Though a business owner can have multiple businesses under one LLC, some may wonder when is the right time to split them into multiple LLCs. It does call for more bookkeeping than you would otherwise require. Also, rather than one larger cumulative whole, taxes will have to be filed for each LLC. In addition to being time consuming, handling business EINs, licenses, and fees can be costly. This decision can have a whole lot riding on it for business owners. Prior to making decisions that can affect their long-term success, serious considerations should be made. Today, we at Kajioka & Associates, Attorneys at Law would like to discuss when is the right time to split your multi-business LLC along with the benefits and disadvantages.
Limit Liability
To further limit liability, you may want to split your business. Forming a different LLC for each new business further divides and limits any possible liability between companies, though LLC is already a limited liability company. Instead of assuming the risk of all business operations, this strategy can be appealing to those who want to isolate each business’s legal and financial risks to its own liabilities. Each entity must formally register with the state, obtain an EIN, taxes, registered agent, etc. This is one drawback of starting and maintaining separate LLCs or corporations. This is where weighing in potential long-term success and security comes into play, however.
Multiple LLCs are Easier to Sell or Close
When it is time to do so, multiple LLCs are easier to sell or close. It becomes a complicated task to separate the paperwork, the assets, and the contracts linked with one of those businesses when you want to sell it when you have several different businesses under one LLC. Without affecting the other operations, it becomes a lot easier to sell or close the business.
Holding Company Structure
For additional protection, you may want to consider forming a holding company. Generally, a holding company doesn’t manufacture anything, conduct business operations, or sell any products or services. Rather, its subsidiaries as holding companies hold equity in other companies. If structured properly, holding companies are protected from losses accrued by subsidiaries. It’s creditors can’t go after the holding company if a subsidiary goes bankrupt or is sued for debts.
Criminal Defense, Personal Injury, Business Attorneys & More in Greater Las Vegas, Nevada
When exploring how to set up multiple businesses we recommend consulting with trusted legal counsel since circumstances will vary widely. For your situation, you will want to consult with a business lawyer and accountants to make the appropriate decision. When it comes to your business in Nevada, you will find you need legal counsel from time to time, including if you are specifically considering splitting your business into multiple LLCs. With Kajioka and Associates, Attorneys at Law, we can provide you with counsel and representation whenever necessary. Call us today for your consultation, and we can discuss the goals of your business and which legal courses to take to help you realize your goals. With our trained and experience expertise, our legal team can help assist you!
