one? Or, do you want to start working on multiple business ideas together?
In both cases, you should consider having multiple LLCs to separate the income, assets, and liabilities of each of your businesses.
Let’s take a look at the benefits of having multiple LLCs, when should you consider forming new LLCs, and the things you need to consider while structuring multiple LLCs.
Why Is Having Multiple LLCs a Good Thing?
Having multiple LLCs offers many benefits, such as:
- It helps you limit any potential liability risk between each of your limited liability companies.
- It makes it easier to attract investors for one particular business (LLC) and even sell a business to someone else.
- When you form a new LLC for a new business, you will be eligible for the incentives offered to new businesses.
- Running multiple businesses under a single LLC can increase overall income and tax liabilities. Whereas, forming separate LLCs can help reduce your taxable income.
- You can have different management structures and taxation structures for each of your LLCs. Similarly, the number of members can vary as well.
When Should You Consider Having Multiple LLCs?
You can form multiple LLCs as a sole business owner or as one of a group of owners.
You should consider having multiple LLCs if:
You Decide to Start Another Business
If you’re already running a business and want to start another one, having a separate LLC for your new business will be a good decision. It will help minimize your risk if one business fails.
For example:
If you run a successful agency and decide to open a cafe, you should form a new LLC for your cafe. Even if the cafe fails and you lose money, it will not put your agency assets at risk.
You Launch a New Product Line
Many business owners consider forming new individual LLCs to launch their new product lines. This helps them protect the assets of their existing LLC if the new product fails.
You Run a Rental Real Estate Business
As a rental real estate business owner, you can consider having a separate LLC for each building you own and want to rent out. This will help you ensure that any lawsuit involving one property will not risk your other properties.
What Does Having Multiple LLCs Take?
While having multiple LLCs can seem like a blessing, you need to understand that forming and maintaining multiple LLCs is more complicated than running just one.
Having multiple LLCs means:
- More paperwork
- More complex accounting requirements
- Higher maintenance cost (filing fee and annual fees for each LLC)
- Additional tax forms
- Additional annual reporting
- Greater chances of conflicts of interests
Regardless of the number of LLCs you want to form, our business formation experts can take care of all of the formation paperwork for you. It can save you time and money and ensure that all legal formalities are completed correctly.
We also offer expedited application processing when you form an LLC with us.
Frequently Asked Questions
1. Should I have multiple LLCs?
If you run two or more separate businesses, having multiple LLCs makes sense. It can help you minimize your risk if one business fails. It can also protect your other businesses’ assets if one business lands in a lawsuit or debt.
2. Can I use one LLC for multiple businesses?
Yes, it is possible and permissible to operate multiple businesses under one LLC. Most business owners who do this file a DBA (Doing Business As) to operate another business under a different name from their LLC name.
However, you should not follow this practice. If a lawsuit is filed against any one of the businesses, you will not be able to protect the assets of other businesses under your LLC.
Having multiple LLCs for different businesses is always a better choice as it will help you separate the debts and liabilities of each business.
3. Can a person have multiple LLCs?
Yes, a person can have multiple LLCs.
If you have multiple LLCs, you will have to complete formation paperwork and pay the filing fee for each of your LLCs. You will also need to maintain separate bank accounts and financial records for each of them.
4. Is it better to have multiple LLCs or DBAs?
Getting a DBA will allow you to operate another business under a fictitious name other than the name of your LLC. You can use individual business names, accepts payments, and market your businesses individually.
You will just need to pay your annual LLC fee for one LLC (and not for each DBA). You can report income earned from each DBA in a single tax report as the LLC owner.
Having multiples DBAs will not protect the assets and income of each DBA from the other DBAs. If one of your DBAs gets sued, all other DBAs under the LLC name will be liable.
For liability protection purposes, it is better to have multiple LLCs for each of your businesses.
5. Do I need a separate EIN for each LLC?
You will need to acquire a new EIN for your new LLC if:
- You form a new LLC with more than one member.
- You form a new single-member LLC and choose to be taxed as a Corporation or an S-Corporation.
- You form a new single-member LLC that has an excise tax filing requirement or an employment tax filing requirement for your employees’ wages.
You will not need a new EIN if you form a new LLC as the sole owner, do not choose to get it taxed as a Corporation or an S-Corporation, and do not have employees or excise tax liability.
However, you may still want to get a new EIN for banking purposes.
Filing for an EIN doesn’t have to be complicated. You can use our tax ID application to file for your EIN online in just five minutes.
Ready to Form a New LLC for Your Business?
The best way to start another venture is to form a new LLC for it and get going.
Pick a business name. File Articles of Organization with the Secretary of State, create an LLC Operating Agreement, and obtain your EIN/Tax ID.
Do you need help forming an LLC for your new business? We’ve got you covered.
One, simplified application. Hassle-free filing.