Holly also founded ExitPromise.com and to date has answered more than 2,000 questions asked by business owners about starting, growing and selling a business.
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In part one of this series, we discussed the various options to incorporate multiple businesses while keeping each business as a separate entity. It’s worth noting that having a separate legal business entities can be costly when it’s time to file your taxes as most CPAs charge an additional fee to file each business entity’s tax returns.Additionally, you may want to develop a line of businesses that are closely related in terms of the products and services offered, the industry, or even its customers. In such a case, it may make good sense to create a single brand that will unify the various business operations. Marketing can be simplified under this type of multiple business structure and the businesses could flourish under a unified brand.
If you find your future plans include the addition of similar lines of business to your existing business (or the business entity you are about to form), there may be a simple way to structure multiple business entities which could reduce tax filing costs and administrative time in the future.
How to Structure Multiple Businesses Under a Single Business Entity
- First determine which type of business entity you’d like to form:
a. Limited Liability Company; or
b. Corporation (an S or C Corporation); or
c. Partnership. - Determine if the business trade name you’d like to use is available in the state in which you choose to form a business entity.
- If it is available, determine if the trade name has been federally trademarked by another party. If so, go back to the drawing board!
- If it is available for your federal trademark registration, consider filing for it after you launch your business.
- Form the business entity you’ve chosen in the state in which you choose. If you choose an LLC, you will need to draft an Operating Agreement. If you choose a Corporation, you will need to file Incorporation documents.
- File all of the necessary start-up documents and public notices with your state and local government (if applicable).
- File for a Federal Employer Identification Number (EIN) for the business entity.
- Make any federal tax elections necessary.
- Under the business entity, apply for a fictitious name for any other lines of business you’d like to operate under the umbrella of the business entity you’ve formed.
Example of Multiple Business Structure Under a Single Business Entity
If you have a business that manufactures shoes in New York called ‘Soho Shoes, Inc.’ and you’d like to offer speaking engagements to shoe designers under the trade name Soho Shoes Speaks and start a blog about the life of a shoe designer at SohoShoesMusings.com, you could hold all these lines of business under one company.
To do so, the incorporated business known as Soho Shoes, Inc. would apply for two fictitious names (or DBAs) — one for Soho Shoes Speaks (for speaking engagements) and another for Soho Shoes Musings (for the blog).
It’s important to note that before your business files for a DBA or Fictitious Name, you should verify that your use of the name does not violate another party’s intellectual property rights. You don’t want to get into trouble and have to start over again after your start marketing your products and services to potential customers.
This multi-business structure example is really one business entity with three different marketing or trade names. So, it’s relatively easy to co-market the related lines of business while minimizing the tax reporting requirements. In my book, this structure saves time and money and that is always good!
What Does Filing a Fictitious Name Mean?
When your LLC, Corporation or Partnership has filed for a fictitious name, the state has given permission to the business to use a trade name for marketing purposes which differs from the business entity’s legal, or official name. It’s really that simple.
The fictitious name certificate does not create a separate business entity so the line of business operating under a DBA is part of the business entity which filed for the DBA.
You will not be able to sell member shares in the LLC, stock in the Corporation, or partnership rights in the Partnership for one of the lines of business which operates under the fictitious name.
And if you choose to sell one of the lines of business operating under the fictitious name, you will have to sell under an asset sale agreement as only part of the business entity will be transferred to the buyer. This can be tricky to do if the accounting books and records for the multiple lines of business have not been kept separately. So, seriously consider keeping separate banking and accounting records for each line of business under this multiple business structure if you think you may sell your business in the future.
In part three in this series, you may explore alternatives to using a single business entity with multiple fictitious names (or DBAs).
My wife and I own a small business (s-corp). I have also been operating another business for the past few years as a dba under this corporation. We very recently changed the name of the parent corporation. Based on my readings here, I believe I do not need to do any additional filing with the dba since it is still tied to the corporation, correct? I assume it can keep operating like usual?
Hi Ryan,
Yes, your assumption is correct. Your DBA (fictitious name) for your existing corporation is still valid because you’ve only changed the name of your existing corporation.
All the best…
How do you draft a proper operating Agreement for each DBA or does the main LLC add an addendum for each DBA?
