In part one of this series, we discussed the various options to incorporate multiple businesses while keeping each business as a separate entity. But what if you want to keep all of your businesses under one roof? If you have multiple business ventures, it might make more sense to keep your businesses as part of one unified brand if the various ventures share similar marketing strategies and target similar customers.
For example, if you offer event planning services and also run a separate website that sells customized invitations, you could host both of these ventures under the same corporate umbrella. How do you create a business structure using one business entity to hold multiple businesses under one corporate umbrella?
Here is one of the simplest and most effective solutions:
How to host multiple companies under one umbrella business structure
This may be done by creating an LLC, S-Corporation or C-Corporation to hold multiple DBAs for the various other ventures that are part of the main “umbrella” business structure.
For example, if someone has three businesses: one consulting service, and two separate websites that sell products related to the consulting work, the business owner could create one overarching LLC or corporation (depending on which choice of business structure provides the most tax advantages) called something such as “Mary Smith Enterprises, LLC” or “Mary Smith Enterprises, Inc.” and then file DBAs (“Doing Business As”) to include each of the subsidiary websites as part of its overall business structure (LLC or corporation), even though they have different names. This is an easy way to structure multiple businesses to potentially minimize tax liability (depending on the business and owner’s tax filing status) and provide added credibility for the business operations.
Tips for structuring multiple businesses under one LLC:
You don’t have to disclose the name of the LLC. If you have multiple businesses that are not seemingly related to each other, you can keep doing business under each business’s name without being legally required to disclose the name of the business which holds the DBAs, (your LLC, corporation or partnership) as part of your marketing.
For example, if Sue Smith runs three companies – “Sue’s Cookies,” “Flowers by Sue”, and “Sue’s Soup Shop,” she can keep using those separate brand names for each business without having to tell anyone that the businesses are actually under the umbrella of “Sue Smith Enterprises, Inc.” Structuring multiple businesses can save on paperwork. Keeping each business separate might be a valid option for certain situations, but it can lead to additional paperwork and expense. Keep all the tax information in one place: If you have multiple DBAs under one LLC or corporation, you can keep the earnings and expense tracking for all of your businesses under that one corporate structure, making it easier to pay what you owe (and save as much as you can) at tax time.
Cover all your bases. Are you going to be doing business under any other names, other than the “obvious” ones? It’s easy to file a separate DBA for each possible permutation of your business name, for example, by filing a DBA for “Sue’s Soup Shop” as well as “SuesSoupShop.com.” By filing an LLC or forming a corporation with multiple DBAs under the business “umbrella,” you may be able to streamline your business bookkeeping and simplify your marketing. Get it done right by structuring your multiple lines of business in a way that maximizes your marketing abilities.
Understand how to structure multiple businesses under one LLC or Corporation to serve as an umbrella.
In part three in this series, you may explore alternatives to using a single business entity with multiple DBAs to expand your business enterprises.
Hi Holly,
Thanks for the great information. I am a CPA and I have recently started a LLC for providing bookkeeping and tax services. I am also planning to start a website for selling insurances under the same company. I am little confused on the general liability and error or omission insurance that I would need. Do I need separate general liability and error or omission insurance for each type of business under my company?
Thanks for your help!
Hi Holly,
We currently have a corporation that was originally started with 1 dba. We have since added 2 other dba’s that all do different lines of work. The 1st dba does lawn care, 2nd metal building construction, and 3rd home building. My question since all of the employees, owners included, all perform work daily for each company depending on what needs to be done that day, should we separate them out into individual entities under the main corporation or leave them as they are. I have no idea how I would separate the payroll out, as well as all of the assets. I am also wondering if I can have one GL policy that will cover all dba’s instead of having to have 3.
Here’s a question… For example an established company decides to start up an additional venture. Essentially a shell ( something highly practiced in the 70’s 80’s) however the manager who sets up the shell does the process wrong and instead creates a relative company ie a DBA LLC . The DBA LLC has its own UBI/EIN and name. But obviously no license; now the companies act separately without the knowledge that infact they’re still one in the same. Tax season rolls around and the now Parent company , a multi million dollar generator, has acquired an IRS issue – they’re behind. Arrangements are made and the company seems to be meeting the IRS needs; However, unexpectedly the bookkeeper notes automatic, non-approved , sporadic withdrawals in various sums out of the relative company. When – in fact it has just reached its one-year anniversary and has yet to acquire taxable services. The two companies should have been taxed seperately- but as it appears they are not. The Q/A : When structuring other Businesses unintentionally under a parent company or umbrella company is it typical for that new company to absorb the debts of the parent company?
This has me all slightly confused and overwhelmed, I’ve been googling all day. Hope you can help. My daughters have started a slime business already named and now they want to make bath bombs which we came up with a name for also. They want to sell at local events, flea markets and online such as their own website and those like Etsy and Ebay. Instead of two separate licenses, I was thinking of going with an LLC called Girlz Club to cover both businesses, but run them as the name they came up with for buyers to easily know what is being sold. Is that okay to do? Also I am revamping my old/expired business to selling mostly personalized eventful items such as toasting glasses, cake toppers, labels for favors, tshirts, etc. I also want to get a business license for my business and change the previous name I first registered my EIN under. I would stay a sole proprietor until I can open a storefront then I would change to an LLC. The thing is my children are 8 and 12 so I’m sure I would be the main member of their LLC for awhile if registered. I’m not even sure how filing taxes would work…ugh. Should I just get my license and have them run under mine until they can get their own? This will give me assurance that they are serious about having a business and I can get things moving for mine. Is that something that makes sense? P.S. I tend to overthink things.
Hi Holly,
Thanks for the article. We are forming a LLC for a tech company that will eventually have multiple tech product companies under it. We do not need to raise capital for the parent LLC but we will need to raise capital for the sub LLC’s. So for example, if the parent company is “LLC A” and we have a sub LLC (LLC B), can we exchange equity for capital into “LLC B” solely without having to give equity away from the parent LLC A? Thanks.
Hi Miguel,
Generally speaking, the answer to your question is yes.
That said, the LLC A should have an Operating Agreement for its members and if it is related by ownership with any sub LLCs, this matter may need to be addressed so doing so is permitted.
This is another good case where seeking legal counsel is very important. If you’d like to be introduced to an Attorney to help you with this, feel free to send in your request here.
All the best…
Hello my name is Brenda
I want to open an LLC with a certain name, but I want to use another name for my business, can I do that and how?
Thanks
Brenda
Hi Brenda,
If you desire to form a business entity with a name which differs from the trade name you want your customers, vendors, and other parties to recognize, at a minimum your business entity will need to apply for a fictitious name.
You should also carefully consider other steps to take to make certain you obtain proper intellectual property rights and don’t violate those rights of others.
All the best…