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.

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.

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.

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

References

Related articles

What Does a Limited Liability Company Mean?

A limited liability company, or LLC, is a hybrid business form created by state statute. The LLC combines the corporate feature of limited liability with the flexibility and tax status of a traditional partnership. It is the preferred business form for small business owners who do not intend their business to grow significantly, according to "Entrepreneur" magazine. “Limited liability” means that the LLC’s members do not have personal liability for business decisions or activity conducted on behalf of the LLC.

Regulations for a Single-Member LLC in Virginia

For an individual starting a business in Virginia, it is important to understand the regulations concerning limited liability companies before committing to the business structure. The state regulations for single-member LLCs are the same as those pertaining to multi-member LLCs. However, owners should be especially cautious about actions that may lead to personal liability for the business.

How to Transfer Ownership of an LLC to a Corporation

Limited liability companies and corporations are both governed by state law. LLCs have members who own the company and corporations have shareholder owners. If you are a member of an LLC, you might be able to transfer your ownership interest in the LLC to a corporation. It depends on your state, the provisions of your LLC agreement, and the purpose of the limited liability company.

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