You know it makes sense to incorporate or file an LLC to protect your business. But what if you have more than one business under the same umbrella?
If you have multiple business ventures, it might make more sense to keep your businesses as part of one unified brand if the various ventures share similar marketing strategies and target similar customers. For example, if you offer event planning services and also run a separate website that sells customized invitations, you could host both of these ventures under the same corporate umbrella.
How does it work to create a legal structure for multiple businesses under one corporate umbrella? Here is one of the simplest and most effective solutions:
How To Host Ventures Under One Corporate Umbrella
Create an LLC, S-Corporation or C-Corporation as the “holding company,” and then create multiple DBAs for the various other ventures that are part of the main “umbrella” corporate structure.
For example, if someone has 3 businesses: one consulting service, and two separate websites that sell products related to the consulting work, the business owner could create one overarching LLC or corporation (depending on which choice of business structure provides the most tax advantages) called “Mary Smith Enterprises, LLC” or “Mary Smith Enterprises, Inc.” and then file DBAs (“Doing Business As”) to include each of the subsidiary websites as part of the overall corporate structure (LLC or corporation), even though they have different names.
This is an easy way to structure multiple businesses so that the owner is protected against liability for any of the businesses, while also minimizing tax liability (depending on the business and owner’s tax filing status) and providing added credibility for the business operations.
Tips for structuring multiple businesses with an umbrella corporation and DBAs:
- You don’t have to disclose the name of the LLC. If you have multiple businesses that are not seemingly related to each other, you can keep doing business under each business’s name without being legally required to disclose the name of the “holding company”, LLC, or corporation as part of your marketing. For example, if Sue Smith runs 3 companies – “Sue’s Cookies,” “Flowers by Sue”, and “Sue’s Soup Shop,” she can keep using those separate brand names for each business without having to tell anyone that the businesses are actually under the umbrella of “Sue Smith Enterprises, Inc.”
- Structuring multiple businesses can save on paperwork. Keeping each business separate might be a valid option for certain situations, but it can lead to additional paperwork and expense.
- Keep all the tax information in one place: If you have multiple DBAs under one LLC or corporation, you can keep the earnings and expense tracking for all of your businesses under that one corporate structure, making it easier to pay what you owe (and save as much as you can) at tax time.
- Cover all your bases. Are you going to be doing business under any other names, other than the “obvious” ones? It’s easy to file a separate DBA for each possible permutation of your business name, for example, by filing a DBA for “Sue’s Soup Shop” as well as “SuesSoupShop.com.”
By filing an LLC or forming a corporation with multiple DBAs under the corporate “umbrella,” you can protect your assets, streamline your business bookkeeping, and simplify your marketing. What’s in a name? Plenty. Get it done right by structuring your multiple businesses in a way that maximizes your marketing abilities while minimizing your liabilities.
Editor’s Note: This was originally written by Nellie Akalp for Exit Promise.