Robert:
A DBA is not a separate company. It does not need an operating agreement. Think of a DBA as a nickname. If you call yourself “Bob”, you don’t get a separate driver license from “Robert”.
I want to partner with a friend on a new company. I’d like for us each to use our existing companies using a DBA to run the partnership. Is this possible and if so what are the benefits?
Hi Josh,
Nope, not possible and here’s why…
A DBA is a fictitious name for either an individual or an entity. When you form an entity, such as a partnership, the partnership has its own legal name (DBA not needed).
If you want to take two existing companies (let’s assume they are LLCs) and form a partnership, then when you form the partnership, the LLCs are the partners and the partnership has an official name. No fictitious name is needed.
Hope this helps…
My wife and I have a corporation, I want to start another business under DBA. Is there a way for me to be the sole proprietary of the DBA.
Hi Bryan,
If the fictitious name (DBA) is for the corporation you co-own with your wife, then the answer is no. Anything you develop ‘under a DBA for the corporation’ belongs to the corporation. Period.
If the fictitious name (DBA) is formed by you as an individual, then it’s all yours. You’d be the sole proprietor of the new business.
All the best…
I’ve read most of the questions on this post and it seems many people want to do something similar to what I was thinking but they’re trying to create “child companies” with a separate EIN through DBA’s which you’ve made clear is not possible. What about divisions? Can a corporation create a division with a separate EIN? Isn’t a division able to have a different marketable name than the parent company?
James:
An EIN is an IRS-issued number and is tied to a LEGAL entity. A “division”, a dba or whatever is not a separate legal entity.
James, you likely have a Social Security Number. You only get one. If you decide to run a lemonade stand as “Jim”, you don’t get another Social Security Number. If you run a garage and call yourself “Jimmy the Mechanic”, you don’t get another SSN. If you get married and change your name (hey, you never know), you STILL don’t get a new SSN. Same idea with an EIN. It belongs to one legal “person”. A “person” is defined as a real person OR a corporation or LLC that is legally recognized by the State.
I am a single LLC owner of a party rental business with a DBA under the LLC. I am interested in starting a transportation business this year. 1. Can I dba the transportation business under my legal entity and have separate bank accounts for the DBA’s or should I create a separate LLC? 2. Can I used the same vehicle that is under the legal entity for the transportation business?
Thank you
Hi Dee,
Yes, it’s possible for your LLC to apply for a fictitious name (DBA) for a new line of business – your transportation business.
And yes, once you’ve filed for the DBA certificate you would take the original LLC formation documents along with the DBA certificate to your bank to open a bank account in the name of the new transportation line of business.
Whether it’s better to form a separate LLC for the new line of business often depends on how much liability you would have in the new business. Here’s another post to help you understand better.
If you choose to file for the DBA (and operate the rental and transportation business under the same business entity), then the vehicle could be used for both lines of work.
If you go that way, be certain to inform your insurance carrier about the transportation business. You’d want your coverage for both types of services you offer.
All the best…
Good afternoon everyone, I started my LLC in 2019 for a tax prep and Financial education for youth and special needs. I have a EIN, Business Chking acct and domain set. I will no longer be preparing taxes, my question is I want to start a kids mobile event rental business with a similar name as the one I have established. Do I have to start a whole new LLC, EIN, chking acct, etc. or can I structure it so I can have the multiple business under the one EIN
Candice: Your LLC can be used for any legal business purpose. You can run 20 different business activities under one LLC, if that’s what you want to do. You cannot use a “similar” name; you must use the LLC’s official name for business activities, unless you register a separate Assumed Name (or dba) under you LLC name. An LLC can only have one Tax ID (EIN) for life.
Thank you for your prompt response
Hi! I own a Florida Real Estate Brokerage as a Scorp with a DBA. I am looking to provide notary loan signing services as a new line of income. Do I need to create a new entity or can I establish a DBA under the Brokerage Brand. Would it be wise to establish a completely seperate LLC for the loan signing services?
Jennifer: Having a notary service for your own brokerage may not be a good idea. You certainly cannot self-notarize documents. There may be other legal issues to consider that go beyond the scope of this forum.
