How to Structure Multiple Businesses — Legal Entities, Tax Consequences, and Best Practices

Entrepreneurs, especially serial entrepreneurs, rarely stop at just one idea. Many see opportunities across industries or expand into related products and services, which quickly raises an important question: How should multiple businesses be structured legally and for tax purposes?

This guide brings together the key concepts from three in-depth discussions on business structures. It explains the different legal entities available in the United States, compares the ways you can organize multiple ventures, and explores the tax and liability consequences of each approach.

Understanding the Basic Legal Structures

Before deciding how to organize multiple businesses, it helps to review the main business entity types.

The simplest form is the sole proprietorship, which happens by default when one individual sells products or services without forming a separate entity. It requires no special filing, but the owner assumes unlimited liability, meaning personal assets are exposed to business debts or lawsuits.

A step up from that is a partnership, formed when two or more people work together in a business without creating a corporation or LLC. By default, this becomes a general partnership, where each partner shares unlimited liability. A limited partnership can protect passive investors, but at least one partner must remain personally liable. Partnerships are required to file an annual federal tax return, and income passes through to the partners’ individual returns.

The limited liability company, or LLC, combines liability protection with flexibility. By default, a single-member LLC is taxed like a sole proprietorship, and a multi-member LLC is taxed like a partnership, but LLCs can elect to be taxed as S Corporations or C Corporations. They are generally simpler to form and maintain than corporations, though it’s important to create an operating agreement that spells out each member’s rights and responsibilities.

Then there are corporations. A corporation is a completely separate legal entity, owned by shareholders. A C Corporation files its own tax return and pays taxes on its profits, while shareholders also pay tax on dividends, creating the so-called “double taxation.” An S Corporation avoids this by passing income through to shareholders, but it must meet certain requirements. Corporations also come with stricter formalities: they must issue shares, hold shareholder meetings, and record decisions in corporate minutes.

There are also specialized forms such as benefit corporations (which must serve a social or environmental purpose), professional corporations or PLLCs for licensed professionals, nonprofit corporations that obtain tax-exempt status from the IRS, and Series LLCs, which allow one LLC to establish multiple “cells” under a single umbrella. Not all of these are available in every state, so it is always wise to verify what your state recognizes.

Different Ways to Structure Multiple Businesses

Once you understand the building blocks, the next step is deciding how to use them if you want to run more than one business.

One of the simplest approaches is to form a single LLC or corporation and then register fictitious names, often called DBAs (“doing business as”), for each line of business. For example, if you own Soho Shoes, Inc., you could create DBAs like “Soho Shoes Speaks” for speaking engagements and “Soho Shoes Musings” for a blog. This way, you keep just one legal entity and one tax filing, but can market each line of business under its own brand. The downside is that all of those businesses share liability. If one is sued, the others are exposed. And if you ever want to sell just one of the businesses, you would need to structure it as an asset sale, which can get complicated unless you’ve kept separate records for each line.

Another approach is to form separate entities for each business. Here, each company has its own LLC or corporation, its own EIN, and its own set of books. This approach provides stronger liability protection and makes it easier to sell or raise capital for one business without affecting the others. However, it also comes with added costs and paperwork, since you’ll need to maintain separate tax returns and pay state filing fees for each entity.

A third strategy is to create a holding company structure. In this model, one entity—usually an LLC or a corporation—owns the others. The holding company might own all of the stock or membership interests in the operating companies, or it might hold assets such as real estate, patents, or software that are then licensed back to the operating companies. This structure is widely used by large corporations but can also be useful for entrepreneurs. It separates valuable assets from operating liabilities and makes it easier to manage growth or sales of individual businesses. The trade-off is complexity: intercompany agreements must be drafted carefully, and tax planning becomes more involved.

Some states also allow a Series LLC, where a single “master” LLC can create multiple protected “cells” for different lines of business. While this sounds appealing, the tax and liability treatment is still evolving, and not all states recognize it. If your businesses cross state lines, this structure may introduce more risk than protection.

The Tax Side of Multiple Entities

Taxes are often the deciding factor when choosing a structure.

If you choose an LLC, partnership, or S Corporation, the business itself generally doesn’t pay income taxes. Instead, profits and losses pass through to the owners’ personal returns. This can be advantageous if one business has losses that can offset income from another.

C Corporations are different. They pay their own taxes on profits and then shareholders pay again on dividends, creating double taxation. On the other hand, C Corporations can sometimes lower overall tax liability if profits are reinvested in the business rather than distributed.

When you’re operating multiple businesses under DBAs of one entity, everything flows through that entity’s tax return. That’s simpler, but it also means losses from one business reduce the profits of another, which may or may not be desirable. When separate entities are used, each one files its own return, which provides cleaner separation but more paperwork.

Strategic Considerations for Entrepreneurs

So which approach is best? It depends on your goals.

If your businesses are closely related and you want to market them under a single brand, a single entity with DBAs might be the most efficient choice. If the businesses are very different in risk level—say, one is a consulting firm and the other is a restaurant—you’ll likely want separate entities to shield one from the liabilities of the other.

If you’re planning to sell one or more of your businesses in the future, creating separate entities makes the process much easier. Buyers prefer to purchase stock or membership interests in a stand-alone company rather than cherry-pick assets out of a larger entity. On the other hand, if you are cost-sensitive and just starting out, it may make sense to begin with a single entity and restructure later as your ventures grow.

No matter which path you choose, keeping careful records is crucial. Even if you operate multiple DBAs under one entity, you should maintain separate bank accounts and accounting for each line of business. This discipline makes it easier to track performance and simplifies things if you ever sell or spin off one of the businesses.

Best Practices and Final Thoughts

Structuring multiple businesses is not a one-size-fits-all decision. Your choice should be guided by your industry, your appetite for risk, your branding strategy, and your long-term plans for growth or exit.

Always consult with an attorney and a tax professional before finalizing your structure. Laws vary by state, and tax rules can change. What works for one entrepreneur may not fit another. The good news is that your structure is not set in stone. Many entrepreneurs start with one approach and adjust as they grow.

A thoughtful structure today can protect your personal assets, reduce tax burdens, and create flexibility for tomorrow’s opportunities.

Frequently Asked Questions About Structuring Multiple Businesses

Can I run multiple businesses under one LLC or Corporation?
Yes. You can register DBAs under a single LLC or corporation. This is cost-effective and simple, but all the businesses share liability.

Do I need a separate EIN for each DBA?
No. All DBAs under the same entity use that entity’s EIN. Only separate entities require their own EINs.

Can I sell one business if it’s just a DBA under another company?
You can, but it usually requires an asset sale rather than selling stock or membership interests. Keeping separate accounting for each DBA makes this easier.

How do taxes work if I have multiple businesses?
If all businesses are under one entity, you file one tax return. If you form separate entities, each one files its own return.

Do I need to trademark each business name?
Not necessarily. A DBA doesn’t provide trademark protection. If you want to protect a name or logo nationwide, you’ll need to register a federal trademark.

What’s the benefit of a holding company?
A holding company can separate valuable assets from liabilities, and makes it easier to raise capital or sell one business while keeping the others.

Are Series LLCs a good option?
They can be, but they aren’t recognized everywhere and liability protections across states are uncertain. Use with caution and legal guidance.

Can two LLCs or corporations share the same brand name?
Yes, if structured correctly, but trademark conflicts and brand confusion can arise. Always check name availability.

Which structure is best if I plan to sell one of my businesses?
Separate entities are cleaner to sell, since you can transfer ownership directly.

Do I need separate bank accounts for each DBA?
It’s not legally required, but strongly recommended for clean accounting and easier sales or spin-offs later.