If you’re an entrepreneur currently running multiple businesses or just thinking about starting a second one, you may be wondering the best way to legally structure them. Should you have separate LLCs for each one or a big umbrella company to hold them all? Are there any limits to the number of companies one person can form?
Read below to consider your options:
1) Create Individual LLCs
There’s no limit to how many LLCs one person can form. Many entrepreneurs opt to file a new LLC for each of their start-up ventures to keep things separate. This route isolates the risk to each individual business in the sense that they won’t share liability. The main downside with this approach is that it involves additional maintenance fees and paperwork.
2) Create a Business Under the Holding Company
Another approach is to create individual LLCs for each of your businesses and to put them under one main LLC for example.
This scenario is common for companies that are looking to be acquired or potentially spin off one of their businesses or for established companies that are looking to start a new business. However, this scenario can have complex tax and legal implications and it’s best to consult with a tax adviser or attorney on the best way to structure a holding company and subsidiaries.
3) Make Each Business a Separate Series.
A series LLC is similar to a holding company with multiple subsidiaries. However, the series LLC segregates risk within separate entities with less cost than setting up multiple separate LLCs. The series LLC is only able to be formed in certain states. Therefore we only recommend registering series LLC’s as a foreign entity in states that recognize series LLCs.
There are many in’s and out’s to all of the options above therefore it’s well worth getting professional legal advice. Before making any moves that could put your businesses in jeopardy of course. You don’t have to navigate this uncharted territory alone – contact LexLaunch today to get the personalized legal advice you need at a price that won’t break your budget.