Can More Than One Business Be Conducted Under One LLC?

By Elizabeth Rayne

A limited liability company, or LLC, is a common and flexible legal structure that is formed under state law. Like a corporation, the owners of an LLC are not personally liable for the debts of the business. Unlike corporations, however, LLCs do not pay corporate income tax and don't have shareholders or a board of directors. Owners of an LLC have the option to set up the business in any way that suits their purpose, which includes the option to create subsidiary companies under the LLC.

A limited liability company, or LLC, is a common and flexible legal structure that is formed under state law. Like a corporation, the owners of an LLC are not personally liable for the debts of the business. Unlike corporations, however, LLCs do not pay corporate income tax and don't have shareholders or a board of directors. Owners of an LLC have the option to set up the business in any way that suits their purpose, which includes the option to create subsidiary companies under the LLC.

Independent Entity

An LLC is an independent entity that exists separate from its owners. Many states allow an LLC the same powers as an individual to do all things necessary to carry on its business and manage its affairs. The LLC may enter into contracts, initiate and defend lawsuits, pay taxes and own property in its own name, including owning another business.

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Business Activities

An LLC can conduct any business that falls within the scope of its formation document. The formation document is usually the articles of organization that were filed with the state. Typically, the articles do not limit an LLC's business activities, although the company may be organized for a specific purpose that limits its activities. In most states, LLCs are permitted to amend the articles to change the business purpose. Many companies choose to organize for "any lawful purpose" so as to not limit potential business activities.

Management

LLC owners can decide to structure the business in any way that works for them. This includes entering into new ventures and structuring these businesses as separate divisions within the LLC or as subsidiaries. New business divisions and subsidiaries must comply with the organizing documents or the LLC will need to amend the articles.

Subsidiaries

An LLC can own more than one business as a subsidiary. A subsidiary company is owned by another business that holds a majority of the shares and may control the activities of the subsidiary. An LLC may create a new business as a subsidiary, or it may purchase an existing company. The LLC, as the parent company, remains a separate legal entity from the subsidiary, and generally, the LLC is not liable for the debts of the subsidiary. In most cases, the subsidiary can be sued or may declare bankruptcy without affecting the parent company.

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Parent LLC Vs. Stand-Alone LLC

References

Related articles

How to Create a New Company or Subsidiary of an Existing Company

An existing company, or parent, can create a new company as an independent subsidiary at any time with the approval of management. The startup process is the same for the company as it would be for an individual business owner. The parent controls the new company by being its sole shareholder and retaining the exclusive right to appoint the subsidiary's board of directors. Corporations are the most common type of entity that will find it useful to form a subsidiary, but it is also feasible for a limited liability company to own another business entity. Subsidiaries are formed as independent legal entities, which means they are typically organized as either corporations or LLCs.

Can I Have a Partner With an LLC?

A Limited Liability Company is a common business entity that may be owned and managed by one or more individuals. LLCs, formed and managed under state law, are relatively simple to set up, and allow for a flexible management structure. Unlike a partnership, LLC owners, known as members, are not personally liable for the debts and obligations of the company.

Does Maryland Permit Single LLCs?

Maryland allows business owners to register as limited liability companies, or LLCs, to protect themselves from personal liability. The LLC provides a business structure that is legally separate from the owner's personal assets, somewhat like a corporation. While LLCs can have many members, Maryland, like most other states, also allows single-member LLCs. The liability protection available to single-member LLCs, however, may not be as strong as multiple-member LLCs.

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