This is a great question, and we are asked this a lot. Many small business owners have a number of talents, and want to operate more than one business under a business entity (i.e. corporation or LLC).
The general rule is there are no legal barriers preventing someone from operating different businesses under one business entity.
There are exceptions, though, most notably dealing with licensure, bonding and regulations. If you are operating businesses that are heavily regulated (i.e. restaurants, food manufacturing, helicopter rides, hazardous waste, cannabis, tobacco, firearms, adult entertainment, school busing, etc), require licensure (i.e. professional licenses such as medical, legal, accounting / CPA, etc, as well as contractors), or require bonding (i.e. contractors), then you cannot mix different businesses that may impact these areas.
If you feel you may be one of the exceptions, we would strongly encourage you to seek legal guidance. If you are located in one of the jurisdictions we have licensed attorneys, consider purchasing a 30-minute business attorney consult.
Otherwise, if you aren’t close to one of the exceptions, the answer to your question is business related (not legal related). Ask yourself the following questions:
- Do one or more of the businesses have a lot of risk, that isn’t shared with all the businesses?
- Do one or more of the businesses possess a lot of (or valuable) assets, that aren’t shared with all the businesses?
- Will one or more of the businesses operate in different states (or jurisdictions)?
- Might you want to partner up with someone else for one or more businesses, but not all?
- Is it possible you may want to sell one or more of the businesses, but not all?
- If you do sell your business someday, is it possible a buyer won’t want all the businesses?
- Any financial reasons where it makes sense to split the businesses, such as one business being more capable of getting a government grant or special dispensations?
If you’ve answered NO to ALL THE ABOVE, then that argues you do not need a separate business entity for your various business ventures.
If, however, you’ve answered YES to ONE OR MORE OF THE ABOVE, then that argues separate business entities for that business (or those businesses, if there are more than one) that caused you to answer “yes” to the question.
This isn’t an exact science, but if you feel one or more of the questions above hits on an issue for one or more of your businesses, then it could make things easier (and therefore more valuable) by splitting the relevant business or businesses into their own separate business entities.
About 95% of the time, a limited liability company (or LLC) is going to be the right business entity for people. You can learn more about LLC’s, their pricing and even order, from here. If you feel you need multiple business entities, then we would recommend you consider a parent umbrella company that owns two or more children, operating companies.
If you’re not sure what entity you need and want help, we have options for you:
- First, try our entity chooser. It’s smart, includes the latest tax reform acts, and considers things like anonymity and more.
- Second, if you have quick questions, please contact us and we’ll do our best without cost to you.
- Third, if you want a quality consult, consider a 30-minute business attorney consult.
