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Multiple Ventures? How to Best Structure your Multi-Brand Business

I’m always in awe of the many talents of today’s entrepreneur…the wedding photographer who also writes children’s books, the copy editor who sells homemade soap, and the stay-at-home mom who doubles as a part-time caterer and jewelry designer. Today’s creative professionals often find themselves making income through a creative patchwork of diverse interests and talents.

Take Sue as an example. She recently called into the office with no fewer than five ventures. She has been selling children’s clothing, handbags, and craft supplies on Etsy. After a few solid years on Etsy, Sue was now ready to take the next step and launch her own websites outside of Etsy, as well as expand into handmade paper goods and home décor.

She wondered about the proper way to structure these businesses and here’s where it gets interesting, since there are both marketing and legal factors to take into account. And often, they’re at odds with one another.

Consider your markets, marketing strategy, and target customers for each venture. Are they synergistic? Are they relevant and will they appeal to the same customer? If so, it makes sense to market them under a shared brand. In other cases, your businesses might target different customer types and your branding should reflect each unique market.

In Sue’s case, she preferred to keep each of her five businesses separate — different websites, business names, and branding. She wondered about the proper way to structure these businesses. Do I have to incorporate each business? Do I need to file separate tax statements for each business, or keep separate bookkeeping?

Technically, it’s possible to create a separate business entity for each venture. However, this can result in excess paperwork and legal filings. And in many cases, each business may not be earning a significant amount of revenue individually, making the paperwork seem especially tedious.

To save some headaches and paper, here are some steps to consider when dealing with multiple business types:

  • Establish one main company (i.e. Big Enterprises) as an LLC or corporation within the state where your business will be actually physically located.
  • Once the main company has been established, it files multiple fictitious business names (or DBA, doing business as, registrations) for each of the ventures within the same state/county. This way each of the smaller companies can reflect the branding and presence best for their specific markets, yet still enjoy the legal protection of the main holding company (i.e. Big Enterprises).
  • When filing your DBAs, it’s a good idea to also consider if you will be doing business under any other names as well— for example, Sue’s Stationery and SuesStationery.com are technically two different names and hence should each be listed within the DBA registration form when filing the DBA. This extra step is relatively easy and ensures you have all your legal ducks in a row.
  • When it comes time for taxes, you can take the income earned from each DBA and report this in a single tax filing under the main LLC or corporation. As always, situations vary and you should always consider consulting with an attorney or tax advisor for individual advice regarding your particular situation.

You’re not legally required to disclose the parent company, meaning the website for Sue’s Stationery does not need to mention that it is part of Big Enterprises. However, as a general rule of thumb, this kind of public disclosure can enhance a small business’ legitimacy in the consumer’s eyes.

Taking the time to incorporate or forming an LLC now will save you more time and money than you know in the future. You’ll have great peace of mind knowing that your assets are protected and your business is a solid legal entity. And for those entrepreneurs with multiple talents and businesses, you’re able to reduce your paperwork and bookkeeping requirements by legally structuring your company as one single entity, with multiple brands as DBAs operating underneath it.

CorpNet’s professional staff is here to assist you every step of the way… And once you know what you’re required to file, we can take care of the details for you!  If you have specific legal questions or concerns, you should consult an attorney for sound advice. After all, your business is worth it.

Please feel free to reach out to me with any questions to nakalp@corpnet.com.

I wish you the best of luck in all of your business endeavors!

Nellie:) xo

Nellie Akalp

Nellie Akalp

Nellie Akalp is a passionate entrepreneur, small business advocate and mother of four. As CEO of CorpNet.com, a legal document preparation filing service, Nellie helps entrepreneurs start a business, Incorporate, Form an LLC, set up Sole Proprietorships (DBAs) and maintain a business in compliance with state filing requirements for a new or existing business.

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Comments

  1. Excellent article! I’m in the process of rolling out my first start-up website and have plans to create other websites in the near future. What you propose in your article makes total sense in terms of simplicity for structuring multiple businesses under a single business entity.

    My only question, if for some reason one of the ventures (one of the DBA’s) were to be sued, would the assets of all the ventures registered under the umbrella LLC be at risk?

    I can see the simplistic benefits of this structure and I’m seriously considering it myself, I just don’t want to have “all my cookies in one jar” during a lawsuit situation with one of the ventures registered under the umbrella LLC.

    Thank you!
    Ben

  2. Thank you!! Websites are coming. This was the clearest, most consice, and most straightforward advice and explanation I have able to find on this topic. Since I already have an S Corp, I will simply file the required DBA forms.
    Thank you again.

