Can One LLC Have Two Businesses?

By Ronna L. DeLoe, Esq.

Can One LLC Have Two Businesses?

By Ronna L. DeLoe, Esq.

A common question people in business ask is whether their LLC can operate more than one type of business. While one limited liability company (LLC) can have more than one business, it's not always a good idea. The advantages and disadvantages of having one LLC oversee more than one company depend on the type of businesses you're looking to open.

Man talking on phone behind counter of cafe while holding tablet

If you're interested in running businesses that complement each other, such as a greeting card shop and a gift store, you may benefit from running both companies under one umbrella LLC. If, however, the two businesses do not have an obvious business tie-in, such as a dog-walking service and a crafts business, you may want to consider having two separate LLCs or form a holding company, which is an LLC or corporation created to own other LLCs, corporations, and assets.

Advantages of One LLC Having Two Businesses

There are several benefits of having one LLC operate multiple businesses. Some key advantages include:

  • Having to file less paperwork to create the businesses than if you had separate LLCs
  • Having to file only one business tax return
  • Saving money by not paying separate fees for each LLC
  • Saving money for accounting

Disadvantages of One LLC Having Two Businesses

While there aren't many drawbacks to having your LLC operate multiple businesses, those that do exist have some significant disadvantages. These include:

  • Exposing each company to liability should there be lawsuits or claims against your existing companies
  • Difficulty keeping the income and expenses separate for each company
  • The need to market each business separately despite their being operated by the same LLC

The biggest issue to having one LLC control two businesses is your liability and potential risk from keeping the businesses together. There are several ways to form two or more businesses. You can have an attorney or accountant review the options to see what works best for your situation or you can have an online service help you with your questions.

Different Ways to Set Up Multiple Businesses

Operating multiple businesses gives you choices as to how you want to set up your legal entities. Here are some of the ways you can run more than one business:

1. Have an LLC run both businesses. This may make sense if you have two or more businesses that are similar or work well together. Your LLC can run multiple LLCs or DBAs (which means “doing business as"). DBAs are companies that conduct business under fictitious or assumed names, such as a company called The Flower Diva whose parent LLC is Fred's Fabulous Flowers. If you are setting up multiple DBAs, you may need to file a fictitious business name statement with your secretary of state.

2. Set up an LLC holding company for your LLC. If you create an LLC holding company, you can set up as many LLCs as you want under its umbrella. You can even operate different types of businesses, such as a pet-care service and an editing company.

3. Set up a holding company for DBAs, LLCs, or both. Your LLC holding company can oversee different types of businesses, including DBAs and LLCs.

4. Start a corporation for your businesses. A corporation can act as a holding company for LLCs, DBAs, and other corporations.

5. Set up separate corporations for each business. You can have as many corporations as you want and each corporation can operate any type of business so long as the business is legal.

6. Set up separate LLCs and DBAs. Setting up your companies with separate designations is the most expensive way and involves the most paperwork, but separate businesses will better protect you. If someone sues one business, your other businesses will be insulated from the lawsuit.

While any type of setup—a holding company, LLCs with multiple businesses, or a corporation—is possible, some will work better for your businesses than others.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.