I am operating under the LLC created by my sister and I (6 years ago) and do business with the same name (bank account is that name, invoicing, Venmo, etc.). I am the registered agent and Manager 1 and she is listed as Manager 2. She has moved and will no longer be associated with the business, so I am in process of making amendments to our LLC formation. I want to take the business in a new updated direction/branding and would like to have a DBA under the LLC. My question is this: With the new DBA name, do I need a whole new bank account, etc since the LLC has its own EIN/Tax ID number OR do I just need to make a name change to bank account and SQUARE invoicing system, Venmo, etc? At this time, I will only have one DBA (the one I will be creating). A little confused and I don’t want to make a big error at this point. Thank you for your time and help!
Hi, Julie. It sounds like you are wanting to completely start a new business from scratch–different ownership structure, different products, different everything. Why are you not just closing the old business and starting completely fresh without any of the baggage of the old business?
Yes, I guess you could “recycle” the old LLC and change the ownership, create new operating procedures, brand, etc, but if you do that, it will RETAIN the old EIN. You don’t change the EIN with a dba. The dba is just a name for marketing purposes. If you were ABC, LLC and you add a dba, such as Newco, your name on official records would now be “ABC, LLC, d/b/a Newco”, or you would just appear as “Newco” to the public.
If one corporation owns another corporation then do we need to put an entity name as an owner under the 2nd corporation or should we just put the individual name as an owner. I am a little confused since one C corporation will be owning another C corporation.
Andy: Can you please specify to what you are referring to exactly? Are you filling out a tax form (which one?) or an application for something? In general, a corporation is not “owned directly”, if you will. A corporation is owned by its shareholders, but another corporation or a person can own 100% of the shares of another corporation.
Basically, I was wondering how can you show on papers that one specific corporation owns another corporation. Is this something you have to mention while forming a second corporation?
Andy: Assuming the parent corporation is not publicly traded, there’s NO place that you need to report the child corp’s ownership. If both are C corps, then any dividends it pays to its parent are taxed at a discount on the parent corp’s tax return. The child Corp remains owned by “anonymous“ shareholder(s), as far as the outside world sees. Some State’s rules may require all corporate entities to reveal the officers, but not the owners.
I have an LLC that I just created. I have another LLC in another state that wants to partner. Being that we are stand alone companies. How would the partnership look for tax purposes? Would we need to create a new LLC? Or would we just operate under their LLC since they are in that state? Would I then just be listed an an investor?
Magen: A Partnership is when two or more people own a business. A “person” for the purposes of a partnership can be a live person, or an entity, such as an LLC, a trust, or a corporation.
There are many ways two persons can do business – create a formal partnership, create a Joint Venture, create a new LLC or corporation. You need to decide what you want to accomplish by joining forces, as well as determine who is responsible for what. DEFINITELY speak with an attorney if you want to reduce expensive errors of doing business with a partner. Don’t rely on the partner’s word!
I just recently formed my LLC. I want it to be the parent company to the DBA’s that I plan on forming. Would I need one EIN for the multiple DBA’s or would it be just the want that my LLC would be using?
2. My brother’s and I want to start a business together. Would it be wise to form an DBA under the LLC that I have already established since I already want it to be the parent company for the businesses that I plan to create with a DBA? Or should we just form a new LLC with all of us being partners?
CC: One Entity gets Only One EIN (Tax ID number). DBAs are NOT separate businesses. A DBA is a name. It cannot be “under” another company. A DBA cannot own anything.
2. You cannot form a partnership as a DBA of another company of any type. A DBA can be another name for a partnership, but not the other way around. You are effectively asking “Can I have 2 owners of PART of my 1-owner LLC?”– and of course, that makes no sense. 2.5 Your new LLC COULD be a partner in another LLC (or a partnership) that is a partner with your brother. Or you could form an unrelated partnership or LLC with your brother directly and leave the other LLC out of it.
I currently have a LLC that is set up for my business, However I am looking to add more streams of income. The business that I have currently set up is herbal business I am looking to start a t-shirt and accessories line, and real estate. I wanted to know with them all being different can I use a DBA for the other two ventures, so it can be under one entity, or will I have to from them into different entities since they are not related at all?
It was suggested that I register myself as a LLC and then have the t-shirt and real estate be DBA’s, and keep my herbal business as is.
