In short – YES! Several states allow you to run multiple companies within one LLC. It is an effective way of safeguarding your property and taking advantage of the tax benefits specific to LLCs. It also eliminates the need to form new limited liability companies each time you launch a new venture, saving you on costs and administrative work.
These benefits ensure that entrepreneurs increase the size of their business while avoiding the complexities involved in owning several enterprises, each with its own LLC structure. Two options for running more than one business under a single LLC include establishing separate DBAs in one LLC or creating a series of LLCs under one umbrella LLC.
In the next section, we will enlighten you on these two structures to help you pick the most suitable one for your business needs.
Multiple DBAs Under One LLC
Jack is an entrepreneur who owns a fitness center under an LLC legal structure. He eventually succeeds, and his customers want to know where he acquired his training equipment and are willing to purchase them from him. Consequently, he started another business within the same LLC but using a different name from his fitness center.
From the above illustration, Jack will maintain a single LLC structure but run multiple businesses with different DBA names. In most states, there is no limit to the number of DBAs you can add under one LLC. Regardless of the number, everything concerning the company rules and requirements falls under the single LLC structure.
When Should You Register Multiple DBAs in One LLC?
As your business expands, it is crucial to be sure that the decision you make will favor your business and meet the goals you have in mind. The following situations may warrant consideration of registering multiple DBAs under one LLC.
- You want to rename your company name or brand different products or services using a catchy or memorable name not captured in the primary LLC name.
- You plan on opening a branch in another state as a foreign LLC, and you can register as a DBA without forming a new LLC.
- You are considering relaunching your business with a new name targeting specific customers or hoping to increase revenue.
- You want to have several divisions (with different names) having specialized activities. For example, a beauty company has divisions for women's facial products, hair products, and a women's salon.
Pros and Cons of Registering Multiple DBAs Under One LLC
As you consider the various situations in which you may need to register your new DBA under one LLC, it is vital to understand the pros and cons of this setup. The table below presents a summary of the most essential pros and cons.
|Offers flexibility and ability to address diverse situations||The asset protection of the LLC may be compromised.|
|No need to file additional LLC papers||Cumbersome filing taxes for different businesses under the same LLC|
|Cuts costs from forming a new LLC||Higher liability risk|
|Use it to test different business products and models||Confusing if all books are run under the same department|
Series LLC Under a Master LLC
Series LLC entails forming multiple limited liability entities under a master LLC. You can think of it as having a parent LLC and producing individual child LLCs or series. Even with the multiple layers, the company pays annual and filing fees for the parent LLC—although some states require separate filing.
Each series conducts business as a separate entity, but profits and losses are eventually reported in the parent LLC. Having your new venture as a series in your LLC enables you to segregate assets for your other business without forming an entirely new LLC.
This structure means if one series gets into trouble with debt or faces a lawsuit, creditors or the court cannot touch the assets of another series unless they go through a bankruptcy hearing against the series with financial challenges.
Who Can Use a Series LLC
Series LLC may not be the best option for some business owners because you still have to go through the process of registering an LLC, including creating a name, looking for a registered agent, and filing a series Articles of Organization. However, you can choose this option if your business falls under these categories:
- Real estate with several properties spread out.
- Franchise business, and you want to limit the risk to each branch or location.
- Investors in various investment fields who want to separate the risk level.
- Professional services, such as a law firm wishing to register each service or practice area independently.
- Contractors who are running different projects or different specializations.
Pros and Cons of Series LLC
Before deciding on starting a series in your LLC, you must consider its advantages and disadvantages and weigh them against your business needs, objectives, and goals. Let's explore these pros and cons in the following table.
|Pros of Series LLC||Cons of Series LLC|
|Lower cost, considering you are doing it under the parent LLC||Many states do not allow series LLC|
|Flexible in creating a new series and adding more||It may be complex to understand for other institutions like banks|
|Legal separation and each series is treated as a separate entity||Parent LLC must have efficient management to monitor all the series|
|Allowed to have separate managers and members in each series||If a series LLC is in a state that doesn't allow it, the child LLC may not be protected from liability|
What Do We Recommend in Which Situation?
After reading the above information, you may still be unsure which option to choose. Fortunately, we have done enough research, and we recommend you consider registering multiple DBAs under one LLC if you want a simpler structure with manageable administrative work, your main focus is rebranding or marketing your products or services, and limited liability protection between the businesses is not a major concern.
On the other hand, consider series LLC if you have significant investments in various industries. You desire a strong risk isolation structure to limit financial exposure between the businesses. You will benefit more (in terms of revenue and management) from the extra paperwork.
If you want to learn more about LLCs and how they work, visit ourresource pages and interact with highly informative and simplified articles that answer all your questions. You can also get in touch with us to learn more from our seasoned legal and entrepreneurial experts.
Frequently Asked Questions
What risks will I have in running multiple businesses?
Examples of risks you may experience in running multiple businesses include:
- Increased financial risks as you invest in each business
- Requires more effort in management
- Complex compliance issues
- Reduced focus on managing multiple entities
- Higher legal risks from potential lawsuits or fines
How do I register a legal DBA?
Registering a DBA is a straightforward process carried out as follows:
- Download or pick an application form from your state or county and fill it out
- Search the DBA name to ensure it's available to use
- Pay the filing fee as you submit the form
- Submit a certificate of good standing
- Await approval
Is it legal to use the same EIN for a series LLC?
It depends on your state laws. If it treats series LLCs as separate entities, you must acquire an EIN for each series. If it has a provision to have a single EIN under the parent LLC, then you do not need to get an EIN for each series.