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- What the Great Resignation Means to Your Business - April 19, 2022
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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.
- Check out our Startup Checklist for your new business to make certain you take all of the necessary steps.
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).


hello i own a car wash and am about to buy another one. the one i own now is a LLC. i was wondering if i should get a new LLC for the 2nd car wash i am about to buy. not sure the best way to structure these two car washes
Hi Alan,
If you include your new business with your existing business under the same LLC, you will have one business entity and the income and assets for both businesses will be exposed to the liabilities in both businesses. This is a risk you should consider carefully.
Also consider that by co-mingling the two business operations and assets in one business, it may be difficult to distinguish the assets, income, expenses, liabilities and profit for each business when you choose to sell one (or both) of the car washes in the future.
Hello,
I have two separate DBA’s (one is service based and the other is retail – both have different Principal activity code). Both DBA’s are under one single member LLC.
My question is, can I file two separate Sch C tax forms with the same LLC EIN number? I only have 1 EIN number. Thanks.
Hi Ali,
Yes, taxpayers may file two separate form Schedule Cs when they have more than one business with differing principal activities. In fact, they should because the IRS compares what is filed on a given Schedule C with all of those taxpayers under the same Standard Industry Code.
Because you have a single-member LLC, your two DBAs would file separate Schedule Cs with the same EIN and the different activity codes.
Hello I am going to start a college consulting business but I am also a notary and would like to have both businesses under 1 LLC name but two different DBA names My main purpose this time is because I already have an llc for my bail bonding business
Ex. TBA Enterprise, LLC
DBA College Consulting
DBA Mobile Notary
Thanks
Hi Nessa,
I am not certain if you are asking a question. Nevertheless, I wish you all the best in your businesses!
We are two nurses that have our own LLC (each has there own business name). We are in the Med Spa business. We want to work and share expenses in the same building, but work under the umbrella (DBA) of one name (ex. Southwest Med Spa). We each have our own bank accounts and will do our own taxes. Do we need an LLC for the entity Southwest Med Spa so the owner of the building we are renting does not get sued? We each have our own Medical Malpractice as well.
Hi Kathy,
Well, it’s great that you and your business associate both have your own individual medical malpractice insurance! That’s the first line of defense and a smart move!
Based on how you’ve worded your question, it seems to me you are under the impression that a DBA fictitious name certificate would offer you personal liability protection. It would not do so. It’s very important for you to understand that a DBA is not a separate business entity. Here’s a post about DBAs so you may learn more.
Whether you and your associate want to form a business entity (LLC, corporation or partnership) to protect the Southwest Med Spa depends on many factors. You may want to learn more about how business entities protect owners and how to reduce business risks in our Business Entity Guide e-course.
All the best to you and your associate Kathy…
Hi, I will have an LLC and a DBA under the LLC. I know I will need a fictitious name certificate for the DBA. The question is do I need a fictitious name certificate for the LLC? To open a bank account need a fictitious name certificate, right? If I don’t have a fictitious name certificate for the LLC, which means the LLC can’t open a bank account, is that right?
Hi Chaz,
It sounds as if you are thinking the DBA would be a separate business entity. It is not. Think of a DBA as a permission slip issued by your State where your business entity was formed (an LLC in your case) to use a name which differs from your business entity’s official name.
With that said, your LLC would be filing for a DBA (fictitious name) and you would still have one business entity — not two.
If you have your LLC file for a DBA, your bank should be willing to open a business banking account in either the LLC’s official name or the DBA (fictitious name). If you want a banking account under both the LLC’s official name and the fictitious name, ask your bank if it will do so. I hope I’ve clarified things for you Chaz!
Hello Holly,
My photography business is a LLC, and I want to add a DBA for my wedding photography. Will I still need to put my LLC name on my contracts, or can I just put the DBA name on it?
Thanks!
Shaun
Hi Shaun,
If you file for a DBA for your existing LLC, you would use the fictitious name for advertising and administrative purposes and would not need to use your official business name.
I live in Buffalo New York
I’ve fully purchased a bldg that has a restaurant/bar.Also a hall upstairs(second floor) and an Icecream Shop.
Should I transfer personal purchase of bldg in a llc?
Should I separate 3 business into an llc Eventhough it’s under one roof?
Any other advice will be appreciated
Hi Jevon,
I am unable to advise you specifically about what you should do. However, I am happy to help you understand why having an LLC formed to hold real estate or a business may be beneficial.
When you have an asset (building, land, business, web property, intangible asset, etc.) and form a business entity to hold and operate it as a line of business, you will enjoy some level of liability protection. Those assets held by a business entity will be regarded as separate and distinct from you and your personal assets. Generally speaking, that’s a good situation.
Ultimately, you have to decide if you want to expose any assets you presently own as an individual (including the real estate you just purchased) to liabilities, lawsuits, claims, etc. from anything which may go wrong with your any of your personal assets, including your newly-acquired businesses. If you have concerns, you may want to consider forming a business entity for the business real estate and operating businesses.
Hello, I am trying to organize my thoughts and wanted to ask your opinion. I have three companies that I want to start and register, but not sure how to structure them. I have been doing all of them on my own, but wanted to branch out and eventually have more than myself and a couple of friends working for me. One of my developments is a film company, the second is a restaurant, and the third is a R&D company for aviation. For some reason I keep thinking I could make a main company name like “John Smith Corporation” that does nothing for the time being and then have the three other company names daughtered underneath it. Would that be a suitable idea? This is not for tax reason or any other shady reason I have read elsewhere on the internet. I just wanted to start something that unified my business and not have to come back and do tons of paperwork to have it placed where it should have been to start with. I also would like to stress that my goal is to have enough employees staffing these endeavors, but don’t want to pay a bundle till they reach that point Thanks, and love your blog!
Hi Steven,
Yes, it’s possible to set up one business entity and then have several businesses owned by (all or a portion) beneath it.
Doing so would mean you have four business entities (as you’ve described). Depending on the type of business entity you choose to form for the holding company will determine if you are able to consolidate tax reporting to the IRS which reduces some administrative paperwork.
Glad you are finding the blog helpful!
I set up an S Corp and wanted it to be an LLC. When applying with the Secretary of State I completed the “Articles of Incorporation” instead of the “Articles of Organization”… Is this a big issue?
So as of now, it’s DRJ Ventures, Inc. and I have my Federal ID number. I want it to now be DRJ Ventures, Inc. dba _______ (still trying to come up with a business name). What exactly do you mean when you say “registering the dba”? What is the process for that? Even though you are doing a dba you still use the one Federal ID # originally assigned to the S-Corp, correct? Thank you for your assistance….
Hi Donya,
Well, pardon my delayed response–I took a vacation 🙂
If you’ve formed an S-Corporation, you would have needed to file Articles of Incorporation. You cannot change an S Corporation (or C Corporation) to an LLC.
If you want to use a name for your business which differs from the official name you used when you formed the corporation, then you need to register the DBA by filing forms with your State’s Department of State (or Corporations). This registration will either be approved to allow your corporation to use a fictitious name (DBA) or denied.
And yes, even if you apply for and are awarded a DBA (fictitious name certificate) for your corporation, you’d use the original Federal ID (EIN) for the corporation when you file your annual tax returns. I hope this helps!
I want to setup an LLC and a DBA. Can the DBA have a different shareholding structure, which may include different or additional partners than the LLC? For example, LLC owners are Beth and Michael, DBA owners are Beth, Michael, James, and Michelle. Can that be done?
Hi Michael,
No, DBAs are not separate business entities. Here’s a post about the differences between a DBA and an LLC.