    Carol O’Neill
    President Rocario Solutions, Inc.
    Christmas Creations by Carol
    Knickerbocker Knot
    Ginham Dog and Calico Cat
    O’Neill & O’Neill Designs
    REVAMP

  3. Ben,

    A DBA only registers an assumed name for an existing legal entity. It does not create a new legal entity. Therefore, the only liablility protection you would have would be at the LLC level. All DBAs of that LLC are just that, DBAs. They are all legally one company doing business under different assumed names. The LLC would own everything: bank accounts, assets, liabilities, etc. Even if aquired under the assumed names.

    Bottom line: unless you create separate entities, everything will flow back to the one LLC “cookie jar”. If you need separate protection, you need separate legal entities.

    If you are serious about protection, talk to a Lawyer about your options and consider business insurance.

    I’m not a lawyer. This is just my opinion.

  4. I am based in CA, which has very high taxes… but I am planning to register an LLC so that I can start building multiple e-commerce and online businesses. These business will not have an HQ or specific office location, and I may be traveling and living in different locations during this time.

    Should I incorporate in Delaware or Nevada, or keep it in California?

    Thanks!
    Cody

    • Hi Cody,

      Thanks for reading the post. In response:

      For most small business owners, incorporating or forming an LLC is an unfamiliar road to navigate. After determining which business type is best, the next question asked is typically where. And more often than not, this question is framed as “should I pick Delaware or Nevada?”

      Delaware and Nevada are hot choices for incorporation for good reason. Many larger corporations choose Delaware because it offers some of the most flexible and pro-business statutes in the country. Nevada is becoming a popular choice for businesses due to its low filing fees, as well as the lack of state corporate income, franchise, and personal income taxes. In addition, Wyoming is rising in popularity.

      To be sure, these states offer compelling advantages. However, they’re not for everyone. As a general rule of thumb, if your corporation or LLC will have less than five shareholders or members, it’s best to incorporate or form an LLC in the state where your business has a physical presence.

      “Physical presence” means the state where your business is physically located, where any property owned by your business is located, where your employees reside, or where the shareholders reside. So unless your business has some kind of physical office in Delaware, Wyoming, or Nevada, it’s going to be much easier (and less expensive) for you to incorporate or form an LLC in your home state.

      Let’s take a look at an example. Ned has launched a consulting business. He lives in Maryland but is thinking about incorporating in Delaware. However, Maryland happens to have rather stringent rules when it comes to bank accounts. By incorporating in Delaware, Ned’s business is considered an ‘out of state’ business for Maryland. And as an ‘out of state’ business, Ned needs to get permission to open a business bank account in Maryland. Likewise, opening a bank account in Delaware will be tough since he doesn’t have a physical presence in the state.

      And the issue involves more than bank accounts. There are other potential logistical hurdles and added fees. For example, when a business incorporates ‘out of state’ (for instance, in Delaware when you live in California), there may be additional filings and fees in both the state of incorporation as well as the state where you live and run your business. These can include:
      • Appointing a Registered Agent, paying filing fees, and filing annual reports in the state where you incorporate
      • Appointing a Registered Agent, paying filing fees, and filing annual reports in your state of residence (i.e. where the business is physically located)
      • Qualifying as a foreign corporation in your state of residence
      I can’t overemphasize that last point, as it is a common misconception among many small business owners that I talk to. When you’re just starting out, the tax burden can seem overwhelming. It’s only natural to be concerned about your taxes, and certainly those tax laws in Nevada are
      incredibly appealing.

      However, just because you incorporate your business in Nevada does not mean those are the only state tax laws that apply to your business. While Nevada may not charge state income taxes for your corporation, the state where your business is physically located will come after you for those taxes sooner or later. Also realize that your tax liability may actually increase because you’re viewed as a foreign entity operating in the state.

      As you can see, any advantages of incorporating in Delaware, Wyoming, or Nevada can be washed away with all the added fees and paperwork of trying to operate out of state. For larger businesses with more complex tax and stock situations, it still may be worthwhile to pick a business-friendly state for incorporation. However, if you’re a small business don’t fall prey to the hype over Delaware or Nevada. The benefits are really limited to larger businesses (remember the rule of thumb: more than five shareholders).

      Small business owners are already contending with enough paperwork and fees as it is. There’s no reason to add more to the workload by operating out of state. If your company has fewer than five shareholders/members, the simplest route of incorporating in your home state turns out to be best.

      Let me know if this makes sense to you and best of luck!

  5. Thanks for this article. It specifically answered the questions that I had concerning the business ventures my husband and I are looking to start. This article answered my questions and took a HUGE load off my mind and shoulders. Thanks again!

  6. If the bookkeeping is kept separate for each DBA, is it onerous to spin off the most profitable DBAs when that occurs down the road or if that is the approach one knows they are taking is it best to simply break the dba’s into separate firms at the onset, killing off those that are not profitable.

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