The popularity of LLCs continues to expand, with more and more new businesses being formed every day. Creating your own business can be as exciting and as rewarding as it is nerve-wracking: you want to succeed, and who knows where that success may take you? Seeing your business blossom is of course, the primary goal, from initial conception to the day you have the paperwork declaring that you are now legally in operation.
With your business up and running – and hopefully successfully – it may not take long until you begin to wonder what else you could do with your company, be it purely to increase profit or to expand the service/s you already cater for. With that in mind, it may also be possible that, should you have one business now running at your command, you wish to venture into a second enterprise altogether – or even more.
Business Versatility With Your LLC Service
So, you have one business already – do you need to form a brand new LLC or can you operate a new business with the one you have already? The answer is ‘YES’ you can – however, there are pros and cons of this, which you need to be aware of before deciding on whether to have separate companies or operate all of your businesses under the one umbrella company which is your original LLC service. Dmitriy Kondratiev, Legal Board Advisor, tells how to open an LLC in an article.
LLCs offer a lot of manoeuvrability, which is one reason for their popularity remaining undiminished. An LLC can allow you to operate any business service you like. Furthermore, providing that you alone are the owner, LLCs are so free of confinement that you can expand infinitely, technically running multiple ventures from under the same roof.
To do this, it requires that you file and register a DBA with the Secretary of State for the State in which your LLC is registered. This is inexpensive and a fairly simple procedure outlining the basic nature of the business, some personal information, and the name of the new company. You will also, of course, need to check and ensure that there is not already a business in operation with the name you are intending to brand yours with.
DBA Within Your LLC Formation
DBA stands for “doing-business-as”, also sometimes referred to as ‘fictitious business names’.
For an example of how it works, your initial LLC – your main holdings company – is a painting and decorating business, “West Philadelphia Home Decor LLC”. Your new business is a home garden landscaping enterprise, and you name it “West Philadelphia Landscaping”. This would mean that the official name for this second business is “West Philadelphia Home Decor LLC d.b.a.West Philadelphia Landscaping”.
It’s important to be aware that you would not be able to put LLC at the end of the name of your landscaping company because of the fact of having created it under the umbrella of your original home decorating business, which is your actual LLC service. Should you wish to have the landscaping business as an LLC then that would require you to register it as its own separate entity by once more going through an online business formation service. That being the case, this second home improvement business you have created would simply go by the name of “West Philadelphia Landscaping” when creating any promotional materials or signage for it.
Something else to take note of: a DBA does not give you rights to whichever name you give it. Your original business name is secured, having been registered as an LLC. If you then begin to operate another business under your LLC as a DBA, there is nothing stopping someone else from using this name and registering it themself as an LLC, something which of course could be very damaging, as well as confusing in regards to public perception and to your reputation.
One good reason that many people opt for other business incorporation under their LLC banner is that all of your businesses – be it just the one or even if you had a dozen d.b.a.’s – will be taxed with the same ID number – the one given to you with your original business formation service. In this way, your original LLC can be seen as something of a seed should you wish to branch out and pursue other ventures – or should the success of your current business demand it.
So, the answer is yes: it is entirely possible to have multiple businesses under one llc and there are many positive reasons to do so – but what about a good reason not to go down this path should you decide to create one or more new businesses?
The Risk Factor of Multiple Businesses With LLC Services
Without any shadow of a doubt, the biggest drawback is that should something go wrong, the risk is that the domino topple will affect every business that you are running. Your LLClc is the literal heart of anything else that comes after it.
If one of your businesses takes a hit – they all take it. Any liability that comes the way of one company will effectively come the way of all of them. This huge liability is where the benefit of registering each business as its own entity can pay off. That way, should one of your enterprises find itself in any kind of trouble, especially financial – and most importantly including bankruptcy – the assets and income of your other business/businesses are isolated, kept separate and safe from any harm should one venture happen to collapse.
The insulation and protection that comes from forming all of your business ventures as their own entities are, unsurprisingly, the top reason that many LLC owners won’t risk expanding under their established company’s roof. For all of the many benefits and the simplicity of utilizing your LLC as a multi-business umbrella, this particular con is one to give some serious thought to when looking at your options.
To run multiple businesses under one LLC, ultimately, is cheaper – especially when first starting up, as for example, you would then have only one annual filing fee and the general administration of your businesses overall would be simpler, but the potential for absolute disaster if one project runs into trouble is so big that it can be well worth a risk negating and playing it safe by establishing singular LLCs. Other countries like the United Kingdom use company formations as a way to create new businesses.
So, having multiple businesses under one LLC is easily – and relatively cheaply – possible. LLCs are so versatile they were virtually made for just that – but it’s a big gamble and it’s up to you whether the risk is one you want – or can afford – to take.
Author’s Bio
Dmitriy Kondratiev, chief Editor of LLC.services, associate in Axon Partners.
Experienced lawyer (Intellectual Property, Patenting, Contract law, Labor Law, International Private Law).
Worked with IT-companies Webxloo (Delaware), Autoxloo (Florida), SCC (Delaware)