If I have a parent company and several business operating from that one name, is it neccessary to LLC each invidual company or just that one parent company?
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If I have a parent company and several business operating from that one name, is it neccessary to LLC each invidual company or just that one parent company?
I have a clothing store, magazine, and jewelry line. However, I have one name that I would like to use for my company. I just don’t know which one to LLC or should I do them all?
Asked on July 31, 2012 under Business Law, Alabama
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 11 years ago | Contributor
Legally, a single business entity (e.g. LLC) could operate many different businesses. Practically, that may be a bad idea, since if you incur liability (whether contractual, a debt, a tort) for one business, all of them--if they're all under the same LLC--would be potentially liable. It is safer to have separate business entities, to protect each from liability against the others, though this does involve slightly higher costs (e.g. insurance, taxes, filing fees); it's also a bit less flexible to have separate entities (can't move money between them as easily), though it probably makes the accounting simpler (each business has its own set of "books"). You have to decide what your priorities are (e.g. safety; simplicity; flexibility; cost; etc.) in deciding what to do. If you do go with multiple LLCs, I'd recommend give them very similar, but not identical, names--e.g. "John/Jane Doe Clothing," "John/Jane Doe Publishing," etc. That will reinforce to the outside world that these are different entities.
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