Am I setting up my business properly?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Am I setting up my business properly?
I have two companies. Both are setup as Sole Proprietorships. I’ll call them
company A and B to make it easy.
I would like company B to be under or part of company A. For example, Limited
Brands owns several other retail brands Victoria’s Secret, Express, Bath and Body
Works, etc.
How do I do this? What changes do I need to make if any?
Asked on November 30, 2017 under Business Law, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 6 years ago | Contributor
You can't put one sole proprietorship under another, since each company is just *you*--a sole proprietorship is not an entity (like a corporation or LLC), it is just you doing business under a name. Since each sole proprietorship is you, you can't have one under the other or owned by the other in a legal sense. What you really are describing is sole proprietorship company A (the one with the EIN and bank account) also doing business as (DBA) company B, too. That is legal, and all you need to do is register the DBA with the secretary of state's office (or whichever agency in your state handles business registrations).
However, sole proprietorships offer you no protection from liability (from debts, from being sued, from contractual obligations, etc.) directed against the business, since the business, again, is you. You really should have an LLC or LLCs to protect yourself: otherwise, if the business is sued, etc., you are sued. An LLC, however, will protect you from business debts and liabilty (most of them; no protection is 100% perfect). You can have two different LLCs, each owned by you; you can LLC A which then owns LLC B; or you can have LLC A which also does business as (DBA) company B.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.