Chenale: If you read through the older questions here, you will see a pattern: there are things you COULD do, legally, but SHOULD you do them is a different question. Yes, you can have one legal entity and run a thousand business activities in that one entity. A DBA is an alternative name. It is NOT a business, and it is NOT a sub-business or a subsidiary of a business. If you do 5 or 100 business activities under one LLC, you’ll compile one set of financials and file one tax return for that entity.
I would never recommend anyone run any type of real estate business as part of another unrelated entity for legal protection reasons more than anything else.
Can my brother file his DBA under my LLC
If so do we file taxes under my EIN
Maurice: Assuming you are not running a partnership with your brother, then no, he assign HIS assumed name under your LLC, essentially being you. If so, you would basically be saying that everything he does, you’re responsible for it!
Imagine you would allow me to put my DBA (ABC Co) under your LLC and I did $100 Million in sales. That means all my sales are really part of your LLC and you must pay the taxes on it. Or, if someone sues ABC Co, and they win the lawsuit, they can get all the assets of YOUR LLC. I don’t think you would like that!
A DBA is NOT a separate business. It is a NAME associated with an existing business. It does not legally stand alone.
If I have an LLC that will receive income from multiple other LLCs (other LLCs income will come from the lease or sale of commercial property), what is the “primary activity” of my LLC? Would it be “Real Estate/I rent or lease property that I own” even though this LLC isn’t directly leasing the properties and there likely would be some portion that are building properties and buying/selling properties?
Jessica:
Quick answer: Your parent LLC is considered a holding company. However, when I see stuff like this, I always ask if this parent LLC is necessary. Does it provide any additional legal protection? Does it provide any tax savings? If you answered “no” to both, then you might not need this LLC.
Hello!
I’m interested in starting a small business with multiple parts. I would like to make and sell clothing, jewelry and accessories, greeting cards, and home furnishings such as curtains, pillows and other decor. I would like to have one name, but several “offerings” as well without the “offerings” names able to be used by anyone else. For example: main name is Mickey Mouse for the clothing and accessories, but I would also like to use Mickey Mouse “Home”, and Mickey Mouse “Greetings.” Do I have to make separate LLC’s or will my main name cover this?
Also, I am a singer with a completely different artist name that will have separate merchandise- some for sale and some as gifts, can this be attached in any way, or is this a completely separate business? I live in IL.
Thank you in advance!
Lavern: A since entity can engage in any number of legal business activities–singing, cleaning bathtubs, fixing oil wells, or selling yachts. Does it make sense to combine all of these things? Probably not. The reason one creates an entity is for both Legal and Tax protections. Imagine if someone sues you for selling defective clothing. If the plaintiff wins, they could potentially take everything that is within that company–its assets and revenue. So if you sold defective clothing and your singing/recording business is in the same business, the plaintiff could theoretically get all your recording revenue, too. So it’s a case of you COULD, but WOULD you put everything in one entity.
As far as having different items to sell, imagine going to the corner store and every category of food they sell is in a different company. You’d have to buy your dairy at one register, canned goods at another, and bakery items from a third. Totally silly, right? So protection from being sued is usually not by having every product sold by a different company. Your company might make umbrellas and shirts and shoes. You could BRAND these items, but just one company sells them. Branding is different than opening a separate business. Brands can be protected by Trademarks, service marks, patents and other legal tools.
I recommend starting a conversation with an attorney and then a tax advisor for strategies on how to set up your business activities.
I have a LLC that been going strong for 2 years, I want to add a dba do I need to get a separate EIN for the DBA when registering the name or do I use my LLC EIN. The business will be up under my LLC
Hi Tyrone,
If you want the LLC to have the ability to market products and/or services under a different name than its legal, official name, then the LLC should register the DBA.
Once it’s approved, the EIN you have used for the LLC will be used also for the DBA. The DBA is part of the LLC if the LLC files for the fictitious name.
Congrats on your successful, growing business! I love to hear that…
I own a LLC – however we would like to get a DBA for another product line. Is it possible for that DBA to add an owner separate from the LLC?
Hi Mandy,
No, it’s not possible for the product line for which you register a fictitious name (DBA) to have ownership structure that differs from the LLC. And that’s because the DBA will be part of the LLC. It’s not a separate, legal business entity.
Hope